Much has been made about Google's announcement today stating their intention to transition from the current "free listings" model to one requiring payment for inclusion. Not wanting to be left out of the game, I thought I'd offer my take on the impact we expect to see for Bonanza and our dear merchants.
A Brief History of Google & Marketplaces
Bonanzle in 2008, when our GPS feed was taken down.
Those were the bad old days.
Bonanza owes a great deal to Google Product Search (henceforth, "GPS"). At the time we launched in 2008, GPS was still a relatively undeveloped product with several major ecommerce players unrepresented. As would become a theme for Bonanza, we used our crack programming team to build a fully automated GPS submission tool that made us one of the largest item providers for Google Product Search. Times were good.
Well, except for when Google would find an item in our 1 million item feed that didn't abide by the dreaded Google Base Program policies. When this happened (which tended to be every couple months), our entire GPS feed would be taken down, resulting in our traffic being decimated by about 60-70%. Times were not good. But our feed would usually get restored within a week or two, and the party resumed.
As 2009 progressed, GPS finally started getting noticed. A crop of new marketplaces took advantage and thrived, Bonanza foremost amongst them. I'd approximate it was around late 2009 or early 2010 by the time the Amazon's and eBay's got around to developing their own well-crafted GPS integrations. Competition became stiffer. When our GPS feed went down we lost "only" about 35% of our traffic. Still not a picnic, but better than the 70% dependence we started at.
In 2010, we hired a team of 79 computer geniuses, who helped us crack the code of how to track our GPS traffic in Google Analytics (OK, it wasn't exactly that hard. But neither was it easy). Over time, we have seen two factors work against Bonanza in the context of GPS: one is the increased competition from every possible store and marketplace being represented. The other is that the shopping algorithms have increasingly tended toward Amazon, Zappos, Nordstrom and the like when they're present.
The net result of these changes was that, as of last month, our analytics indicated that our traffic from GPS was hovering at around 15% of our total traffic. This relatively minimal percentage corresponds to our focused efforts over the last three years to acquire new traffic sources like email, the social sites, and even some advertising.
Google Product Search Becomes Google Shopping
This history brings us up to today, when Google announced that GPS as we know it will soon cease to exist, replaced by Google Shopping. While this move has sent anxiety through the ecommerce world, it remains to be seen what ultimately happens between now and September (when the transition is scheduled to complete).
How many merchants -- particularly small merchants like those on Bonanza and Etsy -- will be able to pay a per-click fee? I'm sure that Google has a guess; my guess would be "not many." In general, small merchants have to be very smart with their limited resources to make their business work, yet they provide most of the "unique merchandise" in the ecommerce universe. If few small merchants have the money (or time) to get listed in the new Google Shopping, I imagine Google will have a very difficult decision about how to proceed. They have shown a lot of willingness to listen and respond to merchant feedback in the past, so I wouldn't be surprised to see them continue to listen and improve as September draws nearer.
A World Without Google Shopping
Assuming that Google decides to proceed with its plan as currently described, what will it mean for Bonanza and the rest of the marketplace landscape?
As mentioned above, in a bad case scenario, our sellers could stand to lose around 10-20% of their monthly traffic. Unpleasant, but non-fatal for most. Meanwhile, the smaller marketplaces (and independent ecommerce stores) that lean more heavily on GPS for buyer traffic will be in tougher straits. Just as the introduction of GPS fueled a proliferation of marketplaces over the last few years, the subtraction of GPS could well induce a contraction of marketplaces that ultimately consolidates buyer and seller traffic. The strong would survive and become stronger.
It's also possible that alternate sites like Bing or TheFind could grow from this change, and we'll see GPS traffic shift in part to an emerging platform.
Regardless of how the traffic balance shifts, our commitment will remain toward diversifying our traffic sources so that our sellers can experience reliable & sustainable sales through many different channels. Delivering buyers a great experience has been at the forefront of our traffic gathering strategy. As our first-place finish on the Ecommercebytes 2012 "Best Usability" measure attests, many users believe we're succeeding at that goal.
At the end of the day, buyers remember a great product, so as long as you all can handle sourcing the merchandise, we'll continue to deliver a polished, enjoyable experience that makes buyers want to come back.
We're not too concerned about the impact of these changes on our sellers, and we'll continue to talk with Google about how to minimize the impact on our sellers. Stay tuned!