GUEST BLOG: The pitfalls of paid search
By Ben Lipscombe, Head of Biddable Media, Red Hot Penny
Your resellers are undercutting you on Google Shopping. What are you doing about it?
Google Shopping is one of the most important channels for generic online growth. But you might be shooting yourself in the foot thanks to the reseller agreements you have in place.
WHY IT’S A PROBLEM
Resellers will discount your product prices due to a lack of awareness around the agreements put in place and/or a lack of restrictions. And with no restrictions in place, your resellers can – and will – sell your products for cheaper.
By the time you realise it is a problem, it’s often too late and you’ll have very little room to negotiate because the agreement (without restrictions on undercutting) is already in place.
This not only strains relationships but also limits the potential you have to drive sales on your own site, so you need to be clear on expectations from the outset.
The ultimate point is that you don’t want to get beaten on price on Google Shopping. It’s essentially a product with a list of prices next to it so is hugely price sensitive.
Having a great brand and strong website won’t matter if someone else can get exactly the same product for cheaper elsewhere. And you don’t want to end up in the position where you’re struggling for growth because your own resellers are selling your products cheaper than you can.
The worst part? You’ll only have yourself to blame.
SOLVING THE PROBLEM
Google have recognised the issue and are bringing out a set of analytical tools that’ll help you pinpoint pricing differences across your product feed – so you can identify issues ahead of time and focus on the areas for growth.
But to help yourself out putting a pricing strategy in place when you first negotiate with your resellers will ensure you leave yourself with the option to sell online through your own site via Google Shopping without the fear of them undercutting you.
In most cases, there’ll already be contracts that exist with no mention of Google Shopping pricing restrictions. So, you’ll need to have a careful discussion with your resellers to reach a compromise without any party feeling hard done-by.
That’s why it’s so important to consider your reseller and partner Shopping agreements pre-emptively.
And remember, Google Shopping is a price-led channel, no matter how big your brand is.
If you’re already in the position where you’ve got agreements in place but no pricing restrictions, or you’re considering working with resellers and don’t want to get tripped up, get in touch for advice on how to approach either situation so you can keep all parties happy.