Paid Search Challenges: Are Resellers Undercutting your Brand?
Your resellers are undercutting you on Google Shopping. What are you doing about it?
Google Shopping is one of the most important channels you can use to drive generic online growth. But you might be shooting yourself in the foot with current reseller agreements that allow your partners to undercut you on your own product pricing.
And with Google Shopping being an extremely price-sensitive channel, you need to make sure you have a proper pricing strategy in place for your resellers, otherwise you face an uphill battle when trying to sell direct on your own site.
We spoke to our Head of Biddable Media, Ben Lipscombe, for all the facts and answers to your Google Shopping price-undercutting problems…
Why Price Undercutting is a Problem
The reason resellers start to discount your product price often comes down to a lack of awareness around the agreements put in place at the beginning of your partnership, and the lack of restrictions placed on them.
With no restrictions in place, your resellers can sell your products for a lower price than you are selling them.
By the time you realise it is a problem, it’s often too late. And when this happens, you’ll have very little room to negotiate because the agreement is already in place – without restrictions on any price undercutting.
This can then limit the potential you have to drive sales on your own site. And it’s hard to then backtrack on an agreed-upon process when things aren’t going right.
It can put a strain on relationships and cause discontent, so you need to be clear on this when you enter into a new reseller relationship and avoid undercutting yourself from the onset by not thinking about your PPC and Google Shopping channels.
You don’t really want to get beaten on price on Google Shopping. It’s essentially a product with a list of prices next to it.
Having a great brand and strong website won’t matter if someone else can get exactly the same product for cheaper elsewhere. But if everything was selling at the same price then brand would matter and would drive more traffic to a retailer’s own website.
And you definitely don’t want to end up in the position where you’re looking at how to expand and grow, only to then find out that you can’t because your own resellers are selling your products cheaper than you can.
Because you’ll only have yourself to blame for not putting pricing boundaries in place at the start.
Solving your Google Shopping Pricing Differences
Google have recognised the issue and they’re planning on bringing out a set of analytical tools later this year that’ll help you pinpoint pricing differences across your product feed and any products that are being undercut by resellers, and competitors.
This will help you identify any future hurdles ahead of time, and also leaves you room to focus on the areas where you don’t have so much of an issue right now.
By having a pricing strategy in place when you first negotiate with your resellers, you can make sure that you leave yourself with the option to sell online through your own site via Google Shopping, and you don’t shoot yourself in the foot by not regulating your resellers’ Google Shopping pricing strategy in the beginning.
For most cases, there’ll already be contracts that exist with no mention of Google Shopping pricing restrictions. So, it’s a case of having a careful discussion with your resellers to reach a compromise without any party feeling hard done-by. This is why it’s so important to consider your reseller and partner Shopping agreements pre-emptively.
And always remember that Shopping is a price-led channel, no matter how big your brand is.
Even if you are a massive brand, if some unheard-of company undercuts you, that will still leave a massive financial dent. Brand size almost goes out the window when it comes to Google Shopping.
If you’re already in the position where you’ve got a contract in place but no pricing restrictions, get in touch for advice on how to manage the problem with a sensitive approach that’ll help keep all parties happy. Our track record in helping brands rely less on their resellers through Google Shopping means that we can also help with pre-emptive conversations.