Many consumers begin their online holiday shopping with a simple Google search. But doing so can mean you end up paying far more than you should.
An investigation by the Financial Times shows that the items featured in Google’s sponsored “product showcases” are routinely overpriced. As a result, shoppers who follow the leads provided by Google’s search service could be paying 34% more than necessary, on average.
When a shopper does a Google search for a product, the results are often topped with a roundup of items, including photos of the goods and links to sites where they can be purchased. The word “Sponsored” is featured in small type at the top of this product showcase box, and when you click on the “i” (for information) to learn more, an explanation is given about how and why these items wound up in the results:
“Based on your search query, we think you are trying to find a product. Clicking in this box will show you results from providers who can fulfill your request. Google may be compensated by some of these providers.”
In other words, they’re ads, and Google is likely paid each time a user clicks on a sponsored link. What’s not mentioned in this information box, however, is that shoppers who choose the most expedient route and click on one of the links are likely to encounter prices that are much higher than they’d find elsewhere on the web. FT researchers found that five out of six items displayed in Google’s sponsored results cost more than the exact same items purchased via different merchants—ones that are not necessarily advertising with Google, but which generally can be found further down on the list of a Google search’s results. Consumers who click on Google’s showcase products and make a purchase will be paying an average premium of 34% compared to the lowest price available for online shoppers, the FT analysis found.
The FT study gives credence to the idea that search results can sometimes be “customized” in the best interest of retailers and advertisers, not the consumer doing the shopping. A while back, word spread that the travel site Orbitz showed higher-priced hotels to anyone browsing for lodging on a Mac computer. Other investigations found that retailers such as Staples priced items higher on their websites when it was determined that the online shopper was an especially far drive away from a competing store (i.e. OfficeMax).
In all of these cases, the moral is an age-old one that consumers need to be reminded of yet again: You better shop around.
Be mindful that when searching for goods online, the first results are often not the best results. The e-retail world is highly competitive, and the presence of price-matching policies from retailers and price-tracking apps makes it easier than ever to compare prices and secure the best deals. But you’ve got to do a little work to avoid overpaying. You can’t simply click and buy the first tempting thing that pops up.
UPDATE: A Google spokesperson released a statement explaining further how and why it features certain items in its product listings:
“Just as people consider multiple factors when they shop, like free shipping or whether they prefer a particular retailer, there are a variety of factors that impact which Product Listing Ads are shown. In addition to price, we consider many factors like relevance, merchant ratings, advertiser bid, whether others have historically clicked on the ad, and conversion rates. Within Google Shopping, people can also browse items from other retailers and sort by price.”