Several online trade industry actors are now expressing great concern about how to: Google Automated Discounts (GAD) changes the competitive landscape.
Thomas Grabe, Executive Director of Bannerhead, it describes as follows:
«‘As a customer, you will eventually learn that it is pointless to go anywhere other than to Google to get the lowest price.’»
This reinforces one of the main challenges: Loyal customers visiting a online store directly pay more than random applicants on Google. GAD thus rewards unfairness and makes customers learn that they always have to go via Google to get the best price.
Case 1: Google search on a product + landing page. Offers in shopping and on the landing page
Case 2: Google searches the same product in Lyko in incognito mode + landings page. Full price in both shopping and on the landing page
Google destroys independent price portals
Several professional actors have pointed out that: Price hunting, PriceRunner and other comparative services lose their valueSo let's say that this is the same thing as that.
- Google often shows prices that are 20-30 % lower than those reported by these services, which makes customers no longer trust them.
- The result is that Google becomes the only source of true prices, which gives them a monopoly role in online commerce.
As Thomas Grabe says:
‘No one will trust an e-commerce page, a price comparison page or any other aggregates in the future. It will only be Google that has the lowest price.’
This is a serious threat to healthy competition; because webshops are being pushed to make their full dependence on Google in order to compete.
Google is an artificial price war and punishes loyal customers
- In the cosmetic industry, it's already at least five online shops using Google Automated Discounts.
- These shops often offer: same product for 500 kr on its own website, but for 300 kr via GoogleSo let's say that this is the same thing as that.
- Only this product is cheapLike a bait.
But the problem doesn't stop there. When these stores later have a ‘sale’, write the 20% discount – before 500 kroner, now 400 kroner.
- In reality has been available for 300 kr per month via Google, but because that price has not been publicly visible at the online store, the discount is experienced as better than it really is.
- This is misleading marketing, creating false reference prices for consumers.
What do online stores say themselves?
Rickard Lyko, CEO of Lyko confirms that they use Google Automated Discounts. He believes that in the long run it may become a problem, but claims that webshops need to adapt instead of countering the systemSo let's say that this is the same thing as that.
«‘There is absolutely a risk in the long term. At the same time, it's hard to stand out. This is part of the reality, and you have to adapt."»
This illustrates where the balance of power in online commerce is now.
- Even large players like Lyko feel they have no choice – they must participate in the system, otherwise they lose competition.
- This means that smaller players without the possibility of using GAD are being pushed out of the market.
What can be done?
1. Consumer authorities and competition control must examine the practices:
- Is it in line with the Marketing Act to offer different prices to different customers without informing them?
- Is this some kind of misleading marketing or hidden price discrimination?
2. Webshops should require more transparency from Google
- How are prices set?
- Why are these discounts not reported as a promotion or premium?
Three. Consumers need to become more conscious
- Always check prices for Google before buying directly from a online store
- Use incognito mode to compare prices
- Be sceptical about ‘sales prices’ – check what the product actually cost over time
Long-term consequences
Google Automated Discounts challenge the principles of transparency and fair competition;So let's say that this is the same thing as that. If this practice is allowed to continue, it may: change the whole dynamics of online commerce – for the benefit of a few, and at the expense of many.
We hope this article will help to draw more attention to the theme and to bring the necessary actions into operation.
What's the problem?
Google Automated Discounts provides some online stores with an unfair advantage by showing lower prices only in Google Shopping.
This creates several problems:
1. Hidden price discrimination
- Customers visiting the online store directly often pay more than those coming via Google. Ironically, loyal customers pay the most, while random Google users get discounts.
2. Price portals such as Prishunt and PriceRunner become irrelevant
- These services provide consumers with an overview of prices across shops, but they capture not up prices offered via Google Automated DiscountsSo let's say that this is the same thing as that.
- In our studies we have seen that the prices in Google Shopping are often 20-30 % lower than those reported by Prishunt and PriceRunner. These platforms thus lose their function and consumers no longer get a real price overview.
Three. Google strengthens its market power – all orders start on Google
- By manipulated the prizes and lure customers into their ecosystem, Google is becoming increasingly powerful.
- If this trend continues, online shops will in future be: fully dependent on Google for sale, which gives Google a dominant role throughout the online trade market.
4. Manipulation of discount campaigns
- We have seen more examples of online shops using GAD to sell a product cheap on Google for a long time, but without recording the lower price as a campaignSo let's say that this is the same thing as that.
- Example of the cosmetic industry:
- A online store sells a product for 500 kroner on its own websiteSo let's say that this is the same thing as that.
- The same product is offered via GAD for: 300 kr on Google – but only this product is cheapLike a classic bait.
- When the store is running a ‘sale’ and setting the price to 400 kr, placed on the market: ‘20 % discount – before 500 SEK, now 400 SEK’So let's say that this is the same thing as that.
- This is misleadingBecause the item has been available for 300 kroner for a long time via Google, which undermines consumers' understanding of real price reductions.
Documented Found
Our tests have shown that large players like Lyko, Eleven, Blush and NordicFeel are actively using this method.
Some of the most important findings include:
- Prices in Google Shopping are 20-30% lower than in the online store.
- Price difference is not provided as discount or promotion, which may break the Marketing Act.
- Manipulation of pre-prices – the low-price period through Google is not recorded in discount campaigns, so that later ‘sales’ appears to be better offered than they really are
How can we demonstrate this?
To show how this practice works, you can:
- Compare prices in the online store and in Google Shopping for the same product.
- Use an incognito window in the browser to see how prices vary.
- Change the URL of the products and observe how prices are automatically adjusted.
What can be done?
Consumer authorities and competition control should examine this practice and assess whether it is lawful.
Online shops should require more transparency from Google on how prices are adjusted.
Consumers should be aware that prices may vary and always check several channels before buying.
Long-term consequences
Google Automated Discounts challenges the principles of transparency and fair competition.
If this practice is to continue, it can change the whole dynamics of online commerce — for the benefit of a few, and at the expense of many.
We hope this article will help to draw more attention to the theme and to bring the necessary actions into operation.