In e-commerce paid search, we know that two important aspects of online marketing are to build well-structured campaigns with relevant keywords and good ad copy. The account needs to have the right bid strategies and negative keywords to improve relevance. Even if all these things are done correctly, there are many other factors that can have a negative impact on performance.
The landing page experience is a major one. Other factors that impact performance are prices, shipping costs, and competition. Below are a few of the challenges some of our clients face.
1. Prices that are too high
Are your prices too high? Can your products be purchased somewhere else for a lower price? If so, it may be time to rethink your pricing structure. It might be possible to reduce your profit margins but still increase your revenue: over 82% of Amazon purchasers say that price is an important factor.
How do your prices compare to your competitors? Google’s price competitiveness tool can be a helpful tool to ensure your prices are not above benchmark prices in shopping. For example, one client increased their prices but then realized that their prices were above the market benchmark price – which may have put off potential buyers.
Tip: Log into Google Merchant Center > click on Growth > and Price Competitiveness. You may be required to enable these insights in order to see this data.
There was a 13% decrease in the ecommerce rate and a 19% decrease in revenue in the period following this price increase.
You can also search for your products and review the competitors that show alongside you in shopping on Google. For example, there is a pretty big difference in prices on the phones below, some offer free shipping and others do not, and some appear to be phone plans vs. buying the phone outright.
2. Competing with Amazon
Amazon is a dominant force in the marketplace, and no other company comes close to meeting its sales performance:
- $368B sales reported in 2020
- 1 out of 3 households have a Prime account
- Amazon owns 49% of the US ecommerce market share
- 89% of consumers trust Amazon
The site has 1.9 million active sellers and an amazing selection of products. Sometimes its prices can be lower than buying directly from the brand. Savvy consumers know they can expect quick shipping times, and their return policy is pretty amazing. For the consumer, this eliminates a lot of risk knowing you can easily ship it back for a refund.
Some of our clients utilize the 1P partnership with Amazon. This route makes it difficult for a merchant to control their products and prices. Plus, Amazon will sell the product under the brand’s umbrella. One of our clients uses this service, and Amazon turns around and prices the products 30-37% lower than the prices on the brand’s website. This option may be worth it to many businesses, but this may impact the product sales performance on the website as although some consumers may prefer to go directly to the brand, many are seeking the best price.
One way this might benefit a company is if there was a differentiating factor between the products available on your website or Amazon. For example, sending Amazon all your older products and keeping the current or most popular on your website. Keep in mind that Amazon often lists many other competing products and it is a good idea to compare prices for similar products. Another option might be to use an agency to directly advertise your products on Amazon. This way you can get your products in front of Amazon searchers and control your prices. This will ensure your prices are consistent between the platform and your website.
Let’s look at this example of buying Clarks sandals. On the manufacturer’s website they show the price at $55, and a 25% off discount brings the price to $41.25 (normally they do not offer discounts on these shoes).
They also offer free shipping, which is a factor in a consumer’s decision. According to BigCommerce, high shipping costs are a #1 reason for shoppers to abandon their carts. To checkout on Clarks’ website requires extra steps as a guest – creating an account, or logging into an existing account.
Many consumers check Amazon before purchasing items… even if they are standing inside the store looking at the product! In this case, Amazon is slightly cheaper at $38.99, and offers free returns. You would only save $2.26 buying through Amazon, but who doesn’t want to save a few bucks? Plus, it’s quicker to buy through Amazon if you already have an account. You also have to consider the shipping prices and expected delivery dates that will play a factor in the consumer’s decision too.
So, pay close attention to the prices of similar products on Amazon to determine how they align with the prices on your website. You may not be looking at prices closely, but customers frequently check prices on Amazon before they make a purchase.
3. Attribution and tracking Issues
Tracking issues come up all the time when measuring paid search performance. In one account, we spent the longest time trying to figure out why performance was so poor for Non-Brand activity after they moved to a new website platform. The reporting was showing some conversions, but the numbers were extremely low. Around 30 days later, we figured out the new website was stripping the Gclid tracking from the URLs on specific pages. This resulted in clicks and sessions not lining up, and the revenue was not being attributed to the correct source or campaigns.
On another website, someone excluded the WWW version of their domain in Google Analytics (they might have believed it would attribute revenue to the non-WWW version of the domain). It seemed to confuse Analytics, and once we removed this domain as an exclusion, paid search revenue improved by 185%.
One reason you might want to exclude a domain is when you are dealing with cross-domain tracking. However, if you see self-referrals reporting there may be a deeper issue on the website or tagging. Excluding your own domain can cause traffic to be attributed as direct traffic.
Adding your domain to the referral exclusion list will appear to get rid of self-referrals caused by untagged landing pages. However, in this case, the referral exclusion list will attribute traffic from your own domain as direct traffic. The correct attribution is still missing. Since some direct traffic is normal for most websites, it also becomes difficult to distinguish between direct traffic and lost attribution. Again, the solution is to tag your landing pages. (source: Google)
It is always a good idea to periodically check your tracking to make sure data is recording as intended.
4. Suboptimal Shipping Prices and Shipping Time
Another important topic is shipping prices. Customers do not necessarily expect free shipping, but they actively seek it out. This is probably one of the biggest reasons consumers shop on Amazon, because shipping is free on Amazon with Prime accounts. Sometimes sellers roll shipping prices into their products, but even the perception of free shipping is a compelling driver of sales.
For example, here is a brand that had high shipping prices which were definitely killing their sales. One product price was $618, and the shipping price was $399.90. After factoring in taxes, the price jumped to over $1000!
Another location showed the shipping price at $419, which brought the price closer to $1100. Due to these shipping prices, potential buyers may reconsider purchasing.
My analysis showed, most consumers were willing to purchase when the price was less than $200 to ship. Only 12% were willing to pay shipping prices over $399. Only 1% were willing to pay shipping prices over $400. Once this was brought to their attention, they decided to set flat shipping rates instead.
Another brand had a notice on the product page showing a 6-8 week wait for building & shipping orders. Our CRO team ran a test showing the notice to only half of website visitors. When the “delayed shipping” message was removed from the page, the conversion rate improved by 46%, and revenue increased by 66%. This test proved delayed shipping messages have a negative impact on conversion performance and revenue.
It may be worth it to test out free shipping or offer free shipping on purchases over a certain value. Overall revenue may increase significantly by testing out these options.
Closing Thoughts
So, even if you are doing all the right things to optimize your ad accounts, there are other factors that can negatively impact conversion performance. You could try investing more money to drive more traffic to your site to increase revenue, but a better option is to identify any issues and fix them to improve your conversion rate. Plus, this will improve revenue across all sources!
