What the Best Shops Do Best

Raise your hand if you've ever lost a million dollars. Okay, three hands. I thought I'd be the only one. Do you still want to hear the story?

Here's how I lost a million dollars. In 2019 I was at a company called G2, happy, with big responsibility and a VP title. In 2020 I got one of those offers you can't refuse, to come to Shopify and lead SEO as part of the growth team. I took it, and I was one of maybe 10,000 people Shopify hired during the pandemic, because we thought nobody would set foot in a store again. Fast forward to 2021 and our numbers started to look not so hot. Fast forward again to 2022 and the company did a 20% layoff, including me, and that's how I lost about a million dollars in stock compensation. Painful. You can see my time at Shopify in this chart: a steep climb, which was fun, then a steep fall, which was not. This is actually the total share of ecommerce out of US retail over time.

I'm still bullish on ecommerce, the pie is growing. But there are four key challenges merchants face, and I call them the four winds, because I come from north, south, west, and east. One, Google is turning from a search engine into an ecommerce marketplace, at least for shopping. Two, channels are getting more expensive. Three, AI is disrupting everything. Four, what I call the third wave.

Google becomes a marketplace

Google never really caught up to Amazon as the place people start their purchase journey. Meanwhile Amazon's ad revenue is growing rapidly, almost $50 billion in 2023, more than YouTube, about 26% of Google search's ad revenue, and growing faster than anyone, faster than Meta.

There's also a big shift in the results as social networks gain visibility over ecommerce. This is from my SEO Site Index, where I monitor over 170 domains to understand how verticals and the SEO landscape are shifting. Ecommerce is losing visibility while social networks grow, largely thanks to Reddit, which gained an ungodly amount of traffic after Google's Hidden Gems update and is now roughly level with Amazon in organic traffic, which is unprecedented. Google is also rewarding brands, sending more traffic directly to them instead of the middlemen, to improve its margins.

Two features took Google from search engine to marketplace. First, product filters, prominent on desktop, which make it look a lot more like Amazon. Second, direct checkout. You can't fully check out on Google yet, but merchants can use "buy on Google" to send clicks from search straight to their own checkout, which is almost a direct checkout. Those were the missing ingredients.

Channels get more expensive

On the paid side, merchants have a choice of about 15 ad platforms, which isn't many, so it's getting crowded. Search ad revenue is driven by retail at over 50%, more than half of every dollar in search ads. At the same time, higher inflation and rising costs have changed consumer behavior: people buy later, buy fewer products, and buy at lower prices, which we call trading down. In the last Black Friday and Cyber Monday, Amazon ad spend was up 30% while CPCs rose 18% and ROAS, your return on ad spend, fell 8% and 5%. You pay more to get less, and that trend holds over time: CPCs rise every year in shopping while average order value tanks.

AI disruption

SGE, the "nuclear option" for SEO, is a bomb I think Google only drops if it has to. More realistic is that Google lobs little cluster grenades into the live search ecosystem, and one is landing in shopping. Google is pairing AI with its shopping graph, a database of over 35 billion data points, one of the most important being third-party reviews. Google doesn't just know the brand, product, size, and price, it knows reviews, and it's pairing that with AI to do things like project products onto models so you can see what an item looks like on a real person. It can suggest near-identical versions of a product at different price points, and it learns your style as more data is labeled, to personalize your shopping results.

It's not just Google. Other platforms use what I call AI efficiencies to improve features. Amazon summarizes reviews and the key valued features so you don't have to sift through them, a competitive advantage. eBay lets you create a listing by taking a photo, and Amazon can now build a whole listing from just a URL, doubling down on their advantages. That matters because Amazon already makes around $140 billion from third-party merchants, so it's essentially a third-party marketplace.

The Chinese third wave

Merchants face big competition from China. The first wave was made in China, the second was shipped from China, and the third is sold by China. The biggest culprits are Shein, TikTok, and Temu. They're not as big as Amazon yet, but they're growing fast, and over 50% of Amazon's third-party merchants are already from China, low-price products creating a lot of competition. Temu is on a spending spree, already on par with Walmart in ad impressions and ahead of Target, spending about $1.7 billion last year to buy into the market at all costs. Shein isn't really fast fashion anymore, it's real-time fashion: they hold far less inventory, release far more products, and use AI to monitor your behavior and create new products almost in real time.

What the best shops do: cut the fat

So how do you thrive here? First, lose fat. Cut low-quality pages so you can show your six-pack to Google and focus on high-quality pages. I call it SEO Ozempic. In example after example, the blue line is the number of pages and the white line is organic traffic: as pages go up, traffic usually goes down, and vice versa. That's not to say more pages are always bad, but if you don't have a strong grip on the quality of what you add, you'll have a problem. Adidas shows the reverse: pages drop and organic traffic rises. Fewer pages alone doesn't automatically win, the point is stripping the fat. This isn't just an ecommerce thing, a SaaS company, Riverside, with high-quality content had a technical issue that skyrocketed its indexed pages, and Google cut its organic traffic.

Faceted indexing

Second, home in on faceted indexing. Google shows a lot more shopping filters, about 11% of desktop queries now, and growing. Nike does this well by progressively indexing facets: basketball shoes, then men's basketball shoes, then blue men's basketball shoes. That lets them match the facets Google shows with their own, raising their chance of ranking. As they index more facets, organic traffic follows.

The Merchant Center

Third, there's a new plant in the garden to tend: the Google Merchant Center. As more keywords show product carousels, over 40% of shopping queries already show popular products or carousels, there's a new playing field with new rules. These carousels usually show in positions 1 to 3, so SEOs need to be on top of them. Merchant Center optimization has many factors, but it reminds me of the classic four Ps of marketing: place, product, promotion, and price. Many decisions that help you rank are made at the product level: how expensive is it, how fast can you ship, can you offer free shipping or 60-day free returns. There's lots of testing on the paid side but almost none on the organic side, so find a scrappy way to A/B test the feed you send to the Merchant Center, because thumbnails and titles have a massive impact on rank. For thumbnails, stage the product and ideally show it in action, but not so much that you can't recognize it. Study what the carousel looks like and figure out how to stand out, maybe a more colorful background or product version. This matters more as over 60% of shopping queries show image carousels, with a direct purchase path through them, and the mix varies by vertical, the beds category shows far more images than average.

Interweave content and commerce

Fish with several lines: combine product and category page optimization with content. Purple and Nike do this well, growing editorial content and pairing it with product landing pages. Reading these charts, the lower you are the better you rank, and the further right, the more words on the page. Purple ranks better than everyone with fewer words, a high degree of insight per word. They structure content simply and digestibly, with callouts at the top of blog articles that answer likely questions directly, tables that lend themselves to featured snippets, and custom graphics that visualize data and decisions. Those quiz-like graphics improve the experience and draw organic backlinks, and quizzes themselves are conversion accelerators, so send people into a quiz and link to it as much as you can. Nike interweaves content and commerce too, with a carousel at the bottom of category pages linking to helpful blog content, and product carousels inside that blog content.

Third-party reviews

Last, third-party reviews act as a beacon of quality for users and feed Google's shopping graph. You can do basic things like driving reviews from NPS surveys: if someone scores above seven, ask them to leave a review, or email them after purchase. Here's Stitch Fix emailing me after I ordered. Smart of them.

Wrapping up

The thriving merchants optimize product and category pages for both classic search and the new marketplace on Google, strip the fat, build muscle, show their six-pack, and drive third-party reviews. Last year I worked with a company called Fast Growing Trees, I had no idea you could make so many millions with plants, but here we are, and we got tremendous results because they followed these principles. It worked for them, and I believe it can work for you if you're willing to take a chance. Thank you.