In the early 1980's Walmart famously introduced barcode scanners in their stores to speed up the checkout process. Back then only 45% of their most successful products carried UPC codes. After successful tests with this new technology Walmart leveraged their market clout to require all their distributors and suppliers to supply UPC codes with their products. Before long everyone who touched the Walmart ecosystem including their competitors had adopted UPC codes and we entered an era when the strategic use of data could become a competitive advantage.
Now Google is poised to press the case to retailers that the maintenance of clean UPC data brings returns far beyond the back office of their POS system. For ecommerce retailers seeking a share of the traffic coming from Google's free shopping searches the UPC code became a required submission starting in May this year. Google is motivated by an ambitious project to link merchants' products to a single product page that includes a prominent image and description, retailer listings, a map in support of local searches, and more.
One of the challenges with gaining search engine placement for a wine store is the constant turnover of inventory. Securing page rank on Google's organic search results favors pages that are always available, whereas retailer's SKUs tend to come and go as stock turns over. The solution to this is the shopping feed which gives Google a regular update of available items in a predefined format.
As we've discussed before the adoption of UPC codes in the liquor industry has been problematic, although there are signs that big box stores and restaurant chains are making the case for electronic data interchange (EDI). Retailers have direct access to the UPC code and use it all day long at the register. However, it turns out stores have adopted practices to accommodate ancient scanners or POS systems by only loading the central 10 digits of the 12 digit code. It has been surprising to realize how prevalent this practice is, even distributors who have been collecting UPC codes have a majority of 10 digit codes. All of a sudden 10 digits are insufficient, as Google is validating UPC codes by verifying the 12th check digit to confirm the code is complete. Starting in June invalid or missing UPC codes could be dropped from your shopping feed.
Of course UPC codes are not the only information Google requires for its shopping feed: product images, titles (not too long) and descriptions (not too short), stock, condition, tax and shipping rates are among the required fields. In order to support local searches a store must be registered with Google Places, and if you advertise with Adwords you can pull across information from your shopping feed for search engine marketing.
With prime placement going to the top search results the stakes are high for stores that compete for position. A new field of search engine optimization (SEO) has grown to meet the need for shopping feed optimization. There is something of a balancing act to having your product titles resemble how customers search for them as opposed to a thorough description of what shows on the label; think Pichon Lalande over Pichon Longueville Comtess de Lalande.
While this puts pressure on stores to maintain their POS information at a higher standard the effort involved will help those stores become more flexible for other marketing services. It is plausible too that the impact of Google's UPC requirement could trickle up to wholesalers and suppliers so that complete UPC codes become an important part of every transaction, benefitting everyone.