Google to Add Local Inventory to Products

Buried in the announcements coming out of the Google Search “Evolution” event that happened yesterday was one about local product inventory coming to Google Product Search (online and in mobile). Because there were bigger and sexier announcements most of the coverage has neglected this little detail, which Engineering VP Vic Gundotra said would happen next year. 

Google Product Search (formerly Froogle) has been a kind of “sleeping giant” in online shopping for quite some time. But the company has largely failed to take advantage of its opportunity and provided a very lackluster product. Indeed it created a big opening for Bing, which sees shopping as one of the “four strategic verticals” (Local, Shopping, Travel, Health).

More recently, however, Google has been upgrading the product search experience and added a range of improvements and new features. Some might argue this is all a response to Bing. But they have been a longer time in coming, though perhaps accelerated by Microsoft’s competitive moves. 

Among the recent Google Product Search upgrades is “nearby stores,” which shows physical store locations rather than product inventory. But that’s about to change according to the largely unnoticed zinger from Gundotra. 

I don’t know who Google is working with or whether they’re doing it on their own; but the addition of product inventory information (both online and in mobile) is potentially a major development. We’ll have to see what shows up. 

Google doesn’t make any money off paid inclusion or clicks within results; it monetizes the traffic by placing relevant ads around results. It also obviously shows product ads on Google.com SERPs. 

Most of the big shopping engines (save one or two) are doing search arbitrage or trying to use SEO to get traffic — essentially because they have no brands and limited consumer awareness — that they then resell as highly qualified. As you know most people do pricing and reviews lookups (research) online and then buy in local stores. The online buying is dominated by familiar brands, multi-channel retailers (e.g., Target) and most notably Amazon. The no-name etailers and shopping engines see traffic and clicks but fewer actual “conversions” for the aforementioned reasons. Even eBay is under increasing pressure and is struggling to boost traffic and growth. 

Source: Hitwise, November 2009

So what happens if Google does a good job with local inventory information? (which has literally been on the company’s radar for 5 years or more). As an aside, the reason local inventory data wasn’t added at Google before is because of a lack of scale. This soft announcement yesterday suggests that Google now has a way to do it at scale or at least has revised its expectations in the near term. 

If what shows up at Google Product Search in the form of local inventory data is prominent and effective it may put Google Product Search in the top tier of online shopping experiences and spell bad news for the Shopping.com’s of the world (owned by eBay). Companies like Krillion would be in a strong position — they’re already talking to everyone — because local inventory information would start to become a “defensive” necessity. Milo, as well, would/will see many BD calls and/or suitors come knocking. NearbyNow has this data but has changed its model to focus on mobile app development for magazine publishers. ShopLocal also has a version of local inventory information in its circular data. 

Another reason that Google would be in a strong position is because of its mobile assets. Among the major e-commerce players and shopping engines, Amazon offers the most complete mobile experience. It has terrific iPhone and Android apps (Amazon Remembers/SnapTell). Shopping.com also has a nice site. But the larger point is that the PC-mobile shopping crossover will get stronger and stronger. And increasingly “online shopping” will feature the following scenario: I’m standing in front of a product in a store with my smartphone. Here’s what I’ll want to see:

• Pricing information
• Reviews
• Discounts/sales information
• Other, comparable products
• Where else might I buy it in my area

The addition of local inventory data combined with Google’s ability to refer traffic to itself (think Maps) could become highly “disruptive” for many online shopping players — provided that Google continues to improve its online shopping experience and leverages its PC–>mobile advantages.