Top 100 Retailers and Local

According to the National Retail Federation, “the Top 100 Retailers rang up sales of $1.74 trillion last year.” And where did those sales happen? Mostly offline of course. By my count there are only three online retailers on the list: Amazon, Apple and Dell.

Here’s a list of the top ten from the larger list, which can be downloaded here.

All of the companies on the list have sites and to varying degrees do some version of online marketing. Most of their online efforts, however, are associated with e-commerce, where precious few dollars change hands relatively speaking. And the majority of these retailers aren’t properly leveraging local targeting to drive people doing product research online into local stores.

US: Q1 E-Commerce Flat

Forrester, Shop.org, comScore take note: the US Commerce Dept. says e-commerce is flat. Here’s the government’s table showing no growth from Q4 2007 to Q1 of 2008 (3.3% of total US retail):

Despite this, the Internet’s influence on consumers and shopping is growing.

While “multi-channel” consumer behavior is becoming more complex, the dominant pattern has been clearly established: shop online, buy in-store. (Also see my post on local product search.) And if you want my slides but didn’t receive them (”National brands going local”) let me know.

Finding Products in Local Stores Now

Products (and brand finders) are the next frontier in local search. Companies such as ShopLocal, Krillion, Shopatron, NearbyNow, Where2GetIt, StepUp/Intuit, Channel Intelligence and retailers themselves, among others, are building the data infrastructure that is going to turn “online shopping” on its head.

Here’s another example of the “local opportunity” (or National Brands Going Local) that I’ve spoken about recently: leading customers to the point of sale. Where2GetIt powers Columbia Sportswear’s maps and directions; it’s also showing users where they can buy Columbia’s products in their area:

One can shop online or find where products are sold locally. This isn’t real-time inventory information but it’s the next best thing.

Consider the potentially missed opportunity in the absence of this type of information. Let’s say I want to buy the Columbia sandals and I don’t know where in my area. I can buy them online but chances are I want to see the sandals first (unless I already own them and I’m just replacing them). Thinking I would find them there, I might go into a sporting goods retailer such as the Sports Authority or Sports Basement. Maybe the sandals are there and maybe not. Once at one of those stores, I might be inclined to buy another shoe because it’s in stock, I like it well enough and my time is precious. So much for the Columbia sandal: the loss of a sale and a loss for the brand.

But since Columbia is doing this I can see where to buy the shoes in my area. I call the store, hopefully confirm the inventory and ask for them to be held. I show up and buy more stuff in addition to the sandals.

I may have been prompted by a traditional ad or other stimulus to search online but eventually I’m likely to end up on the brand/OEM site. Once there, I’m directed to the point of sale in my area. And voila: from search to store.

ShopLocal Adds Listings from Localeze

ShopLocal has added Localeze’s data to its own content. According to the release:

Working with Localeze, ShopLocal.com will blend the shopping and directory experiences in comparing prices and finding local stores, all at one location.

This directory scenario has really always been a part of ShopLocal’s roadmap. And Localeze is doing a great deal directly with merchants to enhance the content it can offer to partners.

ShopLocal Distributing Ads via Yahoo!

This morning ShopLocal announced a partnership with Yahoo! that will see distribution of ShopLocal’s inventory of retailer “circular ads” across the Yahoo! network. These are all local ads because they’re tied to specific stores or retailers in particular areas:

Retailers will now be able to reach potential shoppers among Yahoo!’s 140 million monthly unique U.S. audience(1) more efficiently and with greater precision than ever before by harnessing Yahoo!’s Smart Ads technology which automatically generates customized advertising based on users’ preferences. The program is intended to supplement existing newspaper-based marketing programs for retailers by delivering other key benefits like incremental reach, cost efficiency, flexibility in regional pricing and product availability, as well as the opportunity to deliver advertising throughout the week - not just on Sundays when circulars appear most often.

Yahoo! takes ShopLocal circular content and will configure ads dynamically based on user search and behavioral data, geotargeting, demographic and contextual targeting parameters. Geotarageting will be based on user registration information, IP targeting and search data.

The ads are being assembled from different creative and text components. As they “expire,” because they’re all time-based, they’ll be pulled from the system (that’s part of the ShopLocal “secret sauce”). The ads will appear in various places throughout the Yahoo! network.

This is a big deal because of the degree of dynamic personalization being brought to the inventory for both users and retailers. It’s a validation in some sense of Yahoo!’s dynamic ad serving strategy. One would expect response rates to be much better than the >.25% that display ads typically see online. Retailers, through the Yahoo! distribution, will be getting massive reach, although the ads will be theoretically targeted to individuals.

The search component will contribute to behavioral data factored into the targeting. For example, if I perform a search on Yahoo! for “laptop computer,” I could well see a display ad for “laptops on sale” at my local Best Buy somewhere else on Yahoo! later in the day or week.

The strategy and model are also consistent with the dominant consumer use case associated with products: research online, buy offline.

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Barry Schwartz at Search Engine Land has written up a number of other Yahoo! announcements made today.

NearbyNow Raises Round, Unleashes Data

NearbyNow’s CEO Scott Dunlap a long time ago expressed to me that some of the retailers the company was working with were resistant to syndication of their inventory data. The reason was that they feared being compared side by side vs. e-commerce merchants who could undercut them on price. I always argued to Dunlap that it was the other way around: the e-commerce merchants should fear in-store inventory information because people would be inclined to buy locally.

That retailer fear has apparently been overcome because NearbyNow is about to broadly syndicate its retail inventory data, including via a coming API that will eventually enable anyone to grab it. Krillion has for the past six or so months been doing partnership deals with companies to syndicate its real-time inventory data, but now the floodgates will open.

The first partner for NearbyNow’s data is TheFind (which is also taking Krillion data). But others will very quickly follow, including major shopping engines and search providers. Eventually the API will make the company’s billion products (with a “B”) conceivably available to anyone that wants to tap it.

What’s being announced today includes an $11.75 million Series C investment and an iPhone application, which allows users to search their local mall sites for products (the company’s database now covers 200 malls). Dunlap said the iPhone app simply responds to a recognition of growing usage from iPhone owners that the company has seen and the fact that the demographics line up well between iPhone owners and NearbyNow shoppers.

NearbyNow offers a “reserve online, pick up in store” feature for any product in its database. Usually within minutes to hours (in some cases) the company can verify if a product is present on the shelf and a consumer can go pick it up in store. Shopatron offers something similar for the many hundreds of manufacturers it works with but its data aren’t yet being syndicated (but will be I suspect soon). Where2GetIt and Channel Intelligence are also in this space. So is ShopLocal.

NearbyNow’s free API will eventually enable any mobile publisher, shopping site, vertical site, search engine, mashup builder (think products on a map) to show users where they can buy things in local stores. The missing piece in NearbyNow’s model has always been a more logical distribution strategy. The company built and hosted shopping mall sites. Scott Dunlap has always said, however, working with mall owners has been the most expeditious way to get the data. Now that the company has got it, it has created something of immense value.

NearbyNow takes a negotiated fee each time a consumer “reserves” something for in-store pickup. It’s essentially a CPA model. Third parties showing NearbyNow data on their sites would get a piece of that fee.

As I argued yesterday, product-related e-commerce (buying online from a pure-play etailer) is an endangered species. Only sites with strong brands (e.g., Amazon, eBay) will be able to withstand the onslaught of local inventory data as it proliferates. Indeed, product-related e-commerce becomes a back up to local shopping, when items are out of stock or have to be shipped as gifts, etc. On some occasions people will buy online because they’re forced to (think Dell) or because of a better price on a branded item (e.g., digital camera).

Every shopping engine that doesn’t have this local store data will suffer at the hands of those that do. The significance of this and its potential impact on online shopping (and by extension mobile) cannot be overstated.

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I’ve always thought that products are a compelling addition to local search sites and that services and products have been artificially separated when it comes to local. Inventory data syndication will mean that more “local search” sites will be able to include product information if they so choose.

Pew Report Questions Internet’s Influence

In May, 2007 report, the Pew Internet & American Life Project issued a report entitled “A Typology of Information and Communication Technology Users.” It organized Americans into various categories and subcategories by engagement with technology. One of the striking findings was the following: “49% of Americans only occasionally use modern gadgetry and many others bristle at electronic connectivity.”

A similar finding was just issued by Parks & Associates in a report on US technology usage:

Roughly one-fifth of all U.S. heads-of-household have never used e-mail, according to National Technology Scan, a forthcoming study from Parks Associates. This annual phone survey of U.S. households found 20 million households are without Internet access, approximately 18% of all U.S. households.

These findings suggest that there is a chasm between the technology reliant and those who are disengaged from technology. For those of us whose jobs are tied to the Internet (probably everyone reading this) it’s hard to imagine 20% of US adults (assuming the accuracy of the extrapolation) have never used email.

But in a new report (on shopping) out yesterday, Pew questions the primacy of the Internet’s impact on purchase decisions: “Even though many buyers use the Internet in product research, relatively few say online information had a major impact on the product choice they eventually made.” The survey focused on music, cell phones and real estate purchases. The conclusions of the report are nuanced but generally fly in the face of a good many earlier studies that cite the growing influence of the Internet on consumer purchase behavior. Here are the top-line data from the Pew survey (n=2,271):

For those who have bought music in the prior year:

• 83% say they find out about music from the radio, the television, or in a movie.
• 64% say they find out about music from friends, family members, or co-workers.
• 56% say they find out about music through various online tools, such as going to a band’s or artist’s website or streaming samples of songs to their computers.

Among those who have purchased a cell phone in the prior year:

• 59% asked an expert or salesperson for advice.
• 46% go to one or more cell phone stores.
• 39% use the Internet.

For those who have rented or bought new housing in the prior year:

• 49% use the Internet.
• 49% look through ads in the newspaper.
• 47% ask a real estate agent for advice.

The “bottom line” conclusion is the following: “Even though many buyers use the Internet in product research, relatively few say online information had a major impact on the product choice they eventually made. Only 7% of music buyers, 10% of cell phone buyers, and 11% of those who bought or rented a home in the prior year say that online information had a major impact on their decision.”

How do we explain the discrepancy between these survey data and those that have have come before (from BIGResearch, Yahoo, comScore, etc.)? Here are a few thoughts:

• The Pew methodology uses telephone surveys (landline and cell), which are going to capture a broader range of respondents than online surveys to some degree. Online surveys tend to magnify the influence of the Internet by their very nature. You may also get a higher representation of technology resisters and non-adopters among the landline respondents in a telephone survey. But this is conjecture on my part.
• The focus on “major impact” may necessarily diminish the perceived influence of the Internet.

My takeaway from these data and the data I cite at the top of this post is that we’re living in a very fragmented media world, where no individual medium holds sway over consumers. In addition, to reach target audiences marketers have to really understand those audiences and their media consumption patterns much more today than ever. Some audiences will rely on the Internet more heavily and some on traditional media sources. To some degree that reliance will depend on economic, educational, geographic and ethnic variables.

Local Stores Caused Me to Buy a Mac

This past week I bought a Mac. Way back in the old days (a decade ago) I was a Mac user. My wife has been loyal to Apple all along and now has a 24 inch iMac. But in my world, first as a lawyer and later in other professional incarnations, a Mac was incompatible with colleagues’ machines and inconvenient. When I left Kelsey in April of 2006 I decided to buy a Toshiba laptop after a fair amount of online research. The model I got was well reviewed and reasonably priced. In the end it turned out to be a mediocre gray box.

The trackpad failed after about a year. And three months ago I got a virus (despite anti-virus software that compromised the machine’s performance). That was a horrible episode, which mortally wounded the computer. I managed finally to extricate the machine from the grip of the virus but then other things started happening. Finally, the machine started spontaneously quitting on me last week.

I literally use my computer 24/7 so there was no time to go out and find someone to diagnose and potentially fix it. It was pointless also to try and contact the manufacturer. (I know from experience.) I was assuming the need for a new hard drive, etc. and a couple hundred dollars at least in repair costs. I also expected that I would also have to replace the machine soon anyway even if it could be repaired. So I cut to the chase, so to speak, and decided simply to replace the machine.

Several friends were somewhat relentlessly lobbying for me to get a Mac. I was open to that but also assuming I would buy a new PC. My thoughts were divided between buying a higher end machine that was presumably more reliable or a cheap PC that I wouldn’t really care about and would last a couple of years: sort of a “beater” to invoke a used car analogy. I decided on the latter category. I fixed my gaze on well-reviewed, but inexpensive boxes from Lenovo and Dell. My conclusion was that it makes no sense to spend more than $2K on a PC because they need to be replaced every two years.

But here’s the rub: neither machine was available immediately. There was no store I could go to to buy either computer. I had to buy them online; and the earliest I could expect to get them was “3 to 5 business days.” That means about a week in reality. I couldn’t wait that long.

Enter the Apple store.

Here’s where the personal story dovetails with my analyst coverage. The Mac’s reputation for quality, the availability of local techs (in store) to service the machine, but especially the fact that I could walk in and buy it today, all trumped the PC’s lower price. Also the fact that there are several ways now to run Windows on a Mac (Parallels, Boot Camp, Fusion) removed the final barrier for me. In addition, I had familiarized myself with the various models up close, by visiting the Apple store many times in the past couple years. The “feel” of the keyboard on the Macbook was especially appealing to me. That’s not something I could have readily experienced but for the Apple stores.

Honestly, had there been local stores where I could have purchased the Lenovo or Dell models I identified I probably would have bought one of them. But there weren’t so once again I’m a Mac user.

Stepping back, my process exemplified consumer purchase behavior at large:

• I did lots of online research, reading reviews at “trusted” vertical sites like PC World and CNET.
• I used search engines to search on “generic” phrases like “Best PCs for under $1000″ and “top rated laptops.”
• I searched on brands and branded models to compare prices.
• I went to shopping engines to look at prices.
• I also visited manufacturer websites.

This is what consumers do now as a matter of routine:

Source: Etailing Group/Krillion, 2008

In the end, I bought the machine at a local store because I could get it today and didn’t have to wait. I also had recourse locally to the Apple store, if the machine had a problem or needed service in the future.

Other than in the Travel category, product-related e-commerce in its original form (buying online from a no-name etailer) is an endangered species. Exceptions include trusted sites such as eBay and Amazon and the emerging trend “buy/reserve online and pick up in store.” But the coming, mass syndication of local inventory data will put immense pressure on pure-play, non-branded etailers and e-commerce only shopping engines.

Indeed, e-commerce is dying. Long live Internet-enabled offline commerce.

Major Computer Issues Limit Posting

I’m having major computer issues for the last 24 hours which has inhibited my posting. (My PC is just quitting on me, as well as being slow.) I’m now faced with whether to get another PC or buy a Mac.

One of the issues is that I need another machine now and both of the PCs that I decided were worthy and at the price I wanted to pay are only available online and “in 3-5 business days.” That’s a major inhibitor for me.

It’s not even that I don’t want to pay shipping, I just need the machine today. So that probably means I’ll buy a Mac from the Apple store.

Eating my own online-offline dog food . . .

Study: Traditional Media Drive Search

A study by Google intended to showcase the value of its Google Print offering to advertisers (written up in Marketing Charts and MarketingVox) shows that newspapers remain very much relevant to this Marketing 2.0 world. Newspapers (and other traditional media) drive online activity. Here are some of the top-level findings based on an October, 2007 survey:

• 42% reported that in the last month they had purchased at least one product they saw in the newspaper
• 44% reported that in the last month they had researched at least one product they saw in the newspaper (with some overlap between the groups)
• Overall, 56% had either purchased or researched at least one product they saw in the newspaper in the last month
• Where did that 44% of readers do their research? 67% of people who did research after seeing a newspaper ad did it online.
• Overall, nearly 30% of Internet-using newspaper readers went online to research at least one product that they saw in the newspaper (on average, they researched nine).

What medium did you use to conduct the research which resulted from seeing a newspaper ad?

Source: Clark, Martire & Bartolomeo, Inc. (n=441 US adults who perform a search with a search engine at least once a month)

These data are consistent with findings in the recent BabyCenter research I discussed, where WOM (online and off) was frequently stimulated by traditional media.

The following diagram is from slides I presented at Idearc recently, trying to convey that integrated marketing is now required in a more complex and fragmented consumer environment. Accordingly traditional media remains very relevant.

The newspaper research above and other research show that consumers are often stimulated by WOM or traditional media and then search or otherwise conduct online research to learn more. They eventually buy locally. This behavior is what everybody needs to consider and understand in their marketing efforts. And it’s why local is so important.

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Related: Gannett is developing a single platform (One Gannett) for agencies and media buyers across media types: newspapers, digital outdoor (Captivate) and TV. Google is doing the same and a little-known company called Live Holdings (LiveAdMarket) has already gone fartherst of anyone in this “multi-platform” direction.

E-Commerce Growth: Half Empty, Half Full?

So . . . Forrester and Shop.org came out with their predictions about e-commerce growth for this year. According to an AP story appearing in the NY Times:

Online spending is expected to rise a robust 17 percent this year, despite a sluggish economy that has bruised many brick-based retailers, according to an annual survey to be released Tuesday.

Retail sales online, excluding travel purchases, are set to grow to $204 billion in 2008 from $174.5 billion last year, fueled by sales of apparel, computers and autos, according to a survey conducted by Internet analysis firm Forrester Research for Shop.org, the online arm of the National Retail Federation trade group. That projection is below the 21 percent increase seen in the prior year, but industry officials attribute it to the maturing of the business, not the sluggish economy.

Seventeen percent growth is good and the overall number is a big number, $200 billion (10x of online ad spending), but this is hardly the rocket it was once expected to be. The “half full” spin is: this is good in a bad economy, the “bright spot in retailing” as the article labeled it. Perhaps.

But it’s also a flattening line, compared with the growth of Internet-influenced offline shopping and spending. E-commerce has very few brands (putting aside online sites for major traditional retailers). There’s Amazon, eBay and basically nobody else. (Some geeks might argue New Egg).

Shopping sites are largely “generic” and undifferentiated. True e-tailers with a few exceptions are interchanable and thus vulnerable. And “e-commerce” for major retailers is increasingly about “buy (soon to be reserve) online, pick up in store.”

Local Inventory Data Gaining Momentum

In my Locals Only column at Search Engine Land today I unpack the recent Krillion-E-Tailing Group study on Web2Store consumer behavior in a bit more detail:

The expressed purpose of the study, completed in February, 2008, was to “better understand the mindset of consumers who research online products that lend themselves to purchase at a local store.” One thousand consumers participated in the study; half were male and half were female US adults. All spend at least $500 online annually and said that they made online purchases at least four times per year. So this was a group of self-professed online buyers.

Overall the study found that these consumers spent large amounts of time researching products online, using a range of information sources (including search engines), then typically buy in local stores. In addition the survey found that “as the complexity of the product increases, consumers are more likely to research online/offline and then complete their purchase at a local store.”

Read more…

Revealing Online-Offline Shopping Patterns

Despite the growing body of evidence that the dominant consumer paradigm is online shopping-offline spending many people (including some analysts) still don’t connect the dots. They continue discuss e-commerce as a silo as though they were oblivious to what’s happening in the real world. A new study from shopping site Krillion and the E-Tailing Group makes that e-commerce-centric view harder to maintain.

Here are the details on the study, just out this morning:

• Survey completed February 2008
• 1,000 consumers; 50% male, 50% female
• Spend at least $500 online annually
• Purchase online at least 4x per year

The study highlights the role of Internet information resources, the retailer channel, and web-to-store convenience options offered online—such as in-store pickup and inventory availability—in shaping consumer purchase decisions.

The findings are actually fairly nuanced and reflect increasingly complex and informed online consumer purchase behavior. The study also presents considerable actionable information for product manufactures and retailers about critical website features and content, as well gender differences in behavior and shopping lead times. There’s a lot there so it’s a bit unfair for me to characterize it as purely confirming the ROBO (as Yahoo! calls it) phenomenon.

I won’t summarize all the findings (ppt slides here). However there are a few points from the survey I want to emphasize.

The most important online product resources were (in order of importance):

1. Manufacturer websites
2. Retailer websites
3. Search engines
4. Shopping comparison sites
5. Consumer magazines online
6. Portals and other directories
7. Blogs

Given the general importance of online reviews, it’s a bit surprising to see blogs faring so poorly.

Here are two interesting charts from the survey (both can be expanded by clicking). The first goes to essential content/features on shopping sites, with the most essential being product inventory status. The second shows (by product category) the complexity of purchase behavior today with the Internet and local stores being used by consumers in a majority of shopping scenarios:

As this second chart illustrates local store visits are involved in most of the scenarios and most purchases take place locally as well. Here are the scenarios across product categories in order of commonality:

1. A combination of store visits and online research where final purchase would be at the local store
2. Research online and buy at a local store
3. Go to a local store to research, make my final selection and purchase
4. Research online, buy online
5. A combination of store visits and online research where final purchase would be online

Stepping back, I’m not trying to argue that there is a simple, linear process where consumers do their research on the Internet and then go straight to a local retailers or big box stores to fulfill. There’s lots of complexity and “back and forth” going on now and lots of information being processed during the “purchase cycle.” In a way, the findings of this survey are a mirror of the circuitous, helter-skelter use of search by consumers in the buying process.

But it cannot be disputed that most consumers are using the Internet primarily as a research tool before making purchases in local markets. And as the “local inventory” infrastructure (buy/reserve online-pick up in store and store locators) becomes more prevalent, we should see that consumer pattern further accentuated.

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Shopping engine Become.com also offers in-store availability according to MediaPost.

TheFind Taps Krillion for Local Product Data

For some time I’ve believed that the various “local product inventory” data providers (NearbyNow, Shopatron, Where2GetIt, StepUp, Krillion) would begin to syndicate their data to more established third party sites. And when that started it would become a competitive requirement for all shopping sites that hoped to be viable over the long term.

Well, it’s started to happen. Krillion, which began as something of a quasi consumer destination and SEO service for manufacturers and large retailers has now shifted somewhat and is becoming a data provider to third parties. The first of these relationships is with TheFind.

On TheFind, a user can check a “loc” box and see inventory carried in local stores. TheFind has created this feature by crawling and matching store locations with online inventory (asking users to call stores to confirm product availability). But now users can also “check availability online” and they’re taken to a framed version of the Krillion site, which shows actual in-store availability:

This is both the future of online shopping and “ecommerce” (buy online, pick up in store). True ecommerce (buy online and ship to me) will be viable only for trusted brands/sites (e.g., Amazon and a few others) and only those no-name etailers willing to aggressively discount and/or offer free shipping all the time.

We should also see products now being integrated more into local search sites. Products and services have represented two separate silos. Now that the data are coming online rapidly and being syndicated these silos should start to break down. It’s a very interesting and exciting development.

Product Search: It’s 90%+ Local

Bill Tancer of Hitwise responds to the debate, prompted by comScore and then a UBS report, speculating that Google and search are being directly affected by the recession:

If a recession is in fact affecting search, we should see a drop in the amount of traffic going from Google to retail sites (our Shopping & Classifieds category). The following chart shows the percentage of traffic over the last three years actually increasing.

This where I leave the “is Google going down debate” and go off on my own tangent.

Ecommerce is less than 4% of US retail but the Internet is growing dramatically as an influence over offline purchases in local stores, dealerships, etc. (almost $500 billion today). When considered in the context of real-world consumer behavior — there are lots of studies that validate this proposition — it must be inferred that the majority of that shopping/classifieds search referral traffic that Bill is talking about is ultimately local.

Even though it’s hypothetically possible to fulfill these queries online via e-commerce that’s not really happening. (E-commerce growth has slowed to roughly 19%.)

Source: US Census Bureau

The local intent here is totally hidden because the queries are about products or brands and have no geo-modifiers. But the transaction ultimately takes place in a physical place in the real world in the overwhelming majority of the cases. And if the linkage between the brands/products and where to buy them locally were more pervasive and obvious we would see much more clearly that product search is part of the story of local.

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Related: Patagonia selects Where2GetIt to power a real-time inventory/product locator function:

Where 2 Get It manages multiple daily inventory management updates from Patagonia’s online retailers, providing automated inventory level reporting to ensure that search results are in line with actual product availability.

This kind of thing is going to be increasingly common. Between Shopatron, Where2GetIt and NearbyNow, much of the popular retail product database is probably already online.

Pew Finds Ambivalence about Online Shopping

The latest Pew Internet report (n=2,400) about online shopping finds that Americans increasingly are using the Internet for product research and buying things online but not without fear or ambivalence about security. Below are a few highlights; the full report is here:

• 78% of internet users either agree (53%) or agree strongly (25%) with the proposition that shopping online is convenient for them.
• Yet, 75% of internet users either agree (39%) or strongly agree (36%) with the proposition that they do not like giving out their credit card number or personal information online.

Regarding the experience of online shopping the report says the following:

• 81% of internet users have used the internet to do research about a product they are thinking about buying, with 20% doing this on the typical day.
• 43% of internet users have been frustrated by the lack of information they encounter while using the internet to find out about or buy goods or services.
• 32% have been confused by information they have found online during their shopping or research.
• 30% have felt overwhelmed by the amount of information they have found online while doing online shopping or research.

So, paradoxically, there’s both too much and not enough information for consumers. That probably goes to where they are in the mythical funnel. At the highest levels of early research (e.g., search results) there’s too much undifferentiated information. But then, closer to purchase, in verticals or directories, there’s not enough to help them make decisions. I’m of course drawing inferences here. Do you agree or disagree?

Also this was interesting from the report:

Some 24% of American adults said they had used classified ad or sites such as Craigslist in [the] September 2007 survey. This compares to 14% who said this in February 2005.

Compare this January, 2008 Nielsen data:

• 85% of the world’s online population has used the internet to make a purchase
• Most people return to shopping sites they are familiar with, with 60% saying they buy mostly from the same site.

In the US that’s mainly Amazon and eBay and branded retailer sites. Indeed, the latter point illustrates the importance and role of “trust” (read: brand) in online shopping.

Taken together all this data reflects that consumers want more specific and helpful information from sites they can trust. If they find those sites they will be loyal to them. That’s about user experience and brand.

Gatehouse and Yokel in Local Shopping Deal

Gatehouse Media, which publishes lots and lots of local newspapers, has formed an interesting and innovative partnership with local shopping provider Yokel. The deal offers local product information for consumers and advertising programs for local merchants.

Yokel has been quiet for some time, but this deal indicates the company is still alive and kicking. The press release provides an overview of the partnership and its mechanics:

Fairport-based Gatehouse Media, Inc. has partnered with Yokel, Inc., a Boston-based retail search engine provider, to create a groundbreaking new hyper-local service for shoppers and merchants.

The locally-targeted retail program will be branded as WickedLocal Shopping in GateHouse’s more than 100 Boston-based Web sites and print publications and TotallyLocal Shopping across its hundreds of other community-based properties in more than 23 states.

Shop.TotallyLocal.com and Shop.WickedLocal.com, once integrated with their respective local community Web sites, will combine to make it easy for shoppers to find specific products in stores near them and for local retailers to offer their products and services to these shoppers, online and in print.

For local merchants, The TotallyLocal solution makes it easy to create an online business profile and to market their business in town and across the Internet. Included in the service, participating retailers products will appear on leading search engines, and the most popular products that consumers search for will automatically be featured in print ads in local Gatehouse-owned newspapers giving rise to a first: consumer generated print advertising.

(TotallyLocal is the Gatehouse’s online yellow pages; Shop WickedLocal is Boston-area local product search site.)

The deal features newspaper-site integration for Yokel hosted pages. (Yokel had been crawling for the data, but may have developed additional methods of finding what’s available in local stores.) Gatehouse is also soliciting merchant signups and product inventory information, which will then be marketed online and in print (via “reverse publishing”). There’s also broader Internet distribution for merchants, which is being managed by a third party.

This program is an instance of larger trends:

• Newspapers stepping up SMB marketing outreach and efforts (and competing with YP)
• Local product inventory information becoming more widely available online

Shopatron Matches Products with Local Retailers

Add Shopatron to the list of local product inventory providers that are increasingly connecting the Internet to local store inventories. Shopatron is mentioned in this NY Times article (about buy online, pick up in store) but I completely failed to notice it at the time:

Now, a technology company that helps more than 400 manufacturers sell online, Shopatron, will help a manufacturer’s customers determine if local stores have a particular item in stock.

The service relies on a bidding system of sorts. Through Shopatron of San Luis Obispo, Calif., local merchants answer an online query from a customer who has visited a store and expressed an interest in buying, say, a specific running shoe. If the merchant carries that item, it will tell customers that through Shopatron, giving them the chance to pick it up immediately. (Customers who choose this option usually receive an e-mail response within a few hours.)

If no merchant responds, Shopatron will transfer the order to the nearest retailer that can ship the item to the buyer, but which is too far from the customer to offer an in-person pickup. As more retailers respond to order requests, Shopatron can better predict product availability at the time of the search.

I spoke to the company last Friday. As the description above suggests, Shopatron hosts manufacturer websites. It has over 400 manufacturer relationships and knows all the authorized retailers for those products all over the US. Thus it can identify sources of local inventory all over the country.

The system is run from the manufacturer websites (think channel conflict) and not on centralized shopping destinations or (for now) retailer sites. The customer goes through a typical e-commerce checkout process with a twist. Here’s an example from Brooks running shoes:

Once I input my zip, the system will send out a notification to multiple retailers. They compete for the consumer’s business and more than one may respond. Shopatron keeps records of who does the best job at fulfillment (there’s an analogy here to FastCall411). Location will trump speed in most cases. In other words, if a “closer” retailer (to me) responds after another (but more distant) local retailer in the general area, the closer one gets the order all other things being equal.

The retailer is required to hold the product in question for a period of time and the consumer gets an email or SMS notification that the product is in and where he/she can go to buy it. It’s not real-time but almost; and I would argue the time lag is probably acceptable to most users.

The challenge is to educate consumers that this capability exists. The burden falls on manufacturers to do that and promote their sites as a sales channel (this is where the channel conflict comes in). But because the manufactures are ultimately handing the sale off to a dealer or retailer, the channel conflict isn’t quite the same as if they were just doing straight e-commerce from their sites.

Unlike “buy online, pick up in store” however, this system isn’t limited to big boxes. Small retailers can benefit here too. A local store that carries Brooks running shoes or a particular appliance or musical instrument can get the order just as readily as a big box retailer.

Shopatron has been around for roughly six years but instituted this new system last year. There are many additional and interesting directions this could go, including syndication of the data to third parties (and certainly mobile). Regardless, it’s further evidence that the future is not in e-commerce but the increasing linkage between the Internet and local store inventories.

Taking Local Search to Store Shelves

Bill Slawski at SEL unpacks some recent Google patent filings, some of which have local dimensions. Among the things that Bill discusses, I found the following provocative:

The most sensational aspects of the documents come towards the end where we are told that robots might be used to take pictures of products on store shelves, and in museums. A snippet from the filings:

In addition to street scenes, indexing can be applied to other image sets. In one implementation, a store (e.g., a grocery store or hardware store) is indexed. Images of items within the store are captured, for example, using a small motorized vehicle or robot. The aisles of the store are traversed and images of products are captured in a similar manner as discussed above. Additionally, as discussed above, location information is associated with each image. Text is extracted from the product images. In particular, extracted text can be filtered using a product name database in order to focus character recognition results on product names.

(Emphasis added.)

Robots in the isles may never come to pass but what it points to is a time when in-stock products are widely searchable (with images) and are geotagged. At a conceptual level, putting aside the precise methodology described in Bill’s post, that time will be here sooner rather than later.

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Related: comScore reports holiday related (Nov-Dec) e-commerce grew 19% vs. last year to almost 28% billion. However, growth is slowing, though not the influence of the Internet over local sales/transactions.

Some Thoughts and Predictions for 2008

Here are some quick, stream of consciousness predictions for the coming year, not in any order of significance or priority:

More online video (content and ads):

The “video is everywhere” trend will continue and local sites will increasingly feature video. The yellow pages publishers will have great success selling video to SMBs and it will become a kind of “must-have” promotional vehicle that also plays to the vanity of local business owners.

Internet on TV (and vice versa):

The Hollywood writers’ strike and the continuing exodus of TV audiences to the Internet will mean: 1) more pressure on television and TV advertising 2) accelerating two-way TV-Internet content distribution. Apple’s forthcoming iTunes movie rental announcement is a part of that larger trend.

Newspapers:

I predicted last year that newspapers would finally “figure it out” in 2007. What happened was more incremental, even as newspaper print revenues continued to suffer. But most major newspaper publishers are now moving much more decisively. Most have embraced community and are working with syndication and technology partners. There’s more pain to come but newspapers still have a window of opportunity in local to be trusted “go to” sites because of their brands and content advantage in many markets. (There’s a more nuanced discussion required here, but for “predictions” I’ll leave it there.)

Mobile:

This year will see the continuing impact of the iPhone, as its market share grows and surfing the mobile Internet becomes more mainstream. Touchscreens continue to proliferate (partly in response to the iPhone). The Palm Centro isn’t the hit that Palm is hoping for but smartphone prices come down, causing more people to adopt them – and more mobile Internet adoption in turn.

As an ad medium mobile is no longer a novelty and some interesting and creative mobile campaigns and promotions emerge this year. In addition, mobile starts to become an important bridge between the Internet and the physical store (a la NearbyNow). Mobile as an in-store price-comparison and research tool becomes more important for consumers. And camera-phones as shopping tools (point and shop/search) finally gain some US adoption in 2008.

We’ll also see the first Android phones (from either HTC or LG) and they will either capture the press and pundits’ imaginations or be unimpressive. If they deliver, however, the whole Android platform and movement will get a big boost.

We should also see the introduction of more interesting wireless and mobile Internet access devices that fall into neither the cellphone nor laptop categories (e.g., Dash, iPod Touch, Kindle, Nokia 810, ModBook).

M&A, Yahoo!, AOL and AT&T:

This is a somewhat murky area. It’s very safe to say there will be more M&A activity this year as traditional media companies continue to build out their online portfolios. And the competitive dynamics of the big online portals and engines will continue to fuel acquisitions.

As I said previously, Yahoo! will be forced to “do something” if it can’t appease investors in the next couple quarters with a sufficient growth/turnaround story and results to match. We’ll have more clarity on Yahoo!’s fate as an independent company by Q2.

AOL could be retained or spun off by TWX. The company’s share price has generally been flat (or down) during Richard Parsons’ tenure. So there’s pressure to “do something” to increase shareholder value. Microsoft was interested in AOL previously and got outflanked by Google, when it made its billion-dollar investment in the company two years ago. It’s entirely possible that Microsoft would invest significantly or buy the portal outright (which might be problematic for several reasons for the two companies) if it were to be put on the block.

While there would be integration and redundancy challenges inherent in a Microsoft acquisition of AOL, that would not be as true for AT&T. AT&T has lots of money and is moving fairly aggressively on several fronts. Beyond YellowPages.com, the company doesn’t have a strong consumer Internet (or particularly strong mobile) portfolio; so I would expect some acquisitions in 2008. Investments in Yahoo! or AOL would complement the company’s current businesses — though I think of the two scenarios Yahoo! would be more likely.

Comcast, once a sleeping giant in local, seems to have receded as potential player. Hesitation and competitive pressures on its core business have held back the cable provider from doing much that is decisive or provocative online. However, a growing feeling of a need to act and diversify online could make Comcast a serious potential investor or acquirer in 2008. We might even see a splashy local consumer acquisition, because Comcast has a sales force to monetize local traffic.

The “R” word:

There’s disagreement about the outlook for a US recession in 2008. Some economists think we’re in a recession now. From an advertising standpoint 2008 will see slower spending in traditional media (notwithstanding the Olympics and US election) and an acceleration of brand ad budgets shifting dollars online. Effectively then the traditional ad industry generally will experience a recession-like slump, while online will remain fairly healthy. The problem is: marketers are confused and most are not rising to the challenge of reaching fickle, distracted audiences.

For this reason, paid search advertising continues to shine even as marketers struggle to figure out where to put their brand dollars (portals, social nets, verticals, etc.)?

Local inventory online (and on mobile):

The past two years have seen great strides in the development of what might be called the “product inventory infrastructure.” This year will see local inventory information become even more common and widely proliferated. Some of this will come from new, independent efforts such as TheFind’s. But much of this will come from content and data syndication from the likes of NearbyNow, ShopLocal, Where2GetIt and Channel Intelligence to a range of third-party sites. ShopLocal has been doing this for some time with newspaper partners.

This data/content will also come from retailers’ own buy online, pick up in store capabilities, which are becoming more common and more important to consumers.

User-generated content and trust:

Now that community and the “culture of participation” are firmly established online, the next hurdle is separating the wheat from the dreck. When you’ve got 200 reviews how do you make sense of them? Review aggregation/summaries and site features like Yelp’s “ratings details” chart become increasingly important. Trust circles make a comeback as well for the same reason: “What’s my network saying about this place?”

In addition, Facebook will undergo a significant makeover this year and seek to become more of a “daily utility” (and less of a novelty) to users, adding Web search (from MSFT) and MyYahoo!/iGoogle-like capabilities and features. In other words, it will seek to become a kind of Internet “dashboard” and nouveau portal with trusted community.

Virtual worlds and more 3-D:

Many of you may have seen the recent NY Times article on Webkinz and Club Penguin. A kind of parallel trend to online video, “virtual worlds” and increasing 3-D visualization (maps, etc.) will gain steam in 2008.

I’m fascinated by what I think will be the ultimate collision of gaming, social networking, local content and virtual worlds. It will probably require a bigger pipe (see Internet on TV) for this to be fully realized. But eventually there will be a range virtual worlds for adults (not referring to porn here) online and especially on TV that offer Internet content, community and rich, immersive experiences (something along the lines of Google Earth or Virtual Earth 3-D meets Everyscape meets There.com).

The local SEM rollup:

I keep expecting somebody to come along and bring together two or more of these local SEM firms and then put some meaningful marketing behind the effort to build a trusted brand. This area is still a kind of “Wild West” and most SMBs are still ignorant of the existence of these firms. This year we may see some consolidation in this segment – because that’s the only way to compete effectively with the yellow pages sales forces.

Impatient investors and more startup failures:

We’ll see more startup failures and sites being shut down by VCs this year, as larger investors (like Hollywood) look for increasingly elusive “big scores” to the exclusion of a succession of small hits. This failure trend will be true in local too, as sites just can’t effectively monetize their traffic to support their cost structures. Unfortunately, most VCs will move farther away from the mentality that one needs to succeed in local: a long-term vision and patience.

Newspaper and yellow pages diversification:

I wrote briefly not long ago that newspapers and yellow pages may “diversify” by starting and/or acquiring sites that are once or twice-removed from their core businesses: verticals, community sites, independent local sites and so on. We’ll see how far this goes in 2008.

Will we see the emergence of a coupon destination?

I continue to be amazed that there’s no online coupon destination. Judy’s Book was trying to build one but that was aborted. Many sites offer deals or coupons as an aspect of what they do (e.g., Dealio, ShopLocal), but there’s no “top of mind” branded coupon destination for consumers. Will 2008 be the year that happens? This is, in my view, a gaping hole online.

Mobile coupons (or mobile coupon redemption) is an important future trend as well.

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Andrew Shotland discusses local trends and local SEO trends for 2008.