ShopLocal and ‘The Trillion Dollar’ Marketplace

I spoke last week at a private event hosted by ShopLocal. It was intended to showcase their various products/services and their roadmap to clients and partners. There were some very interesting discussions and sessions (one snippet blogged here.) They also had some fun trivia questions surrounding the concept of a “trillion,” because the theme of the event was “The Trillion Dollar Markeplace.”

This phrase comes from recent Jupiter and Forrester e-commerce/retail reports that predict the Internet will be influencing a trillion dollars of offline (local) spending by either 2010 or 2011. These are self-consciously headline/PR grabbing predictions but directionally they are absolutely correct. And last week there were two thematically related reports, one from Yahoo!/comScore about products and the other from TMP directional media/comScore about services.

Essentially, both of these reports say that the majority of commercial activity being driven by the Internet is happening locally (which has to be the case with most service businesses). And the core point of my talk was that local is not a niche — especially when retail is included — it’s much bigger than anything else happening online. The Internet is much less a transactions platform than it is a marketing vehicle for local/in-store transactions. E-commerce will continue to grow, and mobile will eventually be a bridge between online and offline, but consumers have largely spoken.

When I make these arguments I find some people curiously get upset. It’s happened to me at a couple of events. It’s typically people in their 20s who assume that e-commerce is going to take over. It happened at this event when I argued that many local searches were masked because of missing geo-modifiers or a lack of visibility into the searcher’s ultimate intent and behavior (tracking).

Regarding the first category, I typically use the example of “attorney” or “divorce attorney.” Very few of those searches are going to have an object other than finding a lawyer to consult in the real world. One woman during the Q&A part of my talk disputed this proposition arguing that people might be doing research or looking for forms in such a context. I allowed that that was true for a small percentage of people but not the vast majority. She seemed genuinely upset by this contention.

Chad Schott of RH Donnelley came to my defense and made even more aggressive claims about the percentage of searches that have a local intent.

When I was at The Kelsey Group, I helped formulate a definition of local search that was largely tied to their historical coverage, yellow pages. Yellow pages and its various flavors online forms a core part of local search but it’s a much broader phenomenon. Accordingly, since leaving I’ve been evangelizing a broader definition that I believe encompasses and reflects consumer behavior more accurately: Shop Online, Buy Offline (Yahoo! says “Research Online, Buy Offline” [ROBO]).

In other words . . .

“Local search is a process where users conduct research online but with the ultimate intention or result being an offline transaction. It’s about the Internet influencing real-world buying decisions . . .”

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Related: comScore’s new data on e-commerce and prediction that non-Travel e-commerce would reach $200 billion by YE 2007.

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