In-Stock, Nearby Goes Live on Google

Google promised to bring local inventory data to online and mobile shopping and the company has started to roll the program out. According to a post on the Google Mobile Blog today:

if you’re searching for a product that is sold by participating retailers, including Best Buy, Sears, Williams-Sonoma, Pottery Barn, or West Elm, you can just look for the blue dots in the search results to see if it’s available in a local store.

If you see a blue dot, you can tap on the adjacent “In stock nearby” link, and you’ll be taken to the seller’s page where you’ll see whether the item is “In Stock” or has “Limited Availability” near you. You’ll also see how far away the stores are from you — as long as you’ve enabled My Location or manually specified your location.

(Emphasis added)

This is only mobile for the time being.

I have more detail at SEL and Internet2Go.

___

Update: TechCrunch runs the sensational headline “Google Cuts Milo At The Knees With Its Blue Dot Specials.” Actually the opposite is true in most respects.

This move will validate Milo and some of the other players in the segment, such as Krillion, which have been chugging along but not recognized as killer apps. Now everyone will want to talk to those folks, scared that Google will start to be much more competitive in shopping. 

No one can afford to be complacent; think Google Maps vs. MapQuest, which for too long dismissed what Google was doing as frivolous “bells and whistles” to its ultimate detriment. This information is far more central to the shopping experience than most analysts and marketers realize. 

This is what people really want: tell me what it costs, how good it is and where I can buy it.

Advertisement

Yipit, Group Buying and SMBs

I recently wrote a short post about Groupon and the growing phenomenon of group buying online. Among the several companies I mentioned in the post was Yipit. I lumped the company in with several others as purveyors of local deals to consumers. Shortly thereafter I was contacted by the co-founders of Yipit (who wanted to clarify the nature of their service) and I had a fascinating conversation with them about the entire segment.

Rather than a direct competitor to these group buying sites the company aims to position itself as the “kayak of group buying.”

What that effectively means is that Yipit aggregates deals from many providers (there are a growing number; see list at bottom). The consumer-user selects the desired offer and clicks through to transact on the underlying third party site, in the same way that Kayak refers leads to airlines or hotels. Similarly Yipit takes a referral or affiliate fee for the lead — provided there’s a transaction that occurs.

The way that Yipit improves upon any one of these sites (e.g., Groupon) is that it brings together much more inventory (offers) than any one of these sites individually. Because of this, it allows users to select areas of interest and not receive offers that aren’t relevant. That has always been my experience with Groupon itself; the concept is great but there are lots of deals I’m not interested in:

The concept of group buying has been around since Mercata and the late 1990s. However in “act 1” of the Internet it never took off. Now it has momentum on the heels of the general growth of online coupons and social networks more broadly. Consumers love deals and these sites only charge businesses — mostly SMBs — if enough people show up and a sale is made, collectively speaking:

The offers are always time-sensitive and require a commitment/purchase up front by the user. And the structure of the offer creates competition to ensure that the minimum required volume is met.

Each of the sites that Yipit “indexes” are effectively telephone sales channels, which negotiate these deals with local merchants. Yipit then delivers, or helps deliver, traffic to those individual sites.

I was told by Yipit that where there were once just two or three of group buying sites, now there are dozens of them. The barriers to entry are very low: a wordpress blog, a telephone sales and some email software.

Another fascinating thing to consider is that the risk to the merchant is almost zero; SMBs only pay when the group deal is secured. Thus it becomes potentially easier to sell something like this (especially by a “no name” company that the SMB hasn’t heard of) than more conventional “advertising.”

There’s no “ad budget” that gets tapped; the commission is a slice of sales. Consequently there may be more money for these types of programs than for “advertising.” The notion that “SEM funds itself” is one of the myths of paid search, which is especially a myth in the case of small business. However that is in fact true in this case.

If these group buying sites develop enough momentum there’s a kind of parallel universe of SMB promotions that might arise, where the value proposition is more direct and transparent to the merchant and the risk much less than buying clicks or even calls in some sense. While this is clearly not a model and channel that’s going to work for plumbers or lawyers, it probably works for a much broader group of local businesses than one might think.

Here are the sites (or most of the sites) that Yipit draws upon to serve up geographically relevant deals and offers:

Do you think “grouponing” is a fad or a phenomenon that is here to stay in some sense?

Milo Raises $4 Million for Local Shopping

Milo is seeking to do what nobody has really done successfully so far: create a true online-offline shopping destination. There are several companies out there aggregating and distributing inventory data (e.g., Krillion), but no one has created a successful consumer destination. ShopLocal has largely abandoned its consumer shopping model and become a marketing services company for its retailer clients.

Seeking to become that company Milo has raised $4 million from a range of institutional and individual investors.

The historical challenge has been getting the inventory data and getting enough of it across categories. Milo has developed a methodology that the company believes will give it a powerful shot at becoming a shopping brand and delivering the experience that mirrors the dominant consumer shopping behavior pattern: shop online and buy in stores.

For those who believe that e-commerce is the inevitable future: today it’s flat to declining roughly 3% YoY (per comScore, although YoY it will grow over the holiday season). As the economy improves it will grow in the low single digits across most categories. It’s inching up to 3.7% of total US retail ($922B in Q3):

Source: US Commerce Dept.

Of course the future is multi-channel, with some purchases happening online — mobile adds an interesting wrinkle (in-store price check leading to online purchase) — but the overwhelming majority taking place in physical stores. (Reserve/buy online and pick up in store is also going to be pervasive.)

Here’s my earlier post on Milo. Mobile shopping is also in the company’s near future.

ShopLocal’s Data, Ads Showcased

ShopLocal has been busy with its dynamic search marketing product, pushing its data out to third parties and with new presentations of its circulars.

Here’s an example of “Circular Central” on the Gannet-owned IndyStar site (Gannett owns ShopLocal as well). While it’s been up for the past several months, I recently rediscovered it.

Yahoo! features the same thing (see also coupons from ValPak).

The Circular Central site allows users to page through the circulars in the same way they would in the Sunday newspaper, complete with page turning simulation. It also provides a range of browse and search functions too. According to ShopLocal, users looking at multiple pages average 55 pages in their visits. The company also said that 14% of users look at 100 pages or more in these visits.

Finally ShopLocal is one of the data providers in the novel but ultimately not-very-useful MasterCard-sponsored Priceless Picks iPhone app:

Shouldn’t Most ‘Product Search’ Count as Local?

On Wednesday morning I’m moderating a panel at the Web 2.0 event in San Francisco: “Local is the New Global.” It features the CEOs of Zvents, TheFind, NearbyNow and Krillion. Interestingly three out of four of these companies are product-related and have nothing to do with services — the area everyone tends to focus on in discussing “local search.”

Along those lines, there are many studies in the market that show the majority of consumers are doing online product research but mostly buying products offline. One of the earliest of these studies to document the online-offline phenomenon for products was from comScore and Yahoo! in 2004. They found that 92% of Internet/search influenced consumer electronics purchases happen offline in local stores. Here’s the slide from 2004 (the data were collected in Q1 ’04):

But let’s not focus on or debate the precise accuracy of this 92% figure.

There have been plenty of other such studies since 2004 from BIG Research, Yahoo!, Nielsen and others with varying percentages who research online but ultimately buy offline. This “ROBO” number ranges from 70% to the low 90% range depending on the study and product category being examined. The point is that the large majority of Internet users conducting product research then buy offline in local stores.

Source: Compete Inc., 2008 (n=1,257 US adults; context was mobile phone purchase)

Over the past couple years comScore has maintained, using a conservative methodology, that the percentage of search that is “local” is around 12%-13%. Product search is largely ignored in this calculation unless someone explicitly looks for a product with a geo-modifier attached (e.g., laptops, Jersey City).

But if at least 70% of Internet users doing product research are consistently buying offline/locally shouldn’t we consider at least 70% of the product search pie to be local? Perhaps these folks are open to buying online when they begin their research and so their “local intent” may not be completely conscious or “top of mind.” But the numbers are consistent across the studies. And e-commerce isn’t going to change anything in the foreseeable future; its growth curve has flattened.

Making the connection between search query and the store or POS (the “last mile of search”), as do companies like TheFind, NearbyNow and Krillion (among others like ShopLocal), only plays into the local side of the equation. Indeed, the failure to connect those dots represents a huge lost opportunity for marketers across the product spectrum. Retailers, for example, should be buying product keywords for all products they sell in stores and using geotargeting in search and on the ad networks to capture that shopper who’s ultimately going to buy offline. But, alas, few companies are doing that — let alone doing it well.

Back to the data. Just think how radical it is to say — and it’s true as a practical matter — that at least 70% of all product-related searches are local. It turns the whole e-commerce/local equation on its head.

Anyone want to disagree?

ShopLocal Powers New Yahoo! Deals Site

ShopLocal has a significant and far-reaching partnership with Yahoo! I wrote about it some time ago. One manifestation of that is a new “Circular Central,” featuring coupons, retailer sales and deals of other sorts.

This takes the ShopLocal-managed retailer content and puts it in one very prominent place on Yahoo! This content is certain to be quite popular this holiday season — what with the bad economy and people looking for deals like never before, and all.

ShopLocal may also replicate this through other sites and partners.

More on Research Online, Buy Offline

Nielsen put out consumer research in May that showed 80% of consumer electronics purchasers bought from a store whose Web site they visited first. Here are some additional data from that survey in graphical form (click to enlarge) involving “high consideration” purchases.

The question is: “Why did you make your most recent purchase in a local store rather than online?”

Source: Nielsen, May 2008

The chart below offers somewhat more nuanced data from Krillion and the e-tailing Group on the same general issue:

Source: Source: Web/Store Cross-channel Shopping Study, Krillion & e-tailing group, February 2008

As I’ve tried to argue, there’s often an offline stimulus that precedes Internet research (which then drives offline sales). That stimulus is often traditional media:

Source: Source: Web/Store Cross-channel Shopping Study, Krillion & e-tailing group, February 2008

And here’s the convoluted world of consumer product research online in terms of popularity of the various online sites and resources (according to the Krillion-e-taling study):

1. Visit the manufacturer’s website
2. Go to one of my favorite retailers online to learn more about what they have to offer and their prices
3. Go to a comparison shopping engine to check out prices of the products in which I’m interested
4. Conduct a search online and look at a handful of search listings found
5. Visit a store or several stores to preview the product and then go online to learn more
6. Go to a search engine that has brands I’m looking for and local information about availability and pricing

According to that same study there are gender differences in attitudes and behavior:

• Women are more traditional, favoring word-of-mouth, catalogs, magazines & newspapers
• Men are more Web-centric, embracing online promotions, banner ads and email

While consumer behavior is becoming more complex and e-commerce continues to grow (albeit at a slower pace) here’s the typical consumer behavior pattern:

Dissecting Internet Content

IT security firm Optenet has published a report that categorizes the content on the Internet. Let’s assume their data are correct. Here’s what they say about what comprises the Internet (based on the company’s own classification scheme):

The number of Web sites worldwide surpassed 155 million at the end of 2007 . . . The Optenet study showed that although pornography as a total percentage of Internet content has actually decreased slightly since 2006, it still is by far the largest category of content on the Internet, representing 35 percent of all Web sites. Online shopping represents the second biggest category (10.5 percent), followed by travel (7 percent), advertising sites (6 percent) and sports (4.5 percent).

Here’s the breakdown in graphical form:

Source: Optenet (2008)

If you want to take a look at the report, you can find it here.

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.

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.

___

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.

TheFind Introduces Local Shopping

Innovative “Web 2.0” shopping site TheFind has introduced local shopping today on its site. According to the press release, the site’s new capabilities include:

• Search for products available through local retail outlets. For example, a search for UGG boots in and around Miami would show store locations that are within 25 miles of the shopper’s location. Consumers can easily adjust the search area to comprise a 40- or 50-mile radius, if desired.
• Immediately identify local retail outlets near you that carry desired items. After searching for a product on TheFind, search results will display items from both online retailers and local retail outlets – with local stores clearly identified via a “Local” icon.
• Check in-store availability. For select outlets supporting this capability, TheFind enables shoppers to see which nearby stores have a particular item in-stock. Additionally, all listings for local retailers have phone numbers listed so busy shoppers can call to check in-stock status.
• Quickly and easily determine which retail outlets offering the desired items are closest in proximity. For every search, TheFind graphically maps all the local brick and mortar stores carrying the items of interest. Consumers can use the map to determine which location is the closest to them, saving time and resources. The site also provides street addresses and phone numbers for each store location.
• Compare each store’s offerings and obtain the very best deal. TheFind puts a wealth of information at users’ fingertips to enable shoppers to assess the total overall cost of goods. TheFind alerts shoppers to various considerations such as sale items and promotions and driving distance of retail outlets, so they can make purchasing decisions based on their individual preferences and criteria. Integration of online prices and local offers helps consumers determine the best possible options.

Here’s an example of the new functionality in action based on a search for “All Clad Pots” (click to enlarge images):

And when you mouse over one of the product images:

TheFind is doing this by crawling and matching products on retailer websites with store location and contact information. Accordingly the site recommends “call for availability.” It’s a impressive implementation.

As local inventory data starts to become syndicated in 2008 and these capabilities become more widespread, they threaten e-tailers and those who sell without local stores (with the exception of eBay and Amazon). As I’ve argued all shopping sites will need to have local store information/inventory to compete. Notwithstanding the growth of e-commerce, the Internet is fundamentally a marketing platform to consumers who fulfill offlline rather than a transactions platform.

Remember than e-commerce is roughly 4% of total US retail.

Functionality like “buy online, pick up in store,” which is becoming increasingly common (though the province of major retailers), is a kind of hybrid between local shopping and e-commerce.

In addition to TheFind, the local shopping club includes:

• ShopLocal
• NearbyNow (soon to become a consumer destination)
• Krillion
• Where2GetIt
• StepUp (via Google)
• Yokel
• CNET
• BrandHabit
• GPShopper (mobile)

Shopping.com is on deck presumably with a recently announced deal with Channel Intelligence.

___

In an interview with InternetRetailer, JCPenney noted that 80% of its shoppers had visited the company’s site before showing up in the store.

More on the (Local) Shopping Front

Two pieces that were released recently are worth noting…

The New York Times writes about Wal-Mart the growing trend of buy online and pick up in store. (Nearby Now does “reserve online” and pick up in store.) From the article:

Take Wal-Mart, for instance. In recent weeks, the company, the largest retailer, completed a national introduction of its Site to Store service — in which consumers buy items from the Web site, then have the items delivered, at no charge, to their local Wal-Mart stores where they can pick them up. Items arrive within days, though the system is not yet set up to tell customers when something they want is already in stock at a local store.

According to Raul Vazquez, Walmart.com’s chief executive, the initiative has surpassed the company’s expectations, with about a third of all online sales occurring through this program. “It’s gone incredibly well,” Mr. Vazquez said. “None of us expected to see it reach this percentage of sales at this point.”

This type of program, which is increasingly common, is an interesting hybrid of e-commerce and local shopping. It still qualifies as local because it involves physical stores, local overhead and so on. The key here is the back end systems that allow real-time inventory data to be presented online. As that becomes more prevalent (and it is), you’ll see more online “shopping” offline conversion/purchase behavior — not more e-commerce.

Simultaneously iCrossing has released its “How America Searches — Online Retail” report. The report has lots of interesting data and information I’ve been meaning to dig into. From my superficial review of the data so far, the report is really about the Internet’s influence on consumer purchase behavior in myriad ways rather than e-commerce per se.

I don’t have time to further explore right now, but one interesting piece of data that caught my eye was the use of search to find local/offline stores to buy products. See the far right column in the chart (click to enlarge):

Source: iCrossing (9/07)

ShopLocal Building Out Ad Platform Business

ShopLocal, which just introduced the ShopLocal Index last week, measuring online-influenced, local shopping activity is continuing to build its ad platform (SmartAds/SmartDelivery). Here’s an announcement from today:

With SmartDelivery, advertisers can now choose the advertising delivery vehicle that best reaches their customers with local in-store promotions, including online display ads, embedded content, Real Simple Syndication (RSS), search engine marketing (SEM), widgets and mobile. Traditionally, consumers received their weekly promotions and deals through printed newspaper inserts and mailings but ShopLocal revolutionized the industry with SmartCircular and SmartMedia that placed these same print promotions online. Now SmartDelivery takes multi-channel advertising to a new level by providing the technology that allows advertisers to customize localized content and send it out over multiple channels. The SmartDelivery engine also improves measurability, with performance tracking metrics.

This business runs in parallel but is generally independent of its consumer-facing shopping site.

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 . . .”

___

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

Study Affirms Online-Offline Shopping Connection

Earlier this week Yahoo released the results of a major study of online advertising and consumer retail purchase behavior. Conducted in conjunction with comScore between April, 2006 and January, 2007, the study sought to quantify “the impact of search marketing and display advertising on consumer shopping behavior and the in-store sales of major retailers.”

It measured the influence of paid search and display advertising in isolation, as well as the impact of integrated search and display campaigns. Subsequent consumer purchase behavior was tracked at five major US retailers.

At a high level the findings affirm the value and importance of search marketing generally and of integrated search and display campaigns in particular — on in-store sales. There’s an increasing body of empirical data, much of it from Yahoo studies, that show how significant the Internet has become as a driver of local/offline consumer purchase behavior.

The rest of this post is at SEL.

___

Here are related, previous posts related to Internet-influenced offline purchase behavior.

AT&T-Yahoo! Startpage a Model for Newspapers

I was just speaking with someone about online newspaper strategies and we were discussing the opportunity for newspapers in the Yahoo! consortium – now more than 500 local papers – to create a co-branded local portal in each market modeled on the AT&T-Yahoo! startpage (for ISP subscribers).

The difference is that it wouldn’t be the default homepage that users saw when they fired up their browsers, so it wouldn’t get the “automatic traffic” the AT&T-Yahoo! startpage enjoyed. But the concept is still interesting and valid.

Newspapers and Yahoo! would jointly provide content and services to offer local users a broad range of content and functionality – kind of like a local Yahoo! portal but with prominent newspaper content and branding. In other words: news, entertainment and events, restaurants, local service businesses, classifieds, etc.

In essence this would be a realization of the “local portal” strategy for newspapers that they can’t seem to formulate or execute on their own. The precise relationship of these local newspaper portal sites and the owned and operated newspaper sites would have to be worked out but a model exists in the old KnightRidder Digital “City.com” sites.

__

Related: YP.com and LiveDeal are starting to roll out their combined assets.

Why Are E-Commerce Conversion Rates So Low?

In eMarketer’s newsletter today are data aggregated from Lauren Freedman’s E-Tailing Group and Shop.org:

Online merchants convert an average of 2%-3% of their site visitors into buyers, according to the e-tailing group‘s “Sixth Annual Merchant Survey.”

That’s about the same as last year. And the year before that.

The group says that driving the right customers to sites and increasing sales and retention all require more targeted tactics every year. It points to analytics and data mining as the way to make this happen.

Shop.org conducts a similar annual survey with Forrester Research called “The State of Retailing Online.” Conversion rates in that study also average about 2%-3%.

The piece goes on to discuss sites that have 15% to 20%+ conversion rates.

eMarketer presents these data as something of a “best practices” problem. Undoubtedly sites can improve conversion rates by adopting best practices. But there’s another thing going on here: consumers shop online and buy offline.

It’s really taking people a long time to get this point. Consumers, though they will buy online for various reasons (convenience, price), fundamentally want to buy locally.

As a result of this desire and behavior, you’re not going to see big increases in conversion rates — best practices or no — across the board any time soon.

___

Related: My earlier post, “the future of online shopping is offline.”

Judy’s Book Makeover Almost Complete

Thanks to Gary Price (again) for alerting me to some UI and content changes at Judy’s Book. Here’s their post on the changes and here’s the new site:

It’s a local shopping/coupons site now — the metamorphosis is all but complete — and a distribution partner for ShopLocal (and ValPak) among others. One way to look at this new Judy’s Book is as the “Oodle of coupons and deals.”

Notwithstanding ValPak’s brand recognition in direct mail coupons offline, there’s no single destination of choice for local coupons and deals. It’s a huge potential growth area online and Judy’s Book, if they’re smart, could be one of the winners in the space.

Krillion: A New Local Shopping Engine

Joining the ranks of a small but growing list of companies trying to connect online product research and offline buying, Krillion launched this morning. Other companies offering local product information, to varying degrees, in this segment are ShopLocal, StepUp, NearbyNow, Yokel, CNET, Froogle, Become.com and data provider Channel Intelligence.

The rest of this post is at Search Engine Land.

Here’s some additional information from Matt Marshall at VentureBeat.