Google galvanized a lot of mainstream attention for the online-research-for-offline-purchases market with its recent rollout of Product Search. But with the total sales pie expected to eclipse $1 trillion in 2011, it’s a big enough playground for more than just the big G to stock store inventory online. Milo, which jumped into online-to-offline product search while Google was beta testing Blue Dots (the precursor to Product Search), has added a series of new features and enhanced its partnerships to make it a viable option during the holiday shopping spree.

First, Milo teamed with PriceGrabber to list product inventory at local stores on its site. It has a similar deal with consumer reports, and well as integration with Yellowbook.

Milo currently teams with 150 retailers (Best Buy, Nordstrom, Advance Auto Parts) encompassing more than 50,000 stores to show real-time product availability and price. CEO Jack Abraham not only wants to recruit more retailers, and perhaps move down-market to attract a new breed, but also sees partnerships as vital to expanding Milo’s visibility for those stores. He told BIA/Kelsey that partnerships span four categories: “search, shopping, local and media.”

The Palo Alto, California, start-up also went mobile for the first time, unveiling an Android app (and soon an iPhone counterpart). The early success sent Abraham a strong message about the fundamental value of mobile shopping and the importance of fostering a seamless mobile experience. “I was skeptical from a user standpoint initially,” he conceded. “But it’s been huge for us. The direct relationship through the mobile platform allows you to truly own your users.” Now, ensuring that their retailers are automatically optimized for mobile is an important next step in Milo’s evolution onto the new platform.

With Google already allowing businesses with registered listings on Places to offer coupons and Facebook having recently rolled out Deals, it was inevitable that Milo would counter with a similar option. Indeed it has, offering both printed and buy-online, redeem in-store coupons that pop up automatically based on a user’s location and specific product search.

Coupons are also equipped for mobile, so consumers can simply call them up on phones and have them scanned in-store. And unlike Facebook, Abraham stressed, no check-ins are required for special offers to activate. Instead, they appear when consumers — potentially new customers — are already deep in the purchase funnel, searching for specific goods and already primed to buy.

Abraham is serious about moving down-market to target smaller businesses, even local SMBs. But can this be accomplished with any measure of efficient scale? Abraham acknowledged that “it’s a hard problem to crack,” but one that Milo is working on.

The company recently conducted a trial with inventory from 100 pilot stores and found the local merchants, generally speaking, to be engaged. Among many challenges, the greatest may be adapting the technology for smaller businesses, which have different inventory systems and product data than the national brands that Milo is accustomed to servicing. A turnkey solution that SMBs can easily install will be necessary.

The scale challenge extends to merchant recruitment as well. That’s where media companies with embedded local sales forces such as Yellow Pages companies could be natural partners. Abraham said that Milo has been approached about this idea, and though nothing is active yet, it is in the company’s consideration set.

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Evidently, the popular adoption — or lack thereof — of location-based applications and services may simply be a function of whom you talk to. JiWire asked the on-the-go audience that it serves ads to across public Wi-Fi networks, and the holiday outlook for LBS is markedly sunnier than the dimmer results recently released by PEW.

In a sample of its tech-enthusiast users for its Q3 2010 Mobile Audience Insights Report, JiWire returned that an astounding 89 percent of respondents are likely to use location-based tools this holiday season. These are the same Foursquares, Gowallas, Loopts, SCVNGRs, et al that only 4 percent of PEW’s cross-section reported using in a study published earlier this month. The key differences: JiWire’s audience is exclusively Wi-Fi (thus catering to an on-the-move crowd), with much of its wireless distribution occurring in venues such hotels and airports that skew toward higher-end demos that are heavier holiday spenders.

David Staas, JiWire’s SVP of Marketing, told BIA/Kelsey that “over the last 12 months, we’ve seen an explosion of location-oriented content that’s taking place because of consumer demand. Consumers are starting to think from a location-centric perspective.”

JiWire’s majority, 61 percent, value finding store locations above all other mobile features. Interestingly, 33 percent prefer using LBS to search the product inventory of nearby stores. This validates Google Product Places, Milo, Krillion and a host of others that are partnering with retailers to share real-time inventory, an idea founded in research that indicates that most purchases still occur in store … but nearly half of them are motivated by online research.

LBS has begun to earn a checkered name in some circles because of the gimmickiness and fatigue associated with check-ins and virtual rewards. But JiWire suggests that 49 percent of the on-the-go crowd use these capabilities. They’re checking in principally to unlock deals and promotions, not to accululate virtual capital, supporting the notion that tangible bait is pivotal to drive store traffic.

This reaffirms a previous JiWire study that showed that the majority (51 percent) of its on-the-go audience was comfortable sharing location in exchange for more relevant advertising because, as Staas said, “it’s a value exchange. They’re getting something useful back.”

Also noteworthy: 30 percent of the sampled audience is willing to travel more than five miles to redeem a mobile coupon. For all the talk of hyperlocal and geotargeting, these results affirm the importance of a different term, one that Gannett Digital Network General Manager Josh Resnik recently shared with BIA/Kelsey — “hyper-relevancy.” People will travel if offers are contextually and psychographically germane. “It’s about matching audience with location,” Staas said. “Location has different components, including marketing to the right consumer.”

So, where does the truth lie? Again, it probably depends on whom you ask, and chances are it falls somewhere in-between. By the same token, several recent announcements have the potential to mainstream LBS well beyond the walls of technophilia. Facebook Deals and Places, coupled with Google Places. Place Search, Product Search and Hotpot, run the gamut of LBS, encompassing local, social and retail.

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Google has been telling anyone that will listen just how bullish it is on local/mobile commerce, and it has backed the bombast with a series of initiatives (Places, Place Search and Tags just to name three recent, relevant examples) to aggressively court SMBs and better connect with consumers at a neighborhood level. The latest is the formal rollout of Google Product Search, which will provide searchable and categorizable online product inventory for local branches of more than 70 retailers.

Product Search extends what began in March with the beta trial of Blue Dots, which charted product stock at selected retailers. Now several additional sellers are joining the program, including Best Buy and Williams-Sonoma.

Google joins a host of companies trying to connect online product search to offline purchase, including Milo, Krillion, ShopLocal and NearbyNow. But the Mountain View, California, search giant isn’t worried about the numbers game. Its focus lies on two other numbers:

1) The U.S. online-research-to-offline-buying market is estimated at $917 billion in 2010, swelling to $1 trillion next year. It accounts for the lion’s share of spending, with online e-commerce spending commanding only 7 percent of total U.S. sales.

2) Of the 93 percent of retail purchases occurring in-store, almost half are driven by online research.

Google Product Search does more than simply list inventory by product and store. Consumers will be able to tailor searches to only those brands that are currently available at nearby locales. It is also introducing a “popular products” feature, which shows most-viewed items within a particular search category. “Aisles” enables searchers to organize targeted queries into subcategories.

Google is complementing its release of Product Search with a mobile component. Its Google Shopper application for Android allows on-the-go shoppers to use “brand” and “price” search filters for more efficient discovery. Barcode scanning functionality will remain, too.

With nearly $1 trillion in sales, the pool looks deep enough for multiple competitors. In fact, Milo CEO Jack Abraham recently told BIA/Kelsey that it’s big enough that one company won’t dominate, and that Google’s serious foray is “helping to develop the market.” 

Of course, Google can play zero-sum games (just ask its online search counterparts). A crucial next step for the big G, or any other company seeking growth and differentiation, is to extend online-inventory-to-offline-purchase to SMBs. And that is no easy proposition considering that there is not a clear-cut, frictionless roadmap for how to capture that opportunity at scale.

Courtesy: Google

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