Black Friday, Inventory Data, And Local Shopping

This Thursday is the US Thanksgiving holiday, so Friday marks the official start of the holiday shopping season for a large percentage of US consumers. Infamously known as “Black Friday” (for profit potential), many “big box” retailers will open at midnight or in the early morning hours to long lines of consumers hoping to capture deals on limited supplies of heavily discounted consumer electronics, toys, apparel, and so on. Indeed, Black Friday shopping has become something of a sport for people who are willing to brave the crowds, lines, and frequent “bait-and-switch” retail tactics. The following Monday was dubbed (by Shop.org) “CyberMonday” in the hopes of capturing some of the same behavior and buzz associated with the start of holiday shopping.

Over the past several years, Black Friday promotions have become critical for retailers in building excitement and early momentum to help kick off holiday sales. It’s somewhat analogous to an over-hyped movie opening. But one of the big frustrations of the day for many shoppers is missing inventory: waiting in line only to discover that the 15 sub-$300 laptops advertised have already sold out.

Black Friday deals have historically been published in newspaper inserts, but increasingly websites such as bfads.net have also arisen to offer a sneak preview of deals. One might have expected the rise of e-commerce to dampen the enthusiasm for Black Friday somewhat – but it hasn’t. Some of the most affluent shoppers – those most often associated with e-commerce purchase behavior – are on record planning to be in the store on Friday morning. According to a poll conducted by the Maritz Retail Research Group, “44 percent of those with household incomes between $75,000 and $100,000 [are] planning to shop on Black Friday.”

Years ago, many pundits thought that e-commerce would cut the legs out from under in-store shopping because of its perceived convenience and, many thought, price advantages. And while e-commerce has grown impressively in the past several years, it’s now struggling as more consumers use the Internet instead to conduct product research before buying in local stores.

E-commerce is expected by both JupiterResearch and Forrester to flatten over the next few years, while Internet-influenced offline shopping will continue to grow. Both firms say that while online sales will “plateau” at 10 to 15 percent of US retail, the Internet will influence $1 trillion in consumer spending within the next five years.

Depending on the particular survey and product category in question, anywhere from 70 percent to 90+ percent of consumers now consult the Internet before buying in stores. However, the still-missing link in this process is the widespread availability of product inventory data to connect online shoppers with places to buy things in their markets.

A number of companies, some of which I’ve written about in this column before, are working on solving this problem:

Channel Intelligence works directly with major retailers and manufacturers to obtain their data and distribute it out to various third party sites. The company recently announced a partnership with Shopping.com to provide inventory information and local store data in the US and Europe. It also provides local inventory data to CNET.

Krillion is a consumer destination but also an SEO play for large retailers and manufacturers. The company currently offers data on two product categories, major appliances and televisions. The company also recently announced real-time inventory for televisions, which leverages the buy online, pick up in store infrastructure that is increasingly prevalent at big box retailers. The model for the program is CPA, where Krillion takes approximately 3 percent to 5 percent of the value of the transaction.

NearbyNow has been working with shopping mall owners and national retailers to aggregate inventory data and make it available on local shopping mall portals. NearbyNow also supports in-mall kiosks and has a very popular wireless offering.

ShopLocal began life digitizing newspaper circular ads and inserts and putting them online. The company now has a multi-channel shopping portal, a wireless offering (via uLocate), and increasingly syndicates out its information to partner sites. It obtains local store data from various sources.

StepUp, now owned by Intuit, is a marketing vehicle for local retailers. The company captures, normalizes, organizes, and distributes local retailer data and inventory information to other sites, such as Google.

Where2GetIt started as a dealer locater service for retailers and manufacturers a decade ago, hosting maps and directions that appear on those third-party sites. But in the process of building out its services over time, the company has developed a rich database of product inventory information in addition to business locations. It has mobile products as well.

Yokel crawls retailer sites to find information about what big box stores typically carry. It directs people to call local stores to confirm whether products are actually in the store.

There are also others such as GPShopper for mobile and Askthelocal (UK), which offers both online and mobile information about where to buy products locally.

Real-time inventory information is “the Holy Grail” for online shoppers. And in the next 12 to 18 months you can expect the data collection and syndication process to accelerate dramatically and for the inventory information to be broadly syndicated across the Internet.

In addition, mainstream retailers such as Best Buy, Circuit City, CompUSA, Sears, Talbots, Linen ‘n’ Things, Wal-Mart, and others have or are creating “site to store” capabilities. Buy online, pick up in store is a kind of love child of traditional shopping and e-commerce. But once established, these systems can also support broad syndication of store inventory data to shopping engines, search, or online advertising more generally.

It’s too soon to say whether inventory data will become a “commodity.” However, very soon consumers will be able to do online product research and then learn, fairly quickly, where they can buy the desired product offline. This is the future of online shopping, and any shopping engine or online shopping portal that doesn’t incorporate this local data will be doing so at its own peril.

Greg Sterling is the founding principal of Sterling Market Intelligence and a senior analyst at Opus Research’s Local Mobile Search program. He publishes Screenwerk, a blog focusing on the relationship between the Internet and traditional media, with an emphasis on the local search marketplace. The Locals Only column appears on Mondays at Search Engine Land.