Google heading toward ‘e-commerce 3.0,’ analyst says

Now that it has taken the Internet search market by storm, Google is heading toward capturing the next e-commerce paradigm—using search to buy anything from anyone, anywhere, Safa Rashtchy, senior research analyst at investment firm Piper Jaffray & Co., tells InternetRetailer.com. “Google will be a Craigslist on steroids—a very potent and dangerous challenge to where eBay wants to go,” Rashtchy says.

While eBay has brought millions into online commerce, it is still too complicated for sellers who balk at the listing process and for buyers who don’t want purchase from someone located far away, he adds.

Craigslist Inc.’s CraigsList.com has pioneered a new form of e-commerce, which Rashtchy and others call “e-commerce 3.0,” that connects consumers with sellers of products and services in local communities.

E-commerce 1.0 was defined by early efforts by dot-coms at excessive branding and advertising, but without a sustainable platform or customer base, Rashtchy says. E-commerce 2.0 debuted with the advent of Internet search, which provided the necessary connection between e-retailers and large volumes of consumers, and 3.0 will take that to a local level.

Craigslist is recognized as having kicked off e-commerce 3.0 with a local listing service, which connects buyers and sellers online within local communities but doesn’t process sales transactions. But as Google applies its technology to 3.0, it could also provide some form of online payment system, and it could integrate its local e-commerce service with other Google services like GMail e-mail, GoogleMaps and its shopping site, Froogle, Rashtchy says.

“Craigslist has the limitations that it cannot scale massively as it lacks robust search functionality,” Rashtchy says. “Google, on the other hand, can create a massive and still highly efficient listing service as it has already done with web search. Thus, we believe the next wave of e-commerce will allow users to connect to other users or merchants on a local level. We believe most consumers already greatly prefer to transact locally.”