E-commerce grew 20% for Costco in fiscal 2015—20 times faster than store sales.
Internet search goes local as engines provide services to retailers who want to capture neighborhood buyers.
The global aspect of the Internet is what makes it so valuable to many people. No matter where a shopper is located, she can find desired information or products from throughout the world by using an Internet search engine.
But while a global search is great for some, it`s not all that desirable for others. They`re not looking for that rare lamp from Istanbul or even a software package from California. They just want to find a shoe store or a pet shop near their home or workplace. Even consumers who want to make their purchases online often want to buy from an Internet site that has an outlet nearby in case they have to make a return, need repairs later on or have questions on how to get the product to work.
Google, Yahoo go local
For many of these consumers, local searches--where they can identify a wanted product or service and then type in a ZIP code or hometown to find a local provider--are more desirable. And to meet the growing needs of consumers who want local service providers, many of the global search companies, including Google and Yahoo, have gotten into the local search act.
Local searches have been called "the yellow pages on steroids." What that basically means is that the old-fashioned way of having consumers` fingers do the walking has been replaced by having their fingers type in product names and ZIP codes. But unlike the old-fashioned yellow pages which simply list companies and ads under broad product categories, Internet-based local searches can be customized so consumers can look for specific products and services, and even have the listings of proposed retailers sorted by price or other features of their products.
"We can make the search results so much more meaningful to both the consumers and the advertiser," says Justin McCarthy, head of local sales for Google. "We can give consumers the names of retailers that have outlets near their homes. And for advertisers, the leads we give them are customers who are much more likely to buy from them because they are customers who have stated a preference for a store located nearby."
Staples Inc., the chain of office supplies and equipment, for example, is currently using a relationship with ShopLocal.com to customize its online circular offerings so that the circulars reflect the products offered by stores within a specific region. The chain has 1,200 stores nationally and sells products online.
Customized by region
"We don`t always carry the same inventory in all our stores and we like the ability to customize our circulars so that customers see the exact products we offer in their region," says Cathy Cusack, vice president of consumer marketing. "In Manhattan, for example, the high cost of real estate means we have to keep our stores small and as a result, we have a very limited line of office furniture compared to what we can offer in other regions."
Staples plans to test Yahoo`s offering as well and Cusack was interested in what Google could offer. She likes the ability to customize the product offerings by region so that, for example, a New York City resident would not be referred to Staples for office furniture that was not available in the local stores.
"We`re a national merchant, but we consider ourselves part of the communities in which we have stores. The localized online offerings let us reflect that," Cusack says.
Local searches also expand the available market of retailers that pay to have their names show up on searches. Small locally-owned businesses that might have shied away from paying for leads from shopping search engines before because they feared they would get too many leads from customers located hundreds of miles away now find they can pay only for leads that fit their geographic criteria. Also, retailers and service providers who did not previously have online sales capabilities are looking at online searches because the referred customer will be able to come into their stores or call them to make a purchase.
"Local companies who had not been able to take advantage of online advertising before or were unsuccessful in their online advertising attempts have a whole new opportunity before them," McCarthy explains. "Before, if you were a retailer that only had stores in Los Angeles, you might have gotten your name before a lot of customers who just weren`t going to shop with you. Now you can target your advertising strategy so that you only show up before customers who are located in the Los Angeles region. This is a much more efficient and cost-effective way to advertise online."
In addition to targeting their search criteria, retailers can also target their ads themselves. A customer who clicks on the retailer`s ad might then see an advertisement that emphasizes convenience of location and features that are specific to a region.
The desire to capture the local market has attracted even the largest global search companies. Yahoo Inc., for example, launched Yahoo Local in early October to pursue that market. Yahoo Local is accessible on the Yahoo Front Page and Yahoo Search sites and was launched after obtaining consumer feedback from a beta test in August.
"We`re very excited to integrate our local search product into the Yahoo search experience," says Jeff Weiner, senior vice president of Yahoo Search and Marketplace. "Local is one of the most popular and valuable search categories for our users."
Among features that were incorporated into the local search offering as the result of the beta testing are an improved relevance algorithm to deliver more precise local results; additional data sources; streamlined rating and review systems; improved integration of driving directions from Yahoo Maps; and improved interfaces for narrowing and sorting results by price, rating and distance.
"Local searchers can now feel like an insider in the neighborhood they are exploring," says Paul Levine, general manager of Yahoo Local.
Merchants ensure placement on Yahoo Local in the U.S. by signing up with Overture Local Match, a subsidiary of Yahoo.