The Kelsey Group: ShopLocal Redesign and the 'Offline' Future of Online Shopping

March, 7, 2006 -- I have seen the future of online shopping and it's ShopLocal. Okay, so maybe that statement is somewhat overblown, but it's essentially true. Newspaper-owned ShopLocal just relaunched with a new and improved design and interface. The site offers both online and local deals on a range of products. Consumers can browse newspaper inserts, content from merchant feeds and compare online and local deals.

I can see how much it would cost to buy that laptop online and, with a click, compare those prices to local retailers (with an emphasis on big boxes right now). However the site does increasingly offer true local business information. And that's an area ShopLocal is working to build out.

Froogle, CNet, Interchange Corp.'s Local.com and AOL's Pinpoint Shopping, which both distribute ShopLocal content, and ShopLocal's newspaper affiliates (e.g., Knight Ridder's Mercury News) offer local/offline shopping information. So do Cairo.com and Yokel.com. But the major shopping engines and portal sites are going to need to introduce this "local shopping" content to be competitive over the long term. StepUp.com and Channel Intelligence are two companies working to provide that offline data about merchants and inventory information.

In its redesign, ShopLocal has done a good job organizing and presenting a huge amount of content and visual information in a clear and generally intuitive way. It cannot be disputed that consumers want this local shopping content. According to research conducted in 2005 by Yahoo!, in certain "commodity" categories, consumers may convert or transact online in as many as 50 percent of the cases (depends on the specific category). However, in "high consideration" categories that number drops to 30 percent or below.

The Kelsey Group's research indicates that with purchases over $500, where the Internet is the starting point, over 90 percent of the transactions finish offline. And, my favorite statistic these days: e-commerce represents only 2.5 percent of US retail -- despite the growing influence of the Internet over more and more consumer shopping behavior. Clearly the majority of Internet-influenced transactions are happening and will continue to happen offline.

An indication of consumer demand for local shopping information is ShopLocal's rising US traffic (per comScore August 2005):

1. Shopping.com sites (eBay)
2. Shopzilla/BizRate sites (E.W. Scripps)
3. Yahoo! Shopping
4. NexTag sites
5. inStore (AOL)
6. PriceGrabber
7. ShopLocal (Gannett, Knight Ridder and Tribune)
8. Froogle (Google)
9. CNET Reviews
10. Monster Marketplace.com

These data are now relatively old so I would expect ShopLocal's ranking to be rising further.

At the upcoming Drilling Down event, we'll be exploring the relationship between the Internet and offline transactions in the panel, "The New 'Purchase Funnel': Online Shopping, Offline Conversions," featuring:

Kendall Fargo, CEO, StepUp.com
Brian Hand, CEO, ShopLocal.com
Catherine Kelly, Chief Technology Officer, HarvestINFO
John Kim, Sr. Director, Advertiser Product Marketing, Yahoo!
Search Marketing
John Melideo, CEO, Jambo
Rob Wight, CEO, Channel Intelligence