Evan Schuman's StorefrontBacktalk

In the 15 or so years that we’ve had E-Commerce, the industry has seen quite a few improvements, but nothing that radically changed the way people shopped or retailers sold. Local inventory search, which today is not even in its infancy (not really even embryonic; it’s more like a zygote), is likely to be the first truly dramatic shift.

Consider a quest for a stuffed animal shaped like a buffalo or a very specific part for a long-discontinued product. Assume that the consumer needs it today, so overnight shipping isn’t an option, or perhaps the consumer needs to examine it prior to purchase. The capability for a search engine to have a current and comprehensive list of products (SKU and sub-SKU) for every retailer in a given geography has huge potential to reshape E-Commerce. If nothing else, it could be some very good news for the smallest of retailers today, which hardly ever see any search engine revenue.

Last Thursday (March 11), Google made a major—albeit extremely preliminary—move into local inventory search through a deal with a handful of major chains: Best Buy, Sears, Williams Sonoma, Pottery Barn and the Vitamin Shoppe. The beta test has its accuracy issues, missing many products that are definitely in stock at those chains.

It also gets too specific too quickly. For example, we ran a test seeking a good HDTV. It found quite a few specific models and configurations. But it forced us to select a specific model, brand and configuration rather than allowing us to say, in effect, “Find me the nearest store that has any.” The ones it found were all much farther away than the Best Buy around the corner (and, yes, we checked. That local Best Buy had several HDTVs in stock).

But those bugs will get worked out. Indeed, from Google’s perspective, that’s the whole point. Instead of working out this process internally and then bringing in retailers—or the reverse, with retailers figuring it out first—Google’s objective is to run the earliest stage tests with various chains “so we’re both learning how to do this in parallel,” said Paul Lee, Google Product Search’s business product manager.

“There is some conception, historically, that there is a linear model where the retailer has to get everything done right. Then, eventually, the search engines can piggyback,” Lee said, suggesting that the simultaneous approach should sharply accelerate learning. First, the sequential approach would theoretically take much longer, as the retailer would have to figure it out and then explain the discovered process to the search engine. But realistically, the retailer will likely not have considered some things the search engine lives and breathes, thereby forcing the process to be re-created. If the search engine went it alone, a similar lack of experience with retail logistics would cause the same problem. By doing it together, the learning curve should be much faster and the robustness of the final product stronger.

The Google test is being done solely in mobile, leaving the desktop for much later, if at all. It’s not even offered for all of Google’s mobile platforms: Only iPhone, Palm WebOS or any Android-powered device. Sorry Blackberry users!

But the challenge for the retailer to have a comprehensive and current list of every product down to the sub-SKU level—not merely that it has 52 stuffed animals in stock from the Acme Toy Company (if it’s good enough for Wile E. Coyote, it’s good enough for us), but that it has three shaped like buffalos—is huge. The potential rewards are equally big, though, with each and every product capable of acting as its own tiny little search engine ad for the store.