The E-Commerce Future, Google Style

As search becomes overwhelmingly dominant in e-commerce, Google executives are predicting major changes in the next two years, ranging from purchases via Web-enabled mobile phones to posting daily inventory updates.

Like every major sales and communications advance that preceded it, e-commerces 12-year existence has moved along in phases, as it slowly abandoned earlier methods to accept the new reality.

Offline and online brands were initially kept distinct, then they were awkwardly merged. Initial e-commerce efforts were flashy brochure sites, with rudimentary shopping carts and checkout systems thrown in.

Then systems that tried to anticipate needs and accelerate checkout were deployed.

From Googles perspective, though, one of the biggest changes has been the growing importance of search, both at the site and the Web levels.

Google officials point to a not surprisingly huge number of purchases that follow Web searches as well as abandoned shopping carts that immediately followed a non-productive site search. A classic example: A visitor searches a retail site for "video camera" or "movie camera" and finds nothing and leaves, when the site was expecting "camcorder" and would have shown him 20 models had he used the magic word.

Two Google executives this week talked about their view of e-commerces future and how IT executives should plan.

Seeing tons of additional details from retailers posted online will be one of the first changes expected by John McAteer, head of Google Retail. ("Yes, head is my actual title. Better say head of," he said.)

McAteers view is that a lot of merchants will pour continuous structured feeds of data—including SKU listings, daily inventory and hours of operation—into public search engines such as Google. This is currently being worked with on Google Base.

In theory, this would allow much more specific and relevant search results and—also in theory—much greater e-commerce revenue for the retailers who cooperate.

Not only could a consumer seeking a particular model of electric drill see the retailers who claim to sell it, but also the closest merchants that are open right now and that apparently have five still in stock.

How often does McAteer predict those inventories will be updated? "The more they update it as often as possible, the better off theyre going to be," he said. "Realistically, we can peruse that daily. For some retailers, it will be weekly."

The shop-online-and-buy-in-stores efforts will continue, McAteer predicts, but having much more specific information will make such efforts perform much more smoothly.

Some retailers—such as Best Buy—have tried to insert humans in the middle of the process to make the system more accurate.

That approach calls for customers to use the Web site to make the purchase and identify a local store that apparently has the item in stock. The site then tells the customer to stand by for a few minutes and wait for a confirmation e-mail. A beeper then sounds in the store and a store employee runs out onto the floor, finds the item and gives it to someone in customer service. Only then does the customer receive the e-mail confirming that the product is at the store.

That approach, McAteer said, simply couldnt scale sufficiently and will likely fade away. That will put the pressure right back where it should be, on technology systems to more accurately know what is and isnt in stock. That might require inventory data to be fed to search engines—for appropriate referrals—along with possibly POS (point-of-sale) and RFID item-location information.

The POS data might be critical during high-volume purchasing periods such as the end-of-year holidays. If a store, for example, has only one or two of a much-in-demand product, it might be helpful for the site to know that one was just purchased 5 minutes ago. The RFID data could indicate if the item has left the shelf, either already sitting in someones cart or perhaps simply misplaced.

Next Page: The reasons retailers resist data sharing.