Start-Up Steps Up to Local Product Search Challenge

Take Shopping.com’s product search functions and combine them with Internet yellow pages players’ local focus. What do you get? A San Francisco-based start-up called StepUp.com wants to be the answer to that question.

The 10-employee firm, headed by three Handspring alums, aims to create a local product search destination, which would enable consumers to find things online, then buy them in local retail outlets. Someone looking for a particular model of TV, for example, could find exactly which merchants within driving distance had the item in stock at the best price, potentially saving themselves time and money. The beta version of StepUp.com launched this week.

“The only local shopping resource available for people is the yellow pages. The problem with the yellow pages is it allows you to guess a business category, and then call businesses and see if the product is in stock. It’s kind of a tedious, slow process,” said Kendall Fargo, co-founder, CEO and president of StepUp Commerce. “The yellow pages experience is still about the same as it was about 70 years ago.”

So far, results on the StepUp.com beta site come through affiliate relationships with Kmart, Best Buy and Circuit City. They don’t yet reflect real-time inventory status. The company is using the beta test period to enlist local merchants, and national chains with local outlets. To make this easier, it’s developed software that integrates with Intuit’s popular QuickBooks accounting program. Merchants using QuickBooks to keep track of inventory can automatically link their product information to StepUp.com’s systems.

“The nice thing about our system is that we’re not taking any confidential information. We’re talking product name, part number, product description, plus quantity that’s available. It’s information that businesses are very comfortable with sharing with the public,” said Fargo. “I think the businesses that are going to benefit most immediately from it are those that have products that don’t meet an Internet shipping model, like furniture.”

StepUp is initially offering listings to merchants for free, in an effort to build up its index. Later, the company plans to upsell participating merchants with opportunities to highlight their listings, through coupons or special discounts for example. The company hasn’t settled on a pricing model yet, but says the model is “evolving.”

The company hopes to tap into the $2.5 billion the Kelsey Group predicts local paid search will generate domestically by 2008. While the online product search category is quite crowded, and as local businesses are the latest targets of the likes of Google and Yahoo, no one has put it together quite like StepUp.com.

“There is a market need there online and there is a consumer demand that exists,” said Greg Sterling, an analyst with the Kelsey Group. “The challenges mostly exist on the advertiser side. That’s where the challenge exists for everyone [courting local businesses”.”

Understanding those challenges, StepUp’s Fargo talks warmly of the possibility of partnering with the likes of Google or Yahoo, or potentially an Internet yellow pages player.

“There are obviously a lot of emerging localized content, localized search-type companies out there,” said Fargo. “They’re generating all of this local interest, but they have no local shopping experience. We’re working on partnerships with those kinds of companies.”

The company still has work to do to perfect its technology, too. On Monday, a search for “DVD player” brought up “Pittsburgh Penguins Mario Lemieux 20 Card Player Set” as the first result. A search for “’DVD player’” (with quotation marks) returned more relevant results. Still, with the search parameters set for within 5 miles of a Zip code in Brooklyn, New York, the first store listed was in Huntington, New York — 38 miles away (though the search results page listed it as two miles away).

“They are definitely stepping into an area that is largely unoccupied right now,” said Sterling. “These guys are more obviously out front on that score. It all depends on how quickly they can get merchants to list with them and provide a good consumer experience. That’s sort of the key to their success.”