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Yahoo! Math: Search + Shopping = Small Biz Bucks

Yahoo! announced on Monday the integration of Yahoo! Shopping with product search, following the trend of the blurring between e-commerce and search, while adding another service to appeal to small businesses.

Yahoo! Product Search kicks off with 17,000 merchants and "millions" of items already part of the Yahoo! Shopping platform. This will catapult Yahoo! to the top of the heap among product-comparison search engines. Freshly renamed Shopping.com, for instance, boasts only 3,000 merchants. Yahoo! Product Search offers a mix of unpaid listings, obtained from Web crawls, and paid-inclusion listings from advertisers. Results are determined based on relevancy.

Like Shopping.com, users can compare products by price and obtain information on shipping and handling, as well as product reviews.

"They've done a really great job of combining keyword search, category drill-down, and product comparison," said Matthew Berk, an analyst with Jupiter Research, which is owned by the parent company of this site. "They've put the three together really nicely."

Yahoo!'s product search will put it in competition not only with the likes of Shopping.com and BizRate, and Google's Froogle shopping engine, but also with behemoth e-tailers like eBay and Amazon.

"Google and Froogle are pretty good at helping you find a product, but they're not very good at helping you decide if you want to buy it," said Rob Solomon, vice president and general manager of Yahoo! Shopping.

Solomon predicted the market would split over the next year, between a top-tier of starting points for e-commerce (Yahoo!, Google, eBay and Amazon) and niche product-comparison sites (Shopping.com, BizRate, NexTag).

"We think that there's been a pretty big void in the space that's fully comprehensive on the product side and also offers the comparison shopping," he said.

The merging of search and shopping was expected from Yahoo!, which began testing a product search feature in the spring. The innovation fits with CEO Terry Semel's plan to lure small-and medium-sized businesses to Yahoo! for everything from Web hosting to Internet storefronts to online marketing.

"That's the future of Yahoo!: to be the one-stop shop for small businesses," Berk said.

To further that, Yahoo! separately rolled out a e-commerce packages for small businesses. Yahoo! Merchant Solutions is a tiered offering designed to move small businesses through the Yahoo! funnel.

The packages begin with a $39.95 per month starter kit, giving a small business a taste of Yahoo!'s offering, such as hosting, basic e-commerce functionality, domain registration, and bandwidth. The other packages include further add-ons, such as online coupons, advanced options for Internet storefronts, and dedicated customer support. Any Yahoo! Merchant will qualify for a 20 percent discount on listings included in Product Search, according to Solomon.

Yahoo! has taken a page out of Overture's book by providing online self-service tools for merchants, as a further lure to small businesses. Merchants can use a direct feed service, called Product Submit, to list items in Yahoo! Product Search.

Unlike Shopping.com and other product comparison sites, Yahoo! offers both CPM-priced ads within Yahoo! Shopping, as well as CPC-based listings in Product Search. Yahoo! said the options were based on merchant feedback and designed to give advertisers flexibility.

The CPC system works similarly to a paid inclusion search service offered by Yahoo!'s Inktomi. An advertiser is guaranteed only that its product listings will appear in the database, while results are based on relevancy. Pricing varies, with options for including a logo, bolded text, and Web links.

Also, Overture Services, which Yahoo! purchased in July, serves paid listings at the bottom and the right side of the results page. Those listings are priced on a CPC model.

Yahoo! executives have said that once the Overture deal closes, which is expected by the end of the year, they can roll out packages for small businesses that include paid listings and other marketing services. The Overture acquisition will bring Yahoo! a huge list of prospects for its business services: more than 100,000 mostly small businesses.

"The product search and changes to it will make it a more successful marketplace and it will make it a better place for our merchants to participate," said Rich Riley, vice president and general manager of Yahoo! Small Business. "Over time, you'll see us do various kinds of bundling."

Solomon said Yahoo! would build awareness of Product Search through online promotions on the network and keyword advertising. Yahoo! will also roll out a print and radio campaign to trumpet the search engine before the holidays.