• by Laurie Sullivan  @lauriesullivan, August 5, 2011

As the Internet continues to transform into a platform allowing consumers to transact purchases through PCs and mobile devices, ReachLocal will build an ecommerce offering to facilitate transactions for local merchants and small businesses, CEO Zorik Gordon told MediaPost.

The offering isn't necessarily around payment services like near field communications or hardware, such as mobile phones. These enabling technology and hardware might allow consumers to pay for purchases, but RealLocals offering will become more about creating opportunities for offline purchases aimed at small businesses that serve consumer needs. And it could do it in a way similar to the group-buying coupons and voucher model created by Groupon.

Marketers and merchants might think Gordon's model still seems a bit nebulous and confusing. He's convinced this model will transform local transactions and commerce as the two become the next step in local services.

Groupon focuses on companies supporting consumer impulses, such as entertainment, restaurants and spas. ReachLocal supports mostly "need-based verticals," like plumbers and other local businesses with five to 50 employees. They generate between $250,000 and $5 million in annual revenue.

The companies supporting consumer needs, a required service, will become the next movement in group-buying or deals. "The real innovation will come for companies that figure out need-based deals," Gordon said. "And it will become a different model, a little too early to discuss in detail."

ReachLocal recently reported that second-quarter 2011 revenue rose 32% to $92.8 million, compared with the year-ago quarter, but missed Wall Street consensus of $93.6 million. The company also reported a loss of 3 cents per share, much less than the 13 cent loss the Street called.

A deal to support Google paid-search ads and new product development continue to drive up ReachLocal margins. J.P. Morgan analyst Doug Anmuth wrote in a research note that gross margins of 49.8% were above our 45.8% projection, as ReachCast and ReachDisplay were both stronger than expected during the quarter. "ReachCast renewal rates were solid through its 2nd full quarter and management believes the product can be 10% to 20% of revenue over time," he wrote.

Gordon said supporting the small business environment remains a bit rocky, but believes international expansion can help to grow the company's revenue by 30% long term. In a research note, analyst firm Piper Jaffray estimates ReachLocal revenue can continue to grow in the mid-double digits, but expectations are a bit tempered, based on the company's commentary around the domestic SMB environment.

About 22% of ReachLocal's second-quarter 2011 revenue came from outside the U.S., up 20% sequentially. International revenue grew 86% from the prior year. Piper Jaffray notes that last quarter, the company expects to enter between two and three new international markets per year during the next three years.