Google's cloud-hosted search application for e-commerce sites has been upgraded with on the fly results that drop down from the query box as shoppers type their search terms, the company announced on Tuesday.

The feature is based on the Google Instant feature that the company added to its general web search engine in September, but it has been adapted for the Commerce Search product, which retailers purchase to power the search function of their stores.

"The search-as-you-type feature here has been geared and customized to the needs of retailers," said Nitin Mangtani, a Google group product manager. For example, the Instant implementation of Commerce Search displays product images, shows brands and includes prices, all key elements for people shopping for an item, he said.

This new version of Commerce Search, dubbed 3.0, also serves up product recommendations based on users' queries and site browsing. For example, Commerce Search can tell users that people who viewed a particular product also viewed other ones. It can also inform users which product people ended up buying after viewing this product. Commerce Search also tells users which products people bought in addition to a specific product.

The idea here is to make the online search and shopping experience more interactive, and in that way closer to the experience of walking into a physical store and seeing related products at a glance on shelves and getting advice from a sales associate, he said.

This recommendation capability is rolling out as a Labs feature, so IT administrators have to turn it on for their websites.

Commerce Search now also informs shoppers about availability of products in nearby local physical outlets, in case they prefer to buy it at their neighbourhood store. "It's like real time inventory availability information," Mangtani said.

Commerce Search now also has new merchandising capabilities to let retailers promote certain products based on queries and create banner areas.

Compared with its feature set at its launch in November 2009, Commerce Search has now reached a level of sophistication that should attract serious attention from retailers looking to improve their site's product search engine, said IDC analyst Hadley Reynolds.

"While Google Commerce Search started out with a fairly rudimentary set of functionality, they have been busy adding important features and functions, and now have a package that online marketers will be looking closely at as they make new commerce technology enhancements," he said.

The "instant" product results that appear as shoppers type in queries should add convenience and time savings to the product discovery process, he said. "This feature also gives marketers and merchandising managers a controllable environment in which to feature strategic products," Reynolds said.