Opportunity Is in the Bag Social shopping is driving more than products and purchases--and forward-thinking online retailers are working with vocal consumers to blow apart traditional business models.

Earlier this year, Giantnerd, a Boulder, Colo.-based outdoor gear and apparel e-tailer, spotted some consumer complaints on both its website and Facebook page about a unisex day pack it sold. Customers' posts indicated the straps irritated their skin. The chief executive officer of this self-proclaimed "social shopping community powered by love," Randall Weidberg, informed the product's manufacturer. Using the online feedback, the two parties collaborated on how to improve the day pack. The manufacturer immediately modified the item, in time for its next production run.

This story exemplifies social shopping--the convergence of social media and e-commerce--at its best, says Judy Strauss, associate professor of marketing at the University of Nevada, Reno, and co-author of the study "Radically Transparent: Monitoring and Managing Reputations Online."

"Social media creates great opportunities, not just promotion opportunities and opportunities to win business from competitors, but also conversations with prospects and customers in a way that is much more efficient than it used to be and that can help a company grow and improve," she says.

The Mighty Voice
Social shopping sites--Kaboodle, ShopWiki, ThisNext and others--aim to provide consumers with an online shopping experience that's similar to or better than one they'd have in a store. Each approaches it differently. Giantnerd, for example, lets the online community--through members' comments--determine the products Giantnerd sells, modify the Giantnerd site's design and generate ideas. Giantnerd rewards people for participating on its site (from reviewing products and creating lists to posting pictures and starting discussions), with Nerd Dollars, which can be used toward future purchases, and Social Rank Points toward reaching the ultimate title of "Giantnerd."

When online retailers engage in social media correctly, both they and the online community benefit. Retailers gain ideas for new products or improving existing ones--essentially free market research, Strauss says. Customers receive the merchandise they want, in a personalized way, and enjoy the social shopping experience. They praise, discuss and share the brand, online and off.

Problems, however, can arise when an e-commerce brand doesn't deliver what consumers expect, Strauss says. The online community may vent, expose and criticize, and its cumulative voice is loud and powerful. Negative feedback can lead to companies losing customers, experiencing drops in stock value and even having to close permanently.

"I call social media 'word of mouth on steroids,'" Strauss says. "With the online community, brand experiences spread like wildfire."

For example, in April, a Western Michigan University student created a Facebook dedicated to allegations of illegal practices by a local towing company. In less than a month's time, the group grew to more than 10,000 members.

In another recent example, Greenpeace, via a YouTube video, exposed Nestl� for using palm oil in its products, which the environmental group equated with condoning deforestation in Indonesia and destruction of orangutans' natural habitat to meet product demand.

It's becoming more and more difficult for companies to conceal anything, especially as the number of people and businesses engaging in social media climbs. And the evolution of the internet into its next generation, known by some as web 3.0, likely will magnify this phenomenon, says Omaro Ailoch, founder and president of OC IT Services, an Irvine, Calif.-based company that provides open-source web development, search engine optimization, and search engine and internet marketing.

"Anything good or bad that's being posted is going to be much easier for people to find with web 3.0," he says.

Musts for Businesses
Because of the online climate, it's more important than ever for you and those representing your retail company to be truly authentic, honest, respectful and thankful, and reveal that through your web-based interactions with the online community, Strauss says. Consider sharing your processes and plans, and letting the online public comment.

"The more you reveal, the better people like you and trust you," Strauss adds. "It's just like relationships with friends and other people. That's key online."

Trying to hide mistakes or squelch feedback by, say, deleting posts or acting heavy-handedly only backfires. "It's a conversation," Strauss says. "It's not a monologue."

When your company makes a mistake, and it will, Strauss says, admit it, reveal how you're going to remedy it and thank the community for alerting you.

Also, you must monitor your online reputation--that of your brand, company name, chief executive officer, other public principals, and your advertising campaigns and slogans. You can do this through a social media desktop application or content aggregator such as Google Alerts, Skimmer, TweetDeck, DeskTube, Sobees and others. These programs scan certain websites and notify you when content related to your company appears. The Giantnerd staff--known internally as the HERD--routinely watches for user-generated content on and off its site and responds to it in real time, keeping alive the dialogue, Weidberg says.

The Impact of web 3.0
Web 3.0, also called the semantic web, expands on web 2.0 technology, which allows users to self-publish data and interact with one another through various social networking sites. web 3.0, which will enable websites to interface with one another, processes that data, creates meaning out of it and makes intelligent decisions based on it, Ailoch says. In the 3.0 realm, for example, a social shopping site could recommend products to you based on reviews you perused on another website, like epinions.com or reviews.com. This would further customize consumers' online shopping experiences, which is what they want, Weidberg says.

"web 3.0 aims to make the internet itself a huge database of information accessible to humans and machines," Ailoch says. "This data-driven web will enable us to unearth more accurate information, faster, from the internet."

More and more, we'll see shopping sites integrating with other sites, Ailoch says. This allows consumers, for example, to share a product--while on a social shopping site--with their personal network on a social media site, like Facebook. Integration with the social web, in fact, is the next phase for Giantnerd.

"We'll take our platform that's very internalized right now and spider that out into the web," Weidberg says. "It will take the viral aspect of social networking to another level."

Retailers need to be ready for web 3.0, Ailoch says, which means if you haven't already done so, you should:

• establish a social media presence (for example, publish a page on Facebook).
• incorporate customer reviews into your website.
• facilitate sharing from your site to social media outlets (Del.icio.us, StumbleUpon, MySpace, Digg, Twitter, etc.).
• personalize your customers' experiences as much as possible.
• enable users to access, surf and purchase from your site via mobile devices (like the iPhone).

"Social shopping will become the new standard for e-commerce sites that want to stay competitive," Weidberg says.