E-Tailers Try New Holiday Tricks

They're tapping blogs, social-networking sites, and GPS technology to lure shoppers

Darcey Howard needed an idea. The Seattle image consultant wanted to find a business gift she could give clients -- something stylish, yet appropriate for more than one person. So she went to Judysbook.com, a social-networking site that lets people stay in touch with friends or business associates, and asked for input from the members of her network, mostly other marketing pros. They recommended the Dangle, a $35 portable handbag holder that sits on a tabletop, letting women avoid plopping their Coach () and Gucci bags on the floor. Howard was sold -- on the Dangle and on using the Net for smarter shopping. "You can spend a lot of time there, reading things and finding stuff," she says.

It's not only a merry Christmas on the Web this year, it's also an innovative one. Forrester Research Inc. () says online retail sales this holiday will surge 25%, to $18 billion. The increasingly strong profitability of Net commerce is giving retailers the chance to experiment with a stockingful of new sales and marketing tactics. They're tapping into technologies such as blogs, social networking, and wireless phones to draw shoppers to their sites. "There are a host of new ways to reach out that are more innovative," says Forrester analyst Carrie Johnson.

The experiments are coming from startups to Web giants alike. Yahoo! Inc. () is testing Shoposphere, a networking site within Yahoo! Shopping that offers thousands of reviews, blogs, and shopping lists generated by members. Rob Solomon, a vice-president at Yahoo! Shopping, says relying on users lets Yahoo serve markets too small to command space on its front pages. An example: One member's "Poker Night" shopping list, which tells readers where to find 16 must-haves, from strategy books to green, felt-covered tables. "If you can tap into expertise like that, it's really special," Solomon says.

It can also pay off for smart shoppers. Yub.com, a site with thousands of product reviews, offers visitors cash-back rewards of up to 10% when they make purchases at more than 60 other sites, including Macy's and cosmetics retailer Sephora. Yahoo plans to let people earn cash for posting reviews that lead other users to make purchases.

Sometimes the experiments aren't about closing sales online but about finding new ways to market to harried holiday shoppers. Blog DailyCandy.com offers fashion and beauty tips to the young and hip in eight cities. This fall it launched a newsletter alerting members to deals in their areas. Now companies from Apple Computer Inc. () to Levi Strauss & Co. are lining up to be included in the online mailing, offering DailyCandy members discounts of up to 25%.

Perhaps the biggest potential lies in ventures that want to tie e-commerce to local commerce, which still accounts for about 95% of retail sales. Drawing most of the attention is Google Base, a database service from Google Inc. () that lets people and businesses advertise almost any product or service in a city or region. Already, 14.5 million products are listed on Google Base.

SHOP AROUND THE CORNER

The search giant is but one of many players in the field, however. Startup Cairo.com rounds up local advertising circulars and puts them online to let shoppers know which physical stores in their area offer the best sales. ShopLocal LLC has the same sort of circular information on its site, plus what it claims is the first service for comparing prices at online retailers with those of local merchants. ShopLocal Chief Marketing Officer Dave Hamel says the site has prices from as many as 700 local stores in some cities.

New York's GPShopper Inc., with its S'Lifter service, has attracted attention from retailers as large as Foot Locker Inc. () S'Lifter lets people use their cell phones to compare prices at nearby stores and get notices of local sales. By next year, the company plans to let consumers fill out wish lists, then use satellite technology to flag them when they walk past a store that has one of the items on sale. "We want to find out how many of these places are being used by our customers," says Raul Vasquez, vice-president for marketing at Wal-Mart.com (). "We'll work with several of them."

No one pretends to know how much business the new technologies can help Web merchants capture. Still, the experimentation this season is striking, after years when what passed for innovation was bigger pictures of products. The changes are starting small. But if they work, look for a lot more like them for Christmas 2006 and beyond.

By Timothy J. Mullaney