Holiday Advice for E-tailers

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Although the community knows best in most cases, there are instances when the experts need to exercise precise control over how to promote and position products in their online storefronts. Examples include removing a particular recommendation on an out-of-stock product, or highlighting recommendations about products guaranteed to increase your bottom line. So blend community-driven recommendations with expert tuning that factors margins, inventory levels, promotions, breaking news, and cross-channel content linking.

Step 4: Don't be blind to community bias.

Explicit crowd-sourcing techniques, such as ratings and reviews, have become popular for creating user-generated recommendations online. In theory, this approach has few flaws. If every single person who came to the site weighed in with opinions on every product, you would get a perfect representation of consumer attitudes. But here's the rub: Not everyone contributes. At the end of the day, 99% of the population remains unspoken for.

In reality, there are certain types of people more willing to make their voices heard, particularly when exerting effort is involved (such as writing a review). I categorize the most vocal and misleading group of contributors as squeaky wheels. This could be those people who simply like to complain—or it could be any one of us after a negative experience. Negative experiences tend to stand out more than positive ones and motivate us to take action. Overly positive reviews happen, too, so you ultimately get a representation of the community that is biased to the two extremes.

Another common form of bias occurs when Web site owners "game" the system, using shills to write positive comments. If you have a book coming on the market, your publisher will ask you to recruit friends to write reviews as part of the promotional effort. In my opinion, gaming such as this is actually the rule, rather than the exception, on Amazon and other media sites where products have authors or artists and personal connections abound.

Step 5: Listen to your silent majority while engaging your more vocal minority.

Ratings and user-generated reviews, though often misleading, have become an expected part of the online experience and encourage deeper engagement. However, user-generated review systems must also find ways to inform ratings based on valuable sentiment and implicit feedback gathered from the vast majority of their site visitors, not just the loud minority. With a truly integrated approach to recommendations that blends both implicit and explicit feedback, companies can expect to improve engagement and overall user experience by directing site visitors to the best products possible.

Whether shopping online or offline, consumers want to re-create the feeling of walking into a friendly store or neighborhood boutique. They want the owners to have intimate knowledge about what's on their shelves and which products similar shoppers have found most useful. By following these simple rules, online retailers can get closer to emulating this experience than ever before. The end result will be better conversions (turning Web visitors into purchasers), higher average order values, and ultimately bigger profits to celebrate in the New Year.

Jack Jia is founder and CEO of Baynote, a provider of on-demand product recommendation and social-search technology for e-commerce and business Web sites.

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