Time for E-Commerce 2.0

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Not so at Zappos, which sells clothes, accessories, and a handful of other product types and focuses keenly on customer experience. With surprise upgrades to free overnight shipping, a U.S. call center with highly paid employees, and free and easy return policies, Zappos has created thousands of loyal users. But perks don't come cheap. Zappos is barely at breakeven despite $1 billion in gross merchandise sales. Still, CEO Tony Hsieh isn't done building his vision yet. Think of it as a brand investment that no amount of advertising—not even multimillion-dollar Super Bowl commercials—could equal.

• Make it social: Charlene Li, of market research firm Altimeter Group, is one of those special kind of geeks who wakes up at 6 a.m. the day after Thanksgiving to wait in line at RadioShack (RSH). "It's where my fellow geeks are," she told me in a recent interview for Yahoo's (YHOO) Tech Ticker. And it's not so much to buy whatever gadget she's eyeing as it is the experience of standing in the cold, holding warm coffee, and finding out what everyone else is buying.

Increasingly, online shoppers want interaction, too. They use social sites like Yelp, Twitter, Facebook, or blogs to replicate social aspects of online shopping. But there's no reason the e-commerce sites themselves can't participate. Build a Twitter feed into your page, or let your users install an application or widget that lets them buy from you even when they're on another site.

Li suggests that e-tailers watch a person's shopping habits and then tailor the experience. If someone always abandons a shopping cart when they're asked to enter a user name and password, give them an opt-out option, or an extra incentive of free shipping at that point.

• Concentrate on concierges: When Red Envelope filed for bankruptcy earlier this year, I had one panicked thought: How am I ever going to come up with gift ideas for my parents and in-laws? Red Envelope got the concept of a concierge, adding that extra touch of service. The company kept selection limited to a browsable amount of eclectic gifts and wrapped its signature red boxes in elegant white bows. My impossible-to-shop-for father-in-law loved the cuff links made from wood from the bleachers at Dodger Stadium; I wouldn't have found them if not for the Red Envelope concierge service. And no, I don't care about the extra shipping fees, or even the comparatively higher cost of some of the gifts. That's because Red Envelope wasn't just making a sale, it was solving a problem.

• Delve into discovery: Think of discovery as telepathic search. Instead of you knowing what you want and entering it into Google, the Web studies your surfing habits to show you what it thinks you might like. Mediocre discovery doesn't do anything but annoy people. But done right, discovery delights customers, fosters loyalty, and gets people to spend more. To date, Amazon has done this better than anyone, although Netflix (NFLX) is a close second.

The perfect candidate for rolling out a discovery-based user interface is eBay. Its search is horrific and the sheer total of its inventory makes browsing nearly impossible. And eBay bought StumbleUpon, one of the first Web 2.0 companies to build a business off discovery, by showing users Web sites, videos, or photos they might like, based on what they've previously shown an interest in and what comparable users have liked. But last I talked to StumbleUpon founder Garrett Camp, there was no intention of applying its technology to eBay's larger UI.

That's too bad for eBay, because undoubtedly a smart startup will.

For that matter, newcomers are likely to come up with a host of innovations that turn e-commerce on its ear in the coming years. And as someone who loves to shop, I can't wait.

Lacy has been a business reporter for 10 years, most recently coverhas been a business reporter for 10 years and is currently writing a book on global entrepreneurship. Her first book, Once You're Lucky, Twice You're Good: The Rebirth of Silicon Valley and the Rise of Web 2.0, was published by Gotham Books in May 2008. She also blogs for TechCrunch.