Social commerce is an emerging category of e-commerce that integrates all the best practices we’ve accumulated from our experiences with social media and social networks. Introduced by Yahoo! in November 2005, the term initially referred to features in their online store that encouraged interaction and collaboration among users. These features included shared pick lists, user ratings and user-generated reviews, and advice. The explosive growth of social networking sites opened the doors for exploring e-commerce prospects targeting the huge user bases of such sites as Facebook, MySpace and Twitter.

A study made by the McKinsey group in 2009 reports that for the social commerce providers — the online shops, e-commerce providers and the brands with online presence — the benefits include increased speed of access to knowledge and reduced communication costs. For buyers, these benefits translate to increased product awareness and customer satisfaction.

The practice of social commerce has since expanded to include tools and applications that support social interaction and user contributions to assist network members as they buy and sell products and services online. These include the following applications, found in many online stores and e-commerce sites.

Ask-Your-Network tools provides recommendations and opinions from other shoppers, or those who have knowledge about the product or provider. This activity is sometimes referred to as “friendsourcing.” Examples of this can be seen in the shopping sites of Mattel and Jansport.

Deal Feeds let people share information and news with their friends about deals from brands they patronize or like. Dell, Amazon and Carrefour are all big on deal feeds, which drive a big chunk of their day to day e-commerce activities.

News Feeds are like Deal Feeds; they’re intended to alert people with news about their favorite brands or stores, or to let them know if a sale is on the horizon. This news is shared and spread using social media news syndication tools (for example, Twitter, YouTube, Facebook, and RSS). BestBuy, North Face and Nokia’s WOMWorld all use news feeds to spread the word on latest offers.

Pick Lists, the tool that started it all on Yahoo, are of tremendous value in social shopping portals. They let shoppers follow other people, and be followed in return by the shoppers they trust. Pick lists are a major part of the Amazon experience. They are also put to good use by BestBuy and Kaboodle.

Referral Programs let registered users spread membership by inviting their friends through affiliate networks. Private shopping event portals commonly use this tool. Amazon Affiliates, Gilt and VanRosen are among prominent brands that rely on referral programs to drive membership and increase their user base.

Share-With-Your-Network tools allow shoppers to share their shopping experiences and bargain finds with other members of their social circle. Kaboodle and StyleFeeder use this effectively. Examples of this are on the shopping sites of Charlotte Russe, Mattel and Jansport.

Shop Together tools let shoppers browse online stores together, allowing them to influence each other’s buying decisions.

Social Network Storefronts are shopping portals hosted by social networks like Facebook and MySpace. Levi’s has a very attractive Facebook store.

Whether just a passing fad or a true evolution in retail commerce, social commerce has tapped into opportunities and has set the direction for future developments in retail trade and e-commerce.