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Who's Ready to Put the 'Social' in 'Social Shopping'?

Ever since the days of the town-square market or the general store, shopping has been a social experience. Stores offer people a chance to come together; and the goal of getting a good deal provides something for people to discuss.

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But more recently, Web sites such as Groupon and LivingSocial have used the phrase “social shopping”—and tried to give it a new meaning.

Now, Facebook, the largest social networking site, is taking a stab at the daily deal space, and it will be interesting to watch how it puts its own stamp on the idea of social shopping.

Competition in the space has gotten even more fierce, as speculation put the valuation of companies like Groupon in the billions. Many new sites are cropping up that want to muscle in on the attention given to Groupon and LivingSocial, but most of these sites are still falling short of offering shoppers a truly social experience.

At LivingSocial, for example, the primary social element is to convince several friends to sign on to a deal, so that you can get yours for free. At Groupon, the goal is to get enough people to sign up in order to make a deal valid. But those people are often anonymous strangers. And there is an argument to be made that these sites could essentially do what they do even without a social element attached to them.

While both sites have often been successful in creating buzz about their deals, which circulates from friend to friend in a social network, the idea of community building is not really the ultimate goal—gaining critical mass for the deal is the endgame, and that happens even when people don’t share these items with their social networks.

Facebook’s take on this concept is to focus on experiences that friends can do together, such as river rafting, going to a restaurant, or a concert. What’s interesting is that not all of its offers will provide consumers the ability to get access to these events on the cheap. Some will instead provide consumers with unique or hard-to-get experiences.

It will be interesting to see how successful Facebook is with an offering that isn’t so focused on bargains, which is a key motivator for many of the shoppers who frequent these sites.

No doubt Facebook has learned a few things from its earlier attempt to enter the deal space. Still, others, including Twitter—which ended its attempt to get into the daily deal space after only two months—have failed to gain enough critical mass to make the venture successful.

Others are trying to penetrate the space by cultivating a community. One such site is CheapToday, which relies on a network of so-called power shoppers, who earn points that can be turned into cash by seeking out some of the biggest bargains they find to share with the site’s visitors.

The power shoppers, who are often stay-at-home mothers or students looking to earn a little extra cash, hunt out deals to write about. They earn points based on the number of shoppers who click on the deal, and then proceed to the retailers' websites and make a purchase.

Kim Pinelli, a mother of three, is one of CheapToday's top power shoppers.

“I’ve always been a mega-bargain shopper,” Pinelli said. She dedicates about 25 hours a week to hunting down deals to write about for CheapToday.com. The money she earns won’t pay the mortgage, but it does help pay some of her household’s bills, she said.

Pinelli sometimes promotes her posts on her own Facebook page, and her friends and relatives seek her out for her shopping tips, but she says most of her success has come from learning how to track down deals on designer goods that make shoppers say “wow.”

In some ways, the site is similar to others. For example, it incorporates the idea of rewards for referrals, which is an element of other sites such asTreatFeed, which was created by Lagovent Group partners Brett Markinson and Konstantin Glasmacher, the founders of flash sale site HauteLook (which was bought by Nordstrom last year for $270 million).

And the idea of curators, who help consumers shop by providing their educated opinions, also isn’t new. That’s a key element of sites such as The Daily Grommet, which picks one product each day to feature and promote.

What’s interesting is that these last sites may be more “social” in their approach.

For example, if nothing else, the “power shoppers” of CheapToday are bonded together by their desire to bring in more users to the site, by finding great deals and providing useful information.

Also, says CheapToday Founder Milenko Beslic, the power shopper community offers a “collective wisdom,” by providing their expertise in tracking down deals.

At TreatFeed, the incentives don’t kick in until you have at least 30 friends in your network, and the bigger your network, the better the rewards system works.

As for The Daily Grommet, there is a feeling that the site’s users have a specific mindset and profile, which is helpful for retailers who want to target similar customers.

Questions? Comments? Email us at consumernation@cnbc.com

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