Search engine friendly URL's are short, easy to read by human website URL's that replace the long and un-readable strings that most shopping cart solutions produce to show dynamic data from a database.

not friendly: www.site.com/catalog/file.dll?secid=009&catid=992
freindly: www.site.com/books/fiction

It was originally believed (and argued by SEO's) that better URL's meant better search engine placement.  The orignal thought was that some search engines have a hard time reading query string URL's because they see the same page for lots of different content when they crawl a site (since one dynamic page displays lots of dynamic content).  It was also believed that search engine spiders have a hard time reading past the "?".  This was all eventually proven wrong, and then the argument went on that having keywords in your URL's helped your search results.  While this hasn't really been proven, most people figure it can't hurt, so why not.

While I don't think we can get everyone to agree that short easy to read URL's may or may not make you shoot to the top of Google and Yahoo, they certainly don't hurt, so if it's within technical reach, it's well worth looking into.

The best argument I've found for SEO URL's is just the clean professional appeal they give to a website.  Plus with Web 2.0 sites taking off, it's almost a must to have super short and clean URL's if you want to be part of the crowd.

The bottom line is this, short URL's not only are less intimidating to customers, they make navigating a site easier (if they work as they are supposed to).
For example...
If www.site.com/books/fiction takes you to the fiction category of the book section of an online store, then we should be able to take off the last part of the url and get to all books by visiting www.site.com/books

It's all about making customers feel comfortable on your website, and short clean URL's can really go a long way into doing that.

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