I am in the process of selecting a shopping cart to use for an online storefront. Yahoo stores is appealing although I had some concerns about whether using their templates or their shopping cart would interfere with the SEO of the my store.
My question: Will using Yahoo Stores make it harder to optimize my website for search engines? Or will it limit the effectiveness in any way?

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Very good question. I recommend you to find a site that has Yahoo Stores and then ask the site's owner for his/her opinion. Also, try to find one naturally online

I find that using Yahoo Stores will NOT negatively impact your SEO. I have also seen yahoo stores rank extremely well in the SERPs.

Bottom line.. as long as you can control the meta tags and on-site content, and conform to universally accepted web standards, you will be able to successfully optimize each page for the search engines.

I agree with Jay. Just after I saw this post, I looked online for certain home stuff and tada - I found a few sites on the first Google SERP page that were powered by Yahoo Stores so it confirms with me that it does not matter.

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