19th Apr 2012
Brands are deserting their Facebook shopfronts - but does this mean F-commerce is fundamentally flawed?
E-commerce on Facebook -the logical next step for brands or a square peg in a round hole? The debate continues and evidence is mixed.
Earlier this year Bloomberg wrote a damning report on the state of F-commerce, detailing how a growing number of large retailers were shutting their Facebook storefronts, with the likes of GameStop, Gap Inc., J.C. Penney and Nordstrom all having closed their Facebook stores in the past year.
For some, there was little surprise at this turn of events. While Facebook is the most visited site on the web, with around 850 million members, its users go there to socialise rather than shop, said Forrester Research’s Sucharita Mulpuru, who equated it to “trying to sell stuff to people while they’re hanging out with their friends at the bar.”
Yet despite the rising number of high-profile F-commerce failures, there are still many that are keeping the faith. Reuters recently interviewed a host of start-ups, such as Fab.com and BeachMint, that remain confident that Facebook will be the next great ecommerce platform, and that despite slow uptake, the infrastructure and sheer volume of users will be enough to ensure that F-commerce will take off.
Furthermore, it is something that Facebook’s investors also seem similarly bullish about - Millennium Technology Value Partners, which has a stake in the social network, said that it is a “natural move for Facebook” while Accel Partners indicated it is a “big imperative” for Facebook.
Dead or alive?
So who is right and who is wrong?
Charles Nicholls, an expert on ecommerce, believes that the challenges are stacked again F-commerce success.
“Facebook stores have a more limited range than the full store, so it’s inevitable that serious shoppers will navigate to the main ecommerce store. Limited ranges also lead to lower average order values. Another negative impact of a Facebook store is that there is a reduced screen width in which to display merchandise. This leads to a practical limitation of a three or four column grid for displaying products, smaller images, and the right hand column being reserved for advertisements.”
He continues: “This is also a major limitation when considering mobile sites and apps where the screen size limits the images, download speeds limit the quality, and for apps, limited ranges typically apply.”
Nicholls concludes: “There are, of course, always exceptions where there is an inherently social aspect to the business, and Facebook commerce can thrive. But for the majority of brands and merchandisers, it just doesn’t make sense. In the end, the focus should remain on making ecommerce more social and accessible for different device types.”
Anton Gething, co-founder and product director at nToklo, believes that high-profile failures have left many feeling that F-commerce is a futile exercise, but that it could be the execution that is at fault, rather than a fundamental problem with its premise.
“When Facebook launched its marketplace, offering retailers and brands a storefront on the social network, many heralded the beginning of Facebook commerce. However its underwhelming adoption and the recent announcements that Gap, J.C. Penney, and Gamestop, amongst others, are closing their Facebook stores, it begs the question that, if big brands have lost faith in F-commerce, then who can make it work?” he says.
“Social commerce is something often discussed as a natural progression of two successful market arenas – social networking and e-commerce. However, with forays into social commerce to date amounting to little more than adding a ‘Like’ button or setting up a Twitter feed, the evidence suggests that it’s not yet the sum of its parts.”
Living up to its potential
So how can brands become more sophisticated with their social commerce efforts? What can we learn from the exceptions that Nicholls talks about – from the likes of the Coca-cola F-store, the Lady Gaga F-store and the Nine West F-store?
MyCustomer.com recently spoke with a number of experts for their advice on similar initiatives.
“While there is no one-size-fits-all social media strategy, there are certain ground rules businesses can follow to cut through the hype and get to the essence of engaging with customers,” says Senan Sunil, associate vice president at Infosys. “These basic considerations are centred on three aspects; consumer relevance of the business and the product, the current competency of the organisation and, finally, internal organistional capabilities. One of the most important things to keep in view when adopting social media into your company’s marketing is your organisation’s skills and competencies in the real world – these can be critical in engaging with consumers in the virtual world too.”
Steve Richards, MD of specialist social media agency Yomego advises: “There’s no point embracing F-commerce merely to cannibalise sales from other channels. Facebook can, however, be a great platform to trial a new range or to provide an exclusive deal to people actively engaging and advocating your brand. Executed well, this will stimulate trial, drive loyalty and provide incremental revenues. Retailers need to have mechanisms in place to acknowledge praise, respond to questions and expect and deal with criticism (justified or otherwise!). After all, consumers are much more likely to say to a friend on Facebook ‘don’t buy that, I did and it fell apart in two days’ than they are to go to the retailer’s site and give them feedback.”
Simon Quance of Equi=Media adds: “The first critical step in social selling is planning your approach to the space right and ideally this should include understanding what your customers are already saying about your business and your competitors and where they are saying it. Once you have a strategy for managing your reputation, the next step is developing a conversation with your customers. Key to this proactive brand effort in Social should be producing useful and engaging content that consistently and frequently connects people to the business or its core values. The key is making that content relevant to your customers and their needs and wants rather than simply to your products and services.
“Building trust and dialogue with people is key, social is not simply another marketing and communication channel, but adding value to a customer’s experience of your business will make you more valuable to them and this impacts awareness and consideration.
“Also worth consideration is the fact that your investment in social commerce is impacted by the success and credibility of the network or channel you are developing a presence in. By that I mean your Facebook page will only be successful if Facebook continues to be successful as a network. The issues that impact them, like privacy and security, impact you as well, especially where e-commerce is concerned. The “first to launch a shop” headlines have long gone for Facebook and the game is now all about making it pay. Whatever your social selling ambitions your strategy must be about adding value to customers’ experience of your brand; build the conversation and they will come.”
Is there an F-commerce future?
The allure of Facebook’s considerable audience will be enough to ensure that many brands will continue their efforts to carve out a retail element on the platform. And certainly taking on board some of the advice from experts can provide brands with the best possible chance of success.
But even then, there is the chance that Facebook simply won’t be an appropriate platform for retail for your company. Richards suggests: “I think it depends on the nature of the retailer. Some purchases we’ll make on our own, other’s we’ll seek the opinion of friends. I foresee more strategic partnerships where brands combine to cross-promote their Facebook audiences to mutual benefit. But, as ever, retailers will need to actively manage the customer experience and within Facebook, people will resent overt, ‘salesy’ messages and the retailer should aim to add relevant and tangible value wherever possible.”
And if one thing is to emerge from the recent shakeout in F-commerce, it will be that those brands who have looked at social media through rose-tinted spectacles will take a more realistic view of their activities on social platforms.
Gething concludes: “To be successful, social commerce must put the consumers first and content second, providing the social engagement features with their brand and consumers throughout the shopping experience. Done correctly, social commerce could be very powerful, not to mention profitable, and will breed brand trust and shopping confidence. One thing is for sure though, recent departures from the F-commerce landscape signals a lack of faith in the Facebook offering.”