Will Facebook Ever Drive Commerce?

My bearishness on F-commerce is no secret, so I may have been a little biased when I dove into my most recent research, Will Facebook Ever Drive eCommerce? Fortunately, the findings were nuanced among different types of retailers, which gave a lot to write about. Some highlights:

  • There are retailers (albeit small ones) seeing a double-digit percent of their sales coming through their Facebook stores. These companies often have unique demographics or marketing models (e.g., flash sales) that drive this behavior.
  • Facebook’s “data layer” is probably one of the most underleveraged assets that exists with respect to F-commerce. There is myriad information about fans, what products consumers are liking, and competitive insights that can be gleaned from merchant and consumer activity on and off Facebook.
  • Facebook Credits is a non-starter for most retailers. This is the “currency” that consumers can use to buy, say, potatoes on Farmville. Facebook, however, has little to no credibility with respect to financial services among consumers, and the same retailers reluctant to implement PayPal (which so many large merchants are) will be 10 times more resistant to a less-tried, less-reliable, newer payment mark. 

That said, F-commerce may come alive for large merchants yet. I met a startup called ShopSocially at Channel Advisor’s Catalyst conference yesterday, and it claims to have metrics that prove just that (I didn’t interview it for this document). Stay tuned . . . I’ll report back once I hear more of its story, but my initial reaction is that the best of Facebook is already here. In the interim, let’s hear from readers: What successes or failures are you seeing in S-commerce and F-Commerce? 

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Comments

Facebook Policies

Since we are in the early stages of "F-commerce", Facebook's policies are often overlooked. For example: "You must not incentivize users to use (or gate content behind the use of) Facebook social channels, or imply that an incentive is directly tied to the use of our channels." (http://developers.facebook.com/policy/)

bias

Sucharita, it is obvious your opinions carry a lot of weight within the social commerce and f-commerce community. While I appreciate your honesty in admitting bias, given your status as a Forrester analyst, doesn't that reduce the credibility of your research? I would think a lack of bias would be preferred, especially considering the cost to purchase your report is outside the reach of most small businesses.

Great post

As a small retailer we have been wondering whether to invest time and resources pursuing social media channels. There seems to be a lot of hype around social commerce. However, is there any data available that shows whether there is real value? Your post suggests that some merchants are indeed seeing the benefits. Would be great if you can share some metrics.

Shopsocial.ly

We are using Shopsocially for a number of our clients in the performance channel. This has been one of the top applications we have ever seen related to pure performance in generating sales rapidly. We are now recommending them to our 80+ customers as an efficient and rapid way to tap into the social marketing opportunity.

KUDOS

Good one "Durk". I believe there is a stark difference in performance and metrics with varying business models and markets. The initial success 1800Flowers (as well as others) has seen with F-Commerce will not equate with the different demos. We've tested the waters with this for over a year and user interaction with the F-Commerce engine has been minimal at best. That's not to say that it F-Commerce will not work, however, I believe it to be very select audience who will convert on this platform. Another big consideration is implementation strategy and marketing.... seems like a lot of people are putting the cart before the horse in this case. I've witnessed thousands of dollars spent implementing and maintaining sCommerce without a plan - classic if you build it they will come mentality... ahh if we were only Ray in that field of dreams.

@Black Mamba. You are right

@Black Mamba. You are right in that F-commerce hasn't been effective for merchants so far. Most merchants equated F-commerce to creating a Facebook storefront which hasn't worked.

I took a brief look at ShopSocially based on this post - they seem to have a very different approach. They are trying to get your shoppers to share your products with their friends. According to Sucharita and Durk, it seems they have hit upon a good idea and it is in fact driving real traffic and sales.

Totally agree with you on the wasted dollars on 'build it and they will come'. Always need to focus on ROI.

question on big merchant reluctance to use PayPal

I believe eBay (parent company) will address the reluctance of larger retailers to use PayPal with some planned aquisitions that are more acceptable thereby making this reluctance less of an issue.
This could work to Facebook's favor and I think you are underestimating Facebook, although I personally find the site childish, and much like the Pet Rock, uselessly amusing!