Facebook’s explosive growth has led many to question whether it will become the de facto hub of commerce for retailers. Facebook Commerce is alluring because it enables companies to harness social capital, and retailers are eager to tap into the tremendous word-of-mouth potential of fans liking products, making purchases, and sharing with friends.
Social media strategists often tell their clients to “fish where the fish are,” but while Facebook storefronts can be effective to facilitate impulse purchases, are they the right long-term strategy to grow sales through social media? Perhaps not.
- Traditional Analytics and e-Commerce Platforms - Deliver rich clickstream data, helping retailers track browsing behavior and determine methods to optimize the purchase funnel on their site. These platforms also offer intelligence about which marketing programs (email, search, PPC, social or affiliates) are most effective at driving revenue.
- Facebook Insights - Does provide valuable data on interactions and soft metrics such as impressions, likes and comments. While these are great for measuring engagement, retailers must ultimately make decisions based on factors that directly influence transactional metrics like conversions or acquisition costs, and Facebook’s analytics engine does not yet provide the level of relevant data required for effective merchandising.
Many Facebook storefronts use iFrames or Flash to serve product content, which often results in SEO black holes that receive very little love from search engines. Given that 25-35 percent of traffic to large e-commerce sites is from organic search, the lack of search engine discoverability for product content on Facebook should be a concern.
Clearly there is value in maintaining a strong commerce component under your roof. Perhaps David Fisch, Director of Business Development at Facebook, said it best when he remarked “the storefronts are really only one piece, and really a pretty small piece, of the burgeoning area of social commerce. Our interest isn’t in getting people to create tabs where people can shop but allowing consumers to shop wherever they are and helping them discover products through their friends.”
Fortunately, with the right mix of tools, the benefits of social shopping can be extended to your e-commerce site. Here are three ways to leverage Facebook and social commerce on your site to grow conversions and sales.
1. Social sharing
Social sharing taps peer recommendations to drive qualified traffic to product pages and conversion points on your e-commerce site. It lets consumers promote their purchases or product reviews to their friends on multiple social networks, which fosters brand advocacy and drives qualified referral traffic to your site.
Social sharing also helps retailers circumvent the challenges of news feed optimization. Facebook’s EdgeRank algorithm is designed to promote relevance by favoring news feed posts from friends with whom you frequently interact. While your brand page may have plenty of fans and likes, your Facebook posts could get lost in the news feed unless consumers frequently interact with your messages or visit your page.
Peer-to-peer sharing is different because it leverages the high affinity scores that your consumers already have with their friends. Posts that originate from consumers may be more likely to filter to the top of the news feed than those from your brand. In essence, more impressions lead to more referrals and ultimately, increased sales.
2. Incorporate friends and social graphs
One reason retailers turn to Facebook is to replicate the shopping mall experience online – where consumers flock to stores with their friends to browse and purchase products. But social shopping is also possible directly on a retailer’s site after enabling social login.
Shoppers can choose to share their social profile data and friends lists when they sign-up on your site with their Facebook identity. This social graph data opens the door to social shopping on your site. Here are a few ways your customers can incorporate their Facebook friends into the shopping experience:
- Filter product listings or reviews to prominently display content that friends have recommended.
- Invite Facebook friends to check out a particular product or visit the site.
- Recommend gift ideas for Facebook friends based on their birthday or interests.
By making the shopping experience social, retailers can turn on word-of-mouth to expand product awareness, increase time on site, and improve the likelihood of purchase.
3. Social Ads
Targeted social ads are another effective traffic-driver to product pages and conversion points on your site. Because Facebook accounts for about 12 percent of all time spent online in the U.S., it is an incredibly potent channel for advertisers.
Facebook advertising works for retailers partially because of the social network’s scale, but also because Facebook can target relevant ads based on a consumer’s demographics and interests. If you sell athletic shoes, you will generate more conversions and greater return on your advertising investment by targeting Facebook users who are interested in running.
Many retailers use Facebook ads to drive traffic to their brand pages on the social network. While this is an effective tactic if the goal is to build community on Facebook, your product pages or custom splash pages should be the destination if revenue is the immediate objective. Your e-commerce site remains the best place to track consumer behavior, influence conversions and measure performance indicators through more robust analytics tools.
Facebook has the potential to become a viable direct selling channel. But until it evolves to support the sophisticated analytics, SEO and merchandising tactics that retailers already use on their commerce sites, it is perhaps best leveraged as a complementary sales channel, a branding and engagement tool, and a traffic-driver to your e-commerce site. Fortunately, the aforementioned ideas can channel the power of Facebook Commerce on your site.
COMMENTARY: I find GigaOm's belief that retailers will flock to Facebook because it replicates the shopping mall online experience, not very realistic. Facebook users engage with people, not with brands. If brands what to create true engagement, they must put a human "face" on their brand. Brands should have a real personality represent their brand. WeightWaters has been able to do this by using celebrities as their spokespersons.
Overall, I still remain mostly unconvinced that social commerce or Facebook commerce is ever going to amount to much. The clearly data supports my conclusions.
In a blog article July 9, 2011, Social Commerce Today makes a strong case against Facebook commerce or social commerce in their April 8, 2011 article:
- Small Market - The market for selling on Facebook is tiny – even the most enthusiastic projections forecast a market size of only $1.8 billion or 1% of total ecommerce by the end of 2011 and a maximum of $13 billion or 4% of total ecommerce by 2015.
- Lack of Interest - Online shoppers don’t want to buy on Facebook – the Booz & Allen report on social commerce found that 73% of online shoppers would not purchase goods on Facebook or through other social networking sites.
- Questionable eCommerce Platform - Facebook's user growth is no longer exponential, and reaching saturation in the U.S., the UK and European markets, its ad-supported revenue model is greatly flawed and reached a Critical Inflection Point.
- Lack of Supporting Evidence - Very few major brands or retailers have provided compelling evidence that selling on Facebook unequivocally drives ROI or CLV (customer lifetime value).
- Poor Social Media ROI's - A recent WPP survey found that 23% of marketers said they were convinced that they were getting a good sales return on their social media investment, while 18% said they think their ROI is “average” and 9% described it as “poor.” (see slides below). Businesses find social networks to be the least effective new customer acquisition tool.
- 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 ten times more resistant to a less-tried, less-reliable, newer payment mark.
- Facebook Fails To Drive Traffic - In terms of driving e-commerce traffic, Facebook is failing, ads are getting more expensive yet driving ever less traffic.
- F-Commerce Detracts From Original Mision - Facebook CEO and founder Mark Zuckerberg's original mission was "Giving people the power to share and make the world more open and connected." Facebook is a people focused forum, not a brand focused forum. Facebook was designed for connecting people that share similar interests. F-commerce runs counter-productive to the the original mission. The original mission was never to "bring buyers and sellers together". Brands and businesses were introduced into the social network mix only after site monetization came into being, and it seemed appropriate to have brands and businesses open pages to "connect" with their customers.
In a blog post dated April 19, 2011, I took a strong position against Facebook Credits as the medium of exchange for Facebook commerce. The 30% commission that Facebook takes on social commerce sales is a deal killer from the seller's standpoint. If you are making a 30% gross margin on a product or service, that is pretty much wiped out, so the profit motive is destroyed. I am not so sure that if Facebook were to decrease its commission that this would create a rush of retailer's setting up shop on Facebook.
According to a study which I mentioned in a blog article dated November 11, 2010, only 29% of retailer's said that Facebook was effective in driving traffic to their ecommerce site. It's proven fact that search engines drive most traffic to retailer websites. Google maybe able to make Google Commerce work for them because they control the search engine, but first they need to scale considerably.
In a blog psot dated March 3, 2011, I provided several reasons why I thought setting up a Facebook ecommerce sight was a bad idea.
The buy-to-engagement ratio for the vast majority of brands and merchants continues to remain pathetically low, essentially a non-factor, and in my opinion there is no direct correlation that shows "likes" turn into sales. Consequently, I would strongly advice against any major brand or merchant to contemplate using Facebook as their sole ecommerce platform. Instead, I view Facebook as an adjunct or extension of a brand's regular ecommerce site.
Courtesy of an article dated September 3, 2011 appearing in GigaOm
Terrific stuff! This is the type of stuff that should be spread around the web. Shame on the search engines for not positioning this post higher!
Posted by: diane | 09/29/2011 at 09:02 AM