Friday, April 13, 2012

Can f-commerce work for retailers?

Can f-commerce work? 

Facebook drives valuable traffic to e-commerce sites

While some retailers are clearly unhappy about the returns from their f-commerce stores, Facebook can work well for retailers, even if the transactions are taking place away from the site. 
It can be an important driver of traffic for brands. For example, in September 2010, 1.9% of traffic to Burberry’s website in September 2010 came from Facebook. One year on, this figure rose to 29.1%. 
Stats from last year found that social media accounts for 3% of traffic to e-commerce sites but many brands, such as ASOS, are doing much better than that.  
So, even if all the transactions aren't taking place on the site, the brand exposure and publicity value (Burberry's perfume launch being a great example of this) are driving traffic to e-commerce sites. 

The importance of exclusivity

Essentially, retailers are putting versions of their e-commerce sites up on Facebook, often with limited ranges and inferior usability. So what is there to motivate customers to use f-commerce stores? 
Retailers need to work harder to give customers a real reason to shop on Facebook. The Lightspeed survey quoted above also found that people would buy from brands on Facebook if products and offers were exclusive to fans. 
For example luxury flash-sale site Gilt Groupe has been offering exclusive sales to Facebook fans. This gives people a real reason to use the brand's Facebook store. 
Are retailers working hard enough on f-commerce? 
It is very early days for f-commerce, so brands like Gap may be being too hasty in closing their f-commerce stores.
After all, we're still in the experimental stage. Once the f-commerce experience is optimised for users, people become accustomed to the idea of buying through the site, and lessons are learned, the outlook may be much more positive for retailers. 
One iota CEO Damian Hanson, whose firm has developed f-commerce stores for retailers such as Foot Asylum, echoes this view:
Commerce within Facebook cannot be disputed, especially when you take a look at the social gaming sector. Retail orientated commerce has been slow to gain momentum in the past 12-months and its fair to say it is still in its experimental phase.
Ultimately brands need to work harder on 'in Facebook' product promotion and discovery and consumer adoption will follow. Retailers cannot simply plonk their websites into Facebook via an iframe and expect sales.
We are starting to see good customer demand to provide exclusive offers and deals which are only available within Facebook and to Fans of the brand, we think this type of exclusivity will drive F-commerce adoption in 2012.
F-commerce and small business
While some of the big brands may be getting cold feet, there are examples of f-commerce working for smaller, local businesses
According to Kate Hyslop of bookingbug.com, there's a "thriving community of small businesses out there promoting and selling their products and services through Facebook in a successful and dynamic way".
According to Kate: 
Service businesses in particular are doing this very well, businesses such as health and beauty salons, driving instructors, fitness classes, cookery courses and photographers.
So the idea the idea that "Facebook doesn't drive commerce" is essentially a very narrow-minded view of what Facebook commerce actually is. Where as for the big brands perhaps Facebook is just one minor ad-on channel in their multi-channel online strategy, but for the smaller business it can be a very significant part of their marketing, sales and relationship building armoury. 
One example of this comes from Horgis Driving, which allows people to book lessons via Facebook. 
Owner David Horgan believes that Facebook has great value for businesses like his. If someone books lessons with him, then their friends can see that, and are therefore more likely to use him. 
David explains:
Small service businesses have always relied heavily on word-of-mouth recommendations for client acquisition and Facebook has become the defacto sounding board. Tapping into that ready-made network of potential customers is a great way for small, local or service businesses to get themselves directly in front of a sitting audience of other potential new clients, without having to spend on costly and untargeted advertising.
In my experience, the key to successfully using Facebook for a small business is three-fold; really knowing your target audience, ensuring the online-offline experience is seamless, and convenience - being accessible wherever you clients want to find you.

Can Facebook improve the experience?  

It is in Facebook's interests for f-commerce to work, so can it do more to help retailers optimise the experience for users? 
Perhaps it could help retailers to make the most of user data to create a more personalised e-commerce experience on the site. 
If Facebook can increase the opportunities for monetisation on the site and lower the barriers to entry for both consumers and retailers, then take up will increase. 

Conclusion

While there are clearly issues with usability and generally convincing customers to buy via Facebook, there is clearly a lot more that retailers (and Facebook) can do to make f-commerce work. 
Customers need a reason to use a brand's Facebook store, so retailers need to look at example like Gilt Groupe and find ways to incentivise shoppers. 

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