Thursday, March 15, 2012

An ‘F’ for Facebook Commerce?


Here’s a trend you might not expect: According to a report by Bloomberg, high-profile retailers like J.C. Penney, Nordstrom, Gap and Gamestop have quietly shut down their Facebook “stores” during the last year.

These “stores” are essentially apps that enable customers to view a retailer’s merchandise from the company’s Facebook page, select items and complete a sale without having to leave the social networking site. Allowing users to shop seamlessly while engaging in social media sounds good in theory — but the results have been poor.

One reason? Users have found it easier to navigate and make purchases through the retailers’ own websites. “Whereas [brand] websites can categorize and organize social media, blogging and other engagement devices in a form that is easily navigated and searched, this is not true of Facebook, where all relevant postings are listed in a linear order based on time of posting,” notes Wharton marketing professor Stephen Hoch. “My guess is that Facebook is actively working on how brands can better link their brand pages to their [own] websites.”

The Bloomberg article also notes that the retailers’ merchandise selections were the same on Facebook as on their own sites, offering little incentive for users to engage in shopping while socializing online. “It was like trying to sell stuff to people while they’re hanging out with their friends at the bar,” Forrester Research analyst Sucharita Mulpuru told Bloomberg. One executive the publication interviewed added: “I give so-called F-commerce an ‘F.’”

“Some platforms simply aren’t destined to support commercial activities,” says Wharton marketing professor Peter Fader. “Remember all the promise — and ultimate disappointment — associated with [merchandising in] virtual worlds such as Second Life? That wasn’t the first letdown of this sort, and Facebook won’t be the last.”

Companies have had good reason to believe in the promise of “F-commerce.” With 845 million active users, it’s hard to overlook the social networking giant as a possible retail channel. What’s more, retailers have achieved some valuable brand-building through the site: Gap, alone, has 5.6 million Facebook “fans” for its Gap, Old Navy and Banana Republic pages, according to Bloomberg. “Brands clearly recognize that Facebook has incredible reach and can help them engage with a larger audience than the one already engaged with the brand’s internal website,” Hoch says. “It also seems to me that brands need to continue to invest in social media in advance of clear payout metrics, for future option value if nothing else.”

Retailers have an obligation “to dip their toes in the water, with the expectation that there will be as many misses as hits,” Fader adds. “The hope is that they can genuinely learn from each of these experiences, not only to put them in a better position to capitalize on the next emerging platform, but also to bring some of these [lessons] back to their core business. That’s just the way things work today, and it’s a pattern that will likely recur for years ahead.”

http://knowledgetoday.wharton.upenn.edu/2012/03/an-f-for-facebook-commerce/

1 comment:

Masti said...

This is some value for money story, though I would've preferred to read views on Face Book's strengths - social networking. Web site is not necessarily its current strenght, but as per a recent media report, FB is working very aggressively on
its integrated websites which would make traditional websites redundant! That's a claim, how tall, time will tell.

Cheers,
Shekar