In the past year, Gamestop, Gap, JC Penny and Nordstrom, to name a few, have pulled the plug on storefronts they had set up on Facebook. There are other retailers on the list who have gotten fed up with their efforts to sell on Facebook, and without changes, others may join them in abandoning their so-called F-commerce efforts.
Whether or not the blame lies with Facebook or the retailers and, more importantly, whether or not it will effect Facebook’s initial public offering of shares, is open for debate. Facebook will be under pressure to show shareholders that it can grow its already impressive revenue base, and online retail is either a prime opportunity or an opportunity to be squandered.
“Facebook is a non-starter as far as commerce is concerned because people go on Facebook motivated to socialize, not shop,” said Donna Hoffman, a marketing professor here at the University of California, Riverside. “In contrast, people use Google to find things and it makes sense that consumers might click on ads related to the results of their searches. Thus explaining the phenomenal success of AdWords.”
Hoffman likens Facebook’s efforts to previous attempts by retailers to build stores within Second Life, hoping to catch on to the craze. Those stores failed as well.
“Facebook is a non-starter as far as commerce is concerned. – Donna Hoffman”
“This effort is another good example of how companies can often miss the boat when thinking about why people use social media and what drives online consumer behavior,” Hoffman said. “It’s also a great example of why the general public might think twice about buying shares in Facebook – where’s the sustainable business model?”
Facebook would not comment on its F-commerce strategy, as the company is in a quiet period ahead of the start of its shares trading publicly.
Chase Hill, COO of Tacit Knowledge, a San Francisco-based consultancy that focuses on bringing Silicon Valley innovation to the retail space, said one of the problems facing Facebook and retailers on the social network is that it doesn’t give emphasis to one retailer over another. Simply put, retailers do a much better job of optimizing their own Web sites for sales than they can on Facebook.
“Where F-Commerce might excel in the future is if this basic commerce model has the community element more effectively layered on top of it – essentially, the equivalent of shopping/browsing with a friend or a group of friends,” Hill said. “For this to work, though, users must be willing to forego a sub-optimal buying experience in favor of the social dimension – ‘I’ll settle for something less rich because I can do it so easily with company.'”
Most retailers haven’t figured out the right balance between building loyalty and buzz about their brand on social media platforms and converting it into sales within the platform. As a result, Facebook pages start to feel like blogs, according to Sean Ford, COO & CMO of Zmags, a company that helps retailers develop digital catalogs.
“Facebook commerce is still aspirational for a number of brands because it’s still in its nascent stages and they haven’t figured out how to design and deliver an experience that is engaging and which doesn’t force the shopper to leave Facebook to complete a purchase,” Ford said. “The most savvy, innovative retailers and brands will be those who move beyond their first iteration of a brand Facebook presence and take steps to make their Facebook presence a unique storefront.
