Think Facebook Drives Sales? Think Again.
In my previous post, I referenced the fact that Facebook qualifies as one of the â€œBig Fourâ€ in ecommerce, according to a report by research firm Forrester. Despite this designation, an interesting reality has emerged for some major ecommerce players: Facebook leaves much to be desired when it comes to driving ecommerce sales.
A Bloomberg story that appeared February 17 indicates retailers including GameStop, Gap, J.C. Penney, and Nordstrom opened storefronts on Facebook only to shutter them not long afterwards. GameStop opened its Facebook store last April and closed it six months later. Gap opened and closed a store in 2011. J.C. Penney launched a Facebook â€œshopâ€ tab in 2010 and removed it at the end of last year. Nordstrom decided to broaden its social media focus, discontinuing its Facebook selling efforts.
Plenty of Fansâ€¦ But Not Many Buyers
According to Bloomberg, â€œA year ago, investors hailed so-called F-commerce as the next big thing, speculating that the company had potential to threaten Amazon.com Inc. and PayPal Inc.â€
Yet today, it seems, retailers are fleeing instead of flocking to â€œF-commerce.â€ Why? The answer is pretty simple: ROI.
Ashley Sheetz, VP of marketing and strategy for GameStop, told Bloomberg, â€œWe just didnâ€™t get the return on investment we needed from the Facebook market, so we shut it down pretty quickly. For us, itâ€™s been a way we communicate with customers on deals, not a place to sell.â€ Despite gaining over 3 million customer/Facebook fans, Sheetz said she thought there was little incentive for them to shop via Facebook when the companyâ€™s own website is a convenient place to buy merchandise. Liz Nunan, a spokeswoman for Gap, said essentially the same thing, indicating the company realized that customers â€œpreferred shopping on its own sites.â€
Sucharita Mulpuru, who authored the â€œBig Fourâ€ report for Forrester, told Bloomberg, â€œThere was a lot of anticipation that Facebook would turn into a new destination, a store, a place where people would shop. But it was like trying to sell stuff to people while theyâ€™re hanging out with their friends at the bar.â€
Now public, Facebook needs to fuel its growth, part of which is related to its use by companies who sell online. Facebookâ€™s revenues went up 55 percent in the fourth quarter of last year, so companies must be confident that advertising on Facebook is a smart bet. But Krista Garcia, an analyst for research firm eMarketer, told Bloomberg she thinks Facebook will use ecommerce â€œmore as a way of getting users to stay longer than as a way to boost revenue.â€
Social Ecommerce Is Not Quite There Yet
What should marketers trying to sell products via Facebook do? Clearly, they need a strong presence on Facebook. Marketers should recognize by now that Facebook, like all social media, is intended for building relationships. Listening to and corresponding with fans is at the core of a successful social media strategy.
Should marketers invest in advertising on Facebook? That depends on the objective. Those marketers who advertise on Facebook can keep their brands highly visible and in front of a lot of fans. They also could use Facebook to generate leads. But if the experiences of retailers like GameStop, Gap, J.C. Penny, and Nordstrom are any indication, marketers might find Facebook better at driving traffic to existing store websites rather than to Facebook stores.
At this stage, it may be that social media users are just that â€“ users, and maybe prospects, but not necessarily buyers, at least not yet.
Still, F-commerce is evolving, and selling directly through Facebook may become a more attractive option in the future. The consulting firm Booz & Co. issued a paper last year suggesting that â€œsocial commerceâ€ would grow from $5 billion worldwide in 2011 to $30 billion by 2015. About $14 billion of that growth would come from the U.S., said Booz, and Facebook would be the major contributor of those sales.
In its analysis, Booz saw the future of social commerce this way:
â€œLead generationâ€”the ubiquitous â€œlikesâ€ of Facebookâ€”will not be the most important activity for long, however. The next phase will go beyond mere communication and influencing. Consumers will transact commerce inside social networksâ€”selecting products, adding their selections to shopping carts, and completing purchases through payment with credit cards and points. As they do so, the era of social commerce will commence in earnest.â€
We can only hope thatâ€™s true.
About Barry Silverstein
Barry Silverstein is a freelance writer/marketing consultant. In addition to writing for ReveNews, he is a contributing writer to Brandchannel.com, the worldâ€™s leading online branding forum. He is the author of three marketing books, The Breakaway Brand (co-author, McGraw-Hill, 2005), Business-to-Business Internet Marketing (Maximum Press, 2003) and Internet Marketing for Technology Companies (Maximum Press, 2003). Barry ran his own Internet and direct marketing agency for twenty years. You can find Barry on Twitter @bdsilv.