Some have questioned the effectiveness of Facebook as a commerce platform, but can you dismiss an ad and marketing channel with 800+ million users?
Here are some tips for increasing the opportunities for commerce on Facebook.
Recently, Bloomberg published an article about several retailers, J.C. Penney, Nordstrom, Gap and Gamestop, who all closed their Facebook stores in 2011.
As a consultant implementing s-commerce (Social Commerce) solutions for my clients, I am writing to let you know that Facebook commerce (f-commerce) is alive and well and customers are making money selling products and services via Facebook.
I can't speak about the f-commerce implementations of the aforementioned companies, only from my own experience.
For one company, Grassroots Festival, we created a Facebook store to sell discounted tickets on the festival's Facebook fan page.
The Facebook store generated a 4.1% clickthrough rate, resulted in a significant ROI and also cut-out the middle men in terms of ticket sales, who require substantial commission.
We have also seen considerable success with smaller clients who do not currently sell their products online. The success of their s-commerce efforts has prompted them to commercialize their businesses online with e-commerce functionality on their websites.
For larger online retailers, unless they are offering specific incentives for their Facebook Fans to purchase from their Facebook stores, why would a consumer purchase something anywhere other than their website?
It is even more effective to find a specific niche or focus on clearance lines, rather than replicate your entire inventory in a Facebook store.
We have many hotel clients who have seen considerable volume in their Facebook stores specifically for gift vouchers, a growing category in the hospitality sector. Their websites are not usually geared up for anything other than booking rooms, and even then, they usually use a third party booking engine rather than managing their own functionality.
Again, commission is usually pretty high and with third party voucher sites, very high. Facebook is an excellent solution to reach potential customers and loyal customers looking to purchase a gift card for friends, family and loved ones.
Like the first e-commerce websites from the 1990s, just because you build a Facebook Storefront to sell products and services, it does not mean that your prospect customers will find your store.
Facebook storefronts need to be optimised for the Facebook experience. In fact, the real investment for companies looking to create a Facebook storefront is not from the cost of building the store – you can use an off-the-shelf Facebook storefront.
The real cost comes from building a Facebook-friendly community and engaging your fan base. It must be a win-win relationship - Facebook users are much more comfortable un-liking pages if there is nothing in it for them.
Again, simply replicating your inventory in a Facebook store will not win you sales. You either have to be providing exclusive content or exclusive pricing to win the conversion. This can be utilised very effectively to grow your community.
Creating a Facebook community starts by understanding that the traditional 'retailer - customer' relationship, as it exists in brick and mortar stores and even e-commerce stores, is very different on Facebook.
Social networks were created for connecting and sharing, therefore the relationship between the retailer and the customer on Facebook must take this into consideration.
This doesn't mean that you can't sell on Facebook, it just means that it has to be an 'exclusive' sale, i.e. you won't find this price on our website or in our Amazon store.
So how can an online retailer build a Facebook community to support their store?
It's Facebook
If customers wanted to buy from your website, they would have typed your website address straight into their browser or searched for specific products in their search engine. Shoppers who choose to shop via Facebook do so because they want to be on Facebook and often are simply fulfilling their online social needs and are not even looking for products... they find them because great deals have been shared by their friends and connections.
If retailers want to succeed, they need to respect that consumers are in a very different mindset when socializing as opposed to searching or browsing retailer sites. The look, feel and experience must fit seamlessly with the Facebook interface, ethos and netiquette.
Success in s-commerce will come to companies who integrate their brands with Facebook instead of treating Facebook as simply an extension of their existing e-commerce identity and process.
Provide Facebook-fan page only specials
With all likelihood, people 'Liked' your fan page in order to get something – a discount, a special offer, new products or content early.
Make sure you respect this by repaying their 'Like' with an incentive and keep doing so for the ongoing relationship. That's what s-commerce is all about.
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.
Give Facebook fans a reason to return
You've run a Facebook-only promotion which generates lots of Likes and sales? Great. Now follow it up. You need to provide your Facebook fans with continuous and steady stream of content which will provide reasons to return to your Facebook page and store.
Nothing hurts your social media efforts more than when you're most recent post on your Facebook fan page is more than 10 weeks old. That's not being social. You also have to remember that the more a Fan interacts with your page, the more likely that your future updates will appear in their news streams.
Remember, Facebook recently highlighted the concept of Edge Rank and that even very popular pages are only communicating with circa 20% of their followers via their wall.
Offer content which is of value to users on you Facebook fan page
If you're selling word processors or widgets, offer content which provides value to your fans without selling them anything.
Beyond Facebook fan-page specials, provide new and seasonal information about your products, processes, history and industry news.
A broad rule of thumb for social media communications is that sales-related posts should represent no more than 20% of your messaging. Otherwise you run the risk of annoying your fans.
Don't treat Facebook fans like your personal sales force
An easy trap to fall into is offering Facebook fans additional discounts for referring their friends who are converted into Facebook fans. Similar tactics have been effective for companies like Amway, but most customers will be turned off by a campaign like this.
With Facebook's 800+ million users identifying their interests and affinities, the social network offers the greatest potential for ad targeting on the internet.
We're still early in the f-commerce life cycle and we have not yet refined ad targeting and other social marketing opportunities that are possible via Facebook, including daily deals, flash sales and other shopping activities that benefit from a group / social environment.
It is very easy to write off Facebook stores but we have to remember that Facebook users are still learning how to use the platform, especially as Facebook is constantly evolving both from a user perspective and as a marketing channel.
E-commerce was written off initially, as 'experts' believed that the majority of consumers would never feel comfortable sharing their credit card details over the internet. Look how that worked out!
We are probably still in the early adopters and innovators stage of f-commerce's life cycle, i.e. it may take some time before the vast majority adopt the technology and culture shift required to feel comfortable buying products within Facebook, but I am absolutely convinced that it will become mainstream very quickly.
Like all things, it is great being first, but setting up a presence is not all that is required to succeed; you must have a strategy, you must understand your target market and you must provide them with compelling offers that differentiate you from your competitors.
I look forward to writing about the large retailers returning to f-commerce and how they are tackling it differently.
Justin Thorne is Digital Marketing Director at Blank Page and a guest blogger on Econsultancy.
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