Friending e-commerce

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Facebook's ubiquitous reach now extends into the social commerce arena
Facebook's ubiquitous reach now extends into the social commerce arena

It's no secret that since its launch in 2003, Facebook has grown into a behemoth of social marketing and data. With nearly 1 billion users, Facebook has a wealth of information about customers and potential customers, including what they buy, how they share information, who they're friends with and, of course, what they “like.”

Next on tap for the social media giant is f-commerce, or e-commerce conducted through Facebook. Like direct marketing itself, depending on who's talking, f-commerce refers to a very wide variety of strategies. While just about every company has a company page on Facebook, in many instances, it's simply for branding purposes.

True f-commerce happens when Facebook is used as a conduit to drive sales, either through a Facebook store, or directly to a company's own e-commerce site. F-commerce is e-commerce, with Facebook as the catalyst. However, because the field is so new, definitions of the term differ depending on which analyst one asks.

Susan Etlinger, a social media analyst with Altimeter Group, says she sees “Facebook commerce as more of a continuum from an experience to a transaction.” In other words, Facebook often serves as a vehicle that facilitates the customer's initial impression to buy. It's branding, she says, as well as actual transactions.

The ways in which Facebook can directly initiate a commerce transaction vary. In some cases, Facebook is a platform where online shops run through third-party applications like Payvment and Buddy Media. It has also been used as a referral service, harnessing its social data to drive e-commerce off-site, to a brand's online sales portal.

Several big companies, including JCPenney and GameStop, shuttered their Facebook stores after finding that their e-commerce sites were more effective at driving sales. Some relatively new online retailers, like Gilt Groupe, the popular luxe brand discount site, no longer use Facebook because other social initiatives worked better at driving sales, and therefore were more worthy of the company's resources.

“Stores on Facebook for large brands just aren't the way to go,” says Sucharita Mulpuru, VP and principal analyst at Forrester Research. “People don't shop on Facebook, not for items from known sites. Sharing links on Facebook is much more effective for these retailers,” Mulpuru adds.

Christian Taylor, founder and CEO of Payvment, a company that builds stores on Facebook for small and mid-size companies, says the same. JCPenney, he points out, didn't build a Facebook store that created a seamless experience from browsing to purchasing within the “fabric of Facebook,” which is why it failed.

But companies as diverse as deals site Fab.com, multinational product manufacturer Procter & Gamble and Virginia-based baby clothes retailer Tutu Cute LLC have invested in f-commerce strategies. And they claim they've got the returns to prove that it was worth their initial investments. Or, at least, that it's worth continuing to try to find ways to use Facebook as part of a larger e-commerce strategy.

F-commerce in action

Many companies use Facebook to drive customers to their e-commerce platform outside of the social networking site. Procter & Gamble and Fab.com are two of the many businesses trying out the strategy.

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