Practical Ecommerce

Selling on Facebook: 4 Common Issues

There is a growing integration between social media and ecommerce. And there’s a new term for this integration: social commerce.

Facebook is the leading social commerce platform. Recently I moderated “500 Million People and Growing: The Facebook Conversation Turns to Commerce,” a Practical Ecommerce webinar that addressed how merchants can tap into the Facebook phenomenon to help grow sales. Joining me in the webinar were representatives from Milyoni, a company that provides a Facebook shopping-cart application. We covered four topics:

  1. Why online merchants should sell on Facebook.
  2. Options for social commerce.
  3. Why social commerce is not about selling.
  4. Unique dynamics about selling within Facebook.

1. Why Sell on Facebook?

With more than 500 million users, over 50 percent of who log on at least once per day, Facebook is the leading social network. Not only that, earlier this year it surpassed Google as the most visited site.

Facebook brings in more than $630 million in revenue from advertising. Facebook fans spend $71.84 more annually on consumer products than do non-fans. They are 41 percent more likely to recommend products and 28 percent more likely to continue using them, according to Forbes magazine. As a result, ecommerce merchants should consider Facebook as a channel to expand their businesses.

2. Options For Social Commerce

Social commerce on Facebook tends to take three forms. They are:

  1. Promote brand loyalty;
  2. Drive fans to ecommerce websites;
  3. Reshape the buying experience.

A number of Facebook shopping applications are little more than glorified photo galleries. That’s fine if the goal is to move the buyer from Facebook to the merchant’s ecommerce site.

However, there is a distinct disadvantage to using such an approach as consumers don’t typically want to leave Facebook to complete a purchase. For many, Facebook is the web and they prefer all interactions, even ecommerce, to take place entirely within the confines of that platform.

3. Why Social Commerce Is Not About Selling

Facebook is a social environment, not a shopping environment. Therefore, merchants should engage fans, not interrupt with over-the-top sales messages. The shopping experience needs to remain social, interactive, and contextual to the experience people are having.

That is not to suggest that, on occasion, it’s not okay to directly post a promotional message. But such behavior should be the exception rather than the rule. Educating, informing and entertaining fans is the guideline for what’s acceptable. Making sure there is a healthy balance between commerce-related updates and those that are simply informative is the key.

4. Unique Dynamics About Selling Within Facebook

Here are some keys to social shopping.

  • Social Product Catalog. Shopping, and selling, within Facebook should be contextual in the sense that it has relevance to the shopper. Because Facebook provides information on the individual–gender, geo-location, likes, interests–merchants can create a storefront to take advantage of that. With the data from Facebook, it becomes almost like a personal shopper.

  • Social Merchandising. Putting up a store within Facebook won’t guarantee sales. That’s because fans don’t typically venture too far off a Facebook Wall. By tastefully combining old-fashioned merchandising–the promotion and sale of goods–with social technology, merchants can reach out to fans via the Wall, initiate conversations, promote products, reward participation and bring them to the shopping cart.

  • Secure Order Processing. Remaining within the Facebook environment is a big part of making the purchase experience more convenient. However, many merchants and consumers have questions about Facebook’s security and privacy.

    Each social commerce layer has its own rules on privacy and security. The first layer, Facebook, asks for certain information, such as birth date, gender, and interests, for the purpose of creating a social profile. Facebook-enabled storefronts can then use that information, saving the shopper from having to provide it again. The shopper should just have to supply product selection and shipping details to the storefront. The storefront then passes all of that information to the credit card payment gateway, which securely collects the credit card payment data.

    The key privacy and security concern is to ensure none of that information travels back upstream. Shopping cart vendors such as Milyoni allow the merchant to dictate which payment provider, such as PayPal, Authorize.Net and others, is used for the transaction.

Does It Make Money?

During the webinar, one of the greatest concerns expressed by attendees had to do with the return on investment from social media. Representatives from Milyoni shared the following facts:

  • 40 percent of people become fans to receive discounts and promotions;
  • 39 percent become fans to show their support for a brand.

By using good social merchandising manners, such as posting to engage with fans, make commerce secondary, pace your postings, and reward your fans with exclusive offers, merchants can make money off their Facebook efforts.

Conclusion

We ended the webinar by reminding attendees that:

  • Social commerce is already here and Facebook plays a key role;
  • Privacy and security can be effectively managed;
  • To succeed on Facebook, merchants should remember that it’s not about shopping, but rather about engaging, informing and entertaining fans;
  • Merchants should learn by doing, and experiment with a variety of options.

Click here to view upcoming and archived Practical eCommerce webinars.>

Paul Chaney
Paul Chaney
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Comments ( 10 )

  1. Addoway September 15, 2010 Reply

    Great post and findings! Engage, Engage, Engage. Just like the book by Brian Solis.

  2. mikevoxcap September 16, 2010 Reply

    Paul, thank you for posting this.

    One of the major concerns I hear when approaching the social commerce topic is the SLA (or lack of one) with Facebook. If there is a performance issue with the Facebook API or Facebook is unavailable, how do I escalate the problem? As far as I am aware, there is not a paid service to have these issues resolved. Perhaps someone else is aware of a service like this?

  3. Paul Chaney September 16, 2010 Reply

    That’s true Mike. Being subject to FB’s whims leaves much to be desired.

  4. miiduu September 16, 2010 Reply

    I work for miiduu.com and we’re in the process of tweaking a Facebook integration feature for our online stores. While I see the benefit of not having to leave Facebook at all, aren’t customers (and sellers, for that matter) a little nervous about entering credit card/bank account/other financial information into Facebook? I suppose there are a lot of people who just aren’t concerned at all (the people with their full address posted in their info), but won’t smart shoppers be wary of entering information into a site known for privacy issues?

  5. Paul Chaney September 17, 2010 Reply

    Yes and no. We’re entering an age of digital exhibitionism where people seem much less concerned about privacy. That’s not to say they take a lassez-faire attitude toward security where credit card information is concerned, but something is definitely afoot. It’s a post-privacy era. Perhaps it’s Millennials driving this trend, but it’s happening nonetheless. Case in point, look at what’s happening with Swipely.com.

    Is that to suggest people are so devoted to Facebook they would rather put their credit card information at risk than leave the environment to go elsewhere? You’d have to ask the folks at Milyoni or Payvment their opinion. Of course, in their cases the buyer is not putting sensitive information at risk as the transaction is handled in a secure environment, but you see my point.

  6. mikevoxcap September 17, 2010 Reply

    I *assume* Facebook is PCI compliant as they are storing your credit card information. If this is the case, they can be considered as secure as any other merchant site. I say assume as I can find no reference to PCI compliance on Facebook’s site.

    Paul, the one issue with comparing Facebook to Swipely is that it is truly apples and oranges. Facebook is millions of users strong and therefore a massive target for hacking than from a small start-up like Swipely. Facebook will need to make significant advances as far as I am concerned before I would feel comfortable storing my credit card with them.

    You can easily have a strong, integrated storefront with Facebook that drives the customer into the merchant site. LiveScribe is the best example I have found. http://www.facebook.com/livescribe

  7. Paul Chaney September 17, 2010 Reply

    Actually, Facebook isn’t storing credit card info. In fact, not even the shopping cart is, only the transaction processor. In the case of Payvment, for example, that happens to be Paypal. For Milyoni, it can be Paypal, Authorize.net or others.

    As to the comparison of FB and Swipely, I’m referring to a trend be driven by GenY (and maybe older folks too for that matter). I see that as platform agnostic. But, think about Mark Zuckerberg. His philosophy is very "post-privacy."

    I think we’re going to see more and more shopping carts integrate with Facebook in such as way as to not take the buyer off-site. Another example is Shop Igniter. They have an ecommerce shopping cart, but also offers a FB version that keeps the customer within FB throughout the purchase transaction. I don’t know by what means they are securing the transaction, but I’m sure it’s all SSL-enabled, etc.

    I think the real point here is, Facebook is becoming a mainstream ecommerce platform. It’s already the operating system of the social web, so this is a logical next step in its evolution.

  8. mikevoxcap September 18, 2010 Reply

    Ah, I see. I know Facebook does store payment information when you purchase gift credits. I assumed Milyoni and Payvment would leverage that information during purchase.

    I was focusing on the amount of risk I may be taking on between Facebook and Swipely from a retailer perspective. Swipely is relatively obscure compared to Facebook. As a retailer, I assume there will be more risk with Facebook to security. Im sure it is coming. I do agree that Facebook can and likely will become a viable channel for ecommerce. I just believe we need a higher level of committment from Facebook.

  9. mikevoxcap September 20, 2010 Reply

    Paul, also thank you for the mention of Shop Igniter. Looking at their customer implementations, I am more than a little impressed.

  10. vanguard November 4, 2010 Reply

    well i think we should not forget to mention the european solution called shopshare – do you have any information about their shop system? i have heard some impressive rumors about successful launches of shopshare but i was not able to find out too much searching the web…maybe you can help?

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