J. C. Penney Moves Entire Product Catalog to Facebook
Ecommerce merchants have begun to approach social commerce with less trepidation than in the past. More are incorporating social sharing options into their websites and many are setting up shopping carts in Facebook. That's true for large brands and mom & pop shops as well.
To date, no company large or small has done what J. C. Penney did Tuesday. The century old retailer moved their entire product catalog to Facebook. Whatever products customers can buy at the company's ecommerce website can now be purchased on its Facebook Page.
What are the implications of this action where ecommerce is concerned? Five come to mind:
Facebook is a given for social commerce - Facebook is quickly moving toward 600 million users, 50 percent of whom logon at least once per day, according to its own statistics. What this means is that the social network has become the operating system of the social web. And, not unlike the Oklahoma land rush of the 1880s, retailers are lining up to to stake a claim in what is proving to be fertile territory.
"The value of Facebook and other social media sites to retailers is greater than previously thought," stated ecommerce consultant John Lawson, reporting on a recent survey conducted by social media marketing company Media Logic. "Out of 100 retailers participating in the study, all of them have seen tremendous growth on their respective Facebook pages," Lawson said.
Social shopping is becoming no big deal - Sure, it's a big deal now. There is ongoing contention over whether people will consider merchandising efforts by brands inside social networks to be an intrusion or will embrace them. Privacy concerns continue to be a hotbed issue as well. But, when a major retailer does something as bold as what J. C. Penney did Tuesday, the question becomes less about "why" and much more about "why not."
Other brands will follow suit - Have you ever attended a gathering of people with whom you were unfamiliar and waited until someone else broke the ice before conversing? "Breaking the ice" over the value of using Facebook as an ecommerce portal is essentially what J. C. Penney has done. By moving the entire product catalog to Facebook, they did it with a sledgehammer too! Precedent has now been set and it stands to reason other brands will follow suit.
Online privacy will become less of a concern - As the "digital natives" of Generation Y gain greater stature in the marketplace, concerns over privacy will take a back seat. Some refer to Gen Y as the "non-privacy generation." The idea of sharing via social media, including making online purchases, comes naturally to them.
A Pew Internet & American Life Project study released in May, Reputation Management and Social Media, said internet users have become less concerned about online privacy. "Just 33 percent of internet users say they worry about how much information is available about them online, down from 40% in December 2006," according to the study.
The shift toward the use of Facebook and other social networks for commerce has been incremental. Only last year the news was all about 1-800-Flowers setting up a store in Facebook. A few months ago, the attention was focused on Delta airlines opening a virtual "ticket window" inside Facebook. Now, it's J.C. Penney and, tomorrow, who knows. What is of greatest significance is that social media, especially Facebook, can no longer be considered an insignificant player in online retail marketing and sales.
Whether merchants choose to move the water cooler closer to the cash register by adding social sharing, Facebook's new registration tool (just announced today), ratings and reviews, or other elements of social media connectivity to their ecommerce sites, or, conversely, move the cash register closer to the water cooler by setting up a Facebook shopping cart (or both), those who are willing to take steps now will enjoy the benefits of first-mover advantage in the future when such activity becomes commonplace. Of course, if J. C. Penney's action is any indication, perhaps it already has.
Paul, this is great! Navigated around the site this morning. It has a definite mobile flavor in the navigation. Not the typical top + left menu structure. Their checkout process was a little annoying, but overall it wasnt too much of a hassle. I saw some good usage of social aspects with direct comments on product display pages and comments at purchase. It will be good to watch this case, especially to see how they integrate marketing into the store front.
Paul Chaney says:
Mike, thanks for checking out the nuances of the app, as I had yet to do so myself.
Edward Weisberg says:
This is brilliant. Not only does JC Penney get a leg up on the competition and get to promote to a younger market, but they also are able to get all of their customer "Facebook demographics". It will be interesting to see how this plays out with JC Penney and other retailers that follow in their footsteps.
Fabio De Bernardi says:
Quoting from the post: "Now, it's J.C. Penney and, tomorrow, who knows." I can add a couple of big names that are already on Facebook with their full catalogues (storefronts powered by Wishpot):
Best Buy UK - http://www.facebook.com/uk.bestbuy?v=app_2456371452
Guess Europe - http://www.facebook.com/Guess.eu?v=app_2456371452
Vidar Brekke says:
If this is what big companies think the future of social commerce is, then they’re unlikely to see any return-on-investment from their social media efforts.
Here are my top three reasons that I think J.C. Penney made this misguided move (and why other retailers shouldn’t follow): http://goo.gl/8VG07
Vidar, while I dont disagree that using Facebook as a direct channel for exposing catalog purchases has its concerns, the concerns you listed just are not resonating with me. Saying that customers wont buy from Facebook simply because they dont consider it for commerce is short-sighted. I can list hundreds of examples where customer behavior was changed given an opportunity that presented itself. As far as your second point, the catalog is very likely still hosted by the JcPenney website. All Facebook is providing is an IFrame. They are still getting all the demographic data they would need to present opportunities for personalized promotions, etc. Finally, there is nothing stopping JcPenney from taking the user to their external site. They are simply providing the checkout process for those visiting through Facebook. You make a lot of un-backed assumptions about their implementation. I am not sure how you can claim they are tying their hands by presenting another channel for making purchases of their products. You might be absolutely right with your opinion, but as far as I can see, it is a roll of the dice on either side of the argument.
Paul Chaney says:
Vidar, not to "pile on," but I just published a post on The Social Retailer blog which argues on behalf of Facebook becoming a commerce channel. While I don't besmirch your argument in any way, consumer behavior will change over time. Right now, we're in the early adopter stage, but I won't be surprised if, in a year or two, we won't have moved into the early majority.
The factor which may tip this in Facebook's favor may not be the merchants ability to set up a shopping cart on FB itself, but the integration of Facebook social plugins and Open Graph into the merchant's websites.
Vidar Brekke says:
I might be proven wrong about whether people will prefer using Facebook as a shopping channel, but the current user experience is horrible is when retailers try to cram an entire product catalog into the interface. I’ve managed the development of dozens of branded apps and this is one instance where the app is the exactly wrong size. (Where the catalog is hosted is moot as doesn’t affect user behavior or expectations.)
However, combining social insights with the retailers’ data to present a timely offer, is a completely different thing, and where Facebook may excel – which is one of the points I’m trying to make.
As you allude to, Facebook demographic data is key here, but there's more than one way to gain better insights on your customers. JCP commits a cardinal ecommerce sin by putting up wall between themselves and their customers by requiring customers to 'allow' the shopping application to mine their Facebook profile information for no apparent reason. There is nothing to indicate that JCP is using this information to personalize the product offerings... I can only imagine what the customer drop-off is at this point. (And they still have to tackle traditional check-out drop-off…if anybody even gets that far…hence, I don’t think they’ll see any ROI on this initiative).
Applications that require the user to 'allow' profile mining have their place, but not as the initial ecommerce touch point, where there should be no barriers to engagement.
Alternatively, simply putting a Like button next to every product on their own website would allow JCP to get the aggregate demographic data on the Friends of any of their products - including being able to send customers newsfeed updates (e.g. promotions) based on the unique products they've Liked. The Open Graph allows all of this without requiring the customer to 'allow' any data mining before they can do business with you.
Also, many retailers have said that Facebook storefronts are negligible, according to Sucharita Mulpuru of Forrester: “All the retailers we've talked to say that Facebook storefronts are negligible," she says. "No one visits them and, in fact, few people revisit a fan page after originally Liking it."
Finally, here’s recent article about how Facebook themselves have establishing a special ecommerce group, and it’s clear that Facebook doesn’t see on-Facebook stores to be the way to go either: “Our interest isn’t in getting people to create tabs where people can shop but allowing consumers to shop wherever they are and helping them discover products through their friends.” http://www.internetretailer.com/2010/12/22/facebook-reaches-out-retailers
Paul Chaney says:
Vidar, you're saying it's better to move the water cooler closer to the cash register than the other way around. Use Facebook's Open Graph protocol and integrate it within the bounds of your ecommerce site and don't bother with setting up an ecommerce tab on your fan page.
Vidar Brekke says:
Paul, you're a better wordsmith than me. Yes, I think moving the water cooler closer to the cash register is where eCommerce is (or should be) heading, at least for established brands and e-tailers.
Paul Chaney says:
Not a better wordsmith, I just think in pictures. :-) One of the areas we hope to delve into in 2011 is not only why a merchant should consider use of the Open Graph (or not as the case may be), but how to integrate it from a technical standpoint, as that's a challenge a number of our smaller merchants may face. I realize there are varying degrees of integration, starting with the social plugins. Even that can present a challenge to some.
David Fishman says:
I will reserve judgement on the JC Penney FB storefront. However I have not seen / read a better Fcommerce analysis. Benchmark for an optimal social commerce strategy.
David Fishman says:
Vidar is definitely on to something here. Although transactions and sell-through is the "holy grail" for retail there are other value propostions for social commerce activity in FB and/or other social channels. It may be as worthwhile to study the qualitative aspects of connections versus quantitative aspects:
- What sells with what and to whom?
- Who are the social "purchase influencers"?
- Shopping habits across your web site and Facebook?
- Who is sharing your brand and where?
Selling a data-driven product to retailers who don't see past the hokus pokus "social graph" nonsense of hanging a basic catalog off a FB storefront tab has a lot of potential.
I'm interested to learn more about how you see retail merchants leveraging the Open Graph.
Happy New Year,