There are few who question Facebook’s potential for ecommerce merchants. Access to a user base of nearly 600 million consumers — coupled with the targeting of specific audience segments based on users’ Likes — are compelling reasons to experiment with it as a sales channel.
However, little has been said about how well Facebook actually performs for ecommerce merchants and what the realities are of selling products on that platform.
In this article, we address four realities of selling on Facebook. In preparation for the article, we queried a number of smaller merchants as well as ecommerce vendors — those who sell software and services to ecommerce merchants — to gather their insights.
Reality #1: Sales Volume Is Low
While Facebook may hold a wealth of possibilities for social commerce, those we spoke with — both merchant and vendor alike — say the percentage of sales on Facebook and other social channels is in the single digits. Some reported sales that came as a direct result of product exposure within a social network to be as low as 2 percent of their overall totals.
Most attribute this low volume to the fact that social media is a new channel and that only a small group of companies are even exploring it at the present time. There is also resistance to perceiving Facebook as anything other than a social network. How resilient that perception remains within the minds of consumers will largely determine how well Facebook performs as a shopping channel.
Reality #2: Managing Back-end Functions
A number of vendors provide some type of Facebook shopping presence. Hosted platforms, such as Volusion, BigCommerce and 3dcart, frequently provide Facebook “stores” (photo galleries, really) that link back to the ecommerce sites. Other providers, such as Milyoni and Payvment, allow for purchase transactions to take place within Facebook. The consensus among those we contacted is that routing purchasers to the main ecommerce store will be how most online retailers choose to integrate Facebook.
In the event a merchant created a Facebook cart that is on par with its ecommerce site, what types of technologies need to be considered? A Facebook shopping cart would have to be open enough to accept data feeds and back-end integration into a merchant’s existing platform. Order management, inventory management, payment processing and accounting issues would all have to be ironed out.
One company, Milyoni, does offer custom integration options via its API that includes product catalog, inventory, payment processing and order processing. Another Facebook shopping cart provider, VendingBox, stated that inventory and orders could be synchronized through plug-ins to some existing ecommerce platforms.
Reality #3: Merchandising Is Limited on Facebook
While traditional forms of online merchandising — limited-time special offers, promo codes, free shipping offers, affiliate marketing and so forth — can also work in Facebook, merchandising within the social network takes on a different dimension. Some respondents suggested there is a form of merchandising unique to social media that is based on users sharing products and purchases with friends. Not only that, one respondent suggested that putting a store tab on your Facebook page is insufficient if unaccompanied by merchandising efforts that get the product into Fans’ news feeds.
The ability for Fans to share product information with friends is important from a Fan’s perspective. For merchants, however, an even more important consideration is analytics. Merchants must be able to track impressions, click-throughs and sales conversions, something that Facebook does not easily facilitate at present.
Reality #4: Facebook Is the Gatekeeper
Merchants who rely on Facebook for direct sales or referrals implicitly place that company between themselves and their consumers. It’s a similar “gatekeeper” concept that many merchants experienced with eBay, for example, when those merchants ultimately exited eBay after the company changed its policies.
Opinions as to the value proposition Facebook brings as a sales channel were varied. One respondent said that Facebook doesn’t warrant “middle-man” status, while another said Facebook should be inserted between the merchant and customer due to the wealth of information that could be gleaned from the interaction. Another recommended that Facebook be seen as either an ecommerce-enabled customer-relationship platform or an ecommerce event-marketing platform, but not a duplicate sales channel. Most agree the primary benefits to using Facebook are the potential for increased traffic to the merchant’s website, the opportunity to engage with customers in real-time conversations, and the ability to advertise to highly targeted audience segments.
In short, having a presence within Facebook in any form comes with benefits and risks. First, there is access to a wealth of data based on user’s likes and interests. No other marketing channel provides anything nearly as comprehensive. On the other hand, dependence on a third-party brings with it a loss of control over the customer’s experience. Everything is subject to Facebook’s terms of service and changes can be made with little, if any, notice.
Is it possible for Facebook to cross the chasm from social network to social shopping portal? That remains to be seen. Users’ perceptions will have to change and merchants will have to be willing to embrace the uncertainties that currently exist.
In some respects, selling on Facebook and other social networks is not unlike selling via comparison-shopping engines and open marketplaces like eBay and Amazon. This practice, known as multi-channel marketing, has as its goal finding outlets to get products into the hands of as many customers as possible. It is not inconceivable that social networks could be added to the list as well.