Can f-commerce work for retailers?

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Zenith Comment:  Bit of an essay this one but I thought it was definitely worth posting, keeping with the theme over the last couple of weeks of the posts on f-commerce.  Worth a read when you have a spare 5 minutes.  Interesting points on usability of f-commerce apps but at the same time Facebook is driving quality traffic to retailer sites.

Thanks to the sheer size of the audience alone, it's clear that f-commerce has potential for retailers, but some brands are now deciding that the returns aren't worth the effort. 

So, does this mean f-commerce won't work for retailers or are they simply not trying hard enough? 

I've been speaking to some retailers using Facebook, as well as looking for examples of f-commerce working for small businesses. 

The problems with f-commerce

Usability

From a consumer perspective, there are a number of usability issues with f-commerce apps.

Take ASOS for example. As we have documented on this blog, ASOS is a great example of usability best practice, but its f-commerce app can't quite match these standards. 

The lack of the back button is a pain. while the fact that the site is squeezed into an area which roughly equates to half of the page doesn't help either. 

It's also slow when compared to the main site, with a noticeable delay when loading pages. According to stats, a one second delay in page response can mean a 7% reduction in conversions. 

This is not to single out ASOS, which is actually one of the better Facebook apps, but it cannot match the experience on its main site within the confines of a Facebook app. 

Essentially, when a user friendly site is just a click away, shoppers are being asked to make purchases through an inferior version. 

Are people in buying mode on Facebook? 

Forrester analyst Sucharita Mulpuru observed that selling to consumers on Facebook is "like trying to sell stuff to people while they’re hanging out with their friends at the bar". 

This may not be true of everyone, but people are less likely to be in the mood to make a purchase on Facebook. 

It isn't delivering the returns for some retailers

Lyle & Scott opened its f-commerce site last year, and its essentially the mobile site repurposed for Facebook.   

This approach meant the f-commerce store was cost effective to set up and maintain, though Head of E-commerce Will Dymott hasn't been impressed with the results. 

It has been a bit of a damp squib to be honest. We’re pleased we didn’t pay anything for it. If it wasn’t for the fact that it’s basically our mobile site, and therefore easy to update and maintain, we wouldn’t be that interested. We have got a few sales through it, but not enough to justify any further investment. 

The fashion brand has 50,000 followers on Facebook, and this following has grown without being incentivised through competitions or other such methods. Will also points out that they are engaged and responsive on the site, and many are active customers. 

Facebook is also a valuable source of traffic for Lyle & Scott, delivering around 4% of total site visits. However, it doesn't convert as well as other channels, accounting for around 2.4% of sales.

According to Will: 

People are not in buying mode when on Facebook. Sales are so small that we would be better advised to spend time and money improving our email or search marketing than ploughing more money onto f-commerce.

It cost very little, so it was certainly worth trying, but we could achieve greater returns by, for example, opening a German language version of our website than spending money improving the f-commerce store. 

Privacy and security concerns

Some stats suggest that concerns about security and privacy are affecting consumer confidence.

According to research, 80% of UK and US adults are concerned that Facebook isn't a secure environment for online shopping.  

A similar survey from Lightspeed last year found that, due to security concerns, Facebook users would prefer to redeem special offers on a brand's website, rather than through Facebook. 

Can f-commerce work? 

Facebook drives valuable traffic to e-commerce sites

While some retailers are clearly unhappy about the returns from their f-commerce stores, Facebook can work well for retailers, even if the transactions are taking place away from the site. 

It can be an important driver of traffic for brands. For example, in September 2010, 1.9% of traffic to Burberry’s website in September 2010 came from Facebook. One year on, this figure rose to 29.1%. 

Stats from last year found that social media accounts for 3% of traffic to e-commerce sites but many brands, such as ASOS, are doing much better than that.  

So, even if all the transactions aren't taking place on the site, the brand exposure and publicity value (Burberry's perfume launch being a great example of this) are driving traffic to e-commerce sites. 

The importance of exclusivity

Essentially, retailers are putting versions of their e-commerce sites up on Facebook, often with limited ranges and inferior usability. So what is there to motivate customers to use f-commerce stores? 

Retailers need to work harder to give customers a real reason to shop on Facebook. The Lightspeed survey quoted above also found that people would buy from brands on Facebook if products and offers were exclusive to fans. 

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. 

This article also has some excellent ideas on how retailers can incentivise customers, by treating Facebook fans as a VIP group, as well as offering special gifts and even points to encourage repeat purchases. 

Are retailers working hard enough on f-commerce? 

It is very early days for f-commerce, so brands like Gap may be being too hasty in closing their f-commerce stores.

After all, we're still in the experimental stage. Once the f-commerce experience is optimised for users, people become accustomed to the idea of buying through the site, and lessons are learned, the outlook may be much more positive for retailers. 

One iota CEO Damian Hanson, whose firm has developed f-commerce stores for retailers such as Foot Asylum, echoes this view:

Commerce within Facebook cannot be disputed, especially when you take a look at the social gaming sector. Retail orientated commerce has been slow to gain momentum in the past 12-months and its fair to say it is still in its experimental phase.

Ultimately brands need to work harder on 'in Facebook' product promotion and discovery and consumer adoption will follow. Retailers cannot simply plonk their websites into Facebook via an iframe and expect sales.

We are starting to see good customer demand to provide exclusive offers and deals which are only available within Facebook and to Fans of the brand, we think this type of exclusivity will drive F-commerce adoption in 2012.

Paul Dimmock of CultureLabel, which sells art from galleries and museums, feels that f-commerce is worth persevering with.

Around 100 of its 600 partners (museums, galleries etc) have installed the FB store on their Facebook pages, giving it greater reach and more exposure for its products. 

Though there are limitations, Paul believes that the effort is worthwhile: 

It is a very valuable channel for CultureLabel. We learn a lot from our fans' feedback on our FB page and together with our wish list feature which can also be accessed via the FB shop, we learn what our customers and fans want, what they think is beautiful and what they'd like to see more of. In terms of states we've had approximately 12,000 site visits via FB, with the FB shop driving a lot of that traffic.

F-commerce and small business

While some of the big brands may be getting cold feet, there are examples of f-commerce working for smaller, local businesses. 

According to Kate Hyslop of bookingbug.com, there's a "thriving community of small businesses out there promoting and selling their products and services through Facebook in a successful and dynamic way".

According to Kate: 

Service businesses in particular are doing this very well, businesses such as health and beauty salons, driving instructors, fitness classes, cookery courses and photographers.

So the idea the idea that "Facebook doesn't drive commerce" is essentially a very narrow-minded view of what Facebook commerce actually is. Where as for the big brands perhaps Facebook is just one minor ad-on channel in their multi-channel online strategy, but for the smaller business it can be a very significant part of their marketing, sales and relationship building armoury. 

One example of this comes from Horgis Driving, which allows people to book lessons via Facebook. 

Owner David Horgan believes that Facebook has great value for businesses like his. If someone books lessons with him, then their friends can see that, and are therefore more likely to use him. 

David explains:

Small service businesses have always relied heavily on word-of-mouth recommendations for client acquisition and Facebook has become the defacto sounding board. Tapping into that ready-made network of potential customers is a great way for small, local or service businesses to get themselves directly in front of a sitting audience of other potential new clients, without having to spend on costly and untargeted advertising.

In my experience, the key to successfully using Facebook for a small business is three-fold; really knowing your target audience, ensuring the online-offline experience is seamless, and convenience - being accessible wherever you clients want to find you.

Can Facebook improve the experience?  

It is in Facebook's interests for f-commerce to work, so can it do more to help retailers optimise the experience for users? 

Perhaps it could help retailers to make the most of user data to create a more personalised e-commerce experience on the site. 

If Facebook can increase the opportunities for monetisation on the site and lower the barriers to entry for both consumers and retailers, then take up will increase. 

Conclusion

While there are clearly issues with usability and generally convincing customers to buy via Facebook, there is clearly a lot more that retailers (and Facebook) can do to make f-commerce work. 

Customers need a reason to use a brand's Facebook store, so retailers need to look at example like Gilt Groupe and find ways to incentivise shoppers. 


Source: http://econsultancy.com/uk/blog/9092-can-f-commerce-work-for-retailers