Why Facebook Commerce Will Work

18th Apr, 2011

This is a follow up post to For & Against Facebook Commerce.

Have we Reached a Tipping Point?

There is evidence that f-commerce can become a powerful channel for brands in the future. But as the Forrester research points out there may be some reluctance for consumers to use the channel to make purchases – for now. In the previous post I pointed to growing evidence that friends, and social actions are influencing purchasing decisions and the existence of a Facebook Effect – where brands linking Facebook activity to website and sales activity see positive outcomes. This is underlined in three cases – Ticketmaster, who have estimated they earn $5.30 for every event shared on a fans wall, Amazon’s Facebook traffic increased over 300%, and in the case of American Eagle, who see Facebook referrals spend 57% more than the average visitor.

Why, I think, Facebook Commerce will Work.

I don’t think it’s the case that consumers go to Facebook to hang out and not to shop. The Engage Sciences research does point to consumers willing to make purchases via social media (not just Facebook). We haven’t reached a tipping point, but in the next 12 months we will. There’s three arguments for this.

1. Consumers not there just yet

One is the consumer mindset may not be there yet in terms of making purchases via Facebook. Who would have thought in as recently as a year ago, group buying websites would become such a craze? Ok maybe you or me, but the average person in the street? Group purchasing websites have proved that shopping habits can be changed. I think the adoption of Facebook Credits by X-Factor, and other mainstream entities, along with further adoption of Facebook stores by brands, will change this perception in the coming year. The Engage Sciences report also highlights the emergence of a strong want in people to purchase via Facebook, and not just for heavily discounted goods either.

2. Fans will more than likely buy from their ‘likes’

The second argument I have is with fans purchasing habits. Although people spend 700 billion minutes on Facebook per month, a large chunk of that will be doing social activities with friends and not handing over money to brands. Set expectations and goals at a realistic level, I may not always want to buy a new shirt, but when I do, I’m more than likely going to check out those brands I ‘like’ first. Building an audience of fans will put you towards top of mind when a purchase decision comes about. Similarly in a bricks and mortar shop not everybody who walks into the shop is going to make  purchase, you have to get them in the door and then show the person something they want.

3. How suited is your brand to f-commerce?

Third, how suited is your brand to f-commerce. How likely are you to buy certain goods via Facebook? A case in point is the recent campaign by Heinz. Would you buy ketchup through Facebook? No probably not. What if it was a new limited edition Ketchup flavour available first through Facebook? That puts a different spin on things and Heinz managed to sell an initial run of 3,000 bottles, gained 14,000 new fans and a lot of press. Ok the latter isn’t going to happen every time, but the launch created a demand for the new product in advance of it going on sale to the general public. The lesson? If people are unlikely to purchase your product via Facebook then you need to give them a reason. In this case Heinz gave fans access to a unique and exclusive new product.

The Forrester report, which found Facebook will not drive commerce, also supports this point. The research found those with unique sales models or who sold digital goods were using Facebook to drive double digit sales.

For certain brands Facebook may not be perfectly suited towards f-commerce. Heinz won’t be able to produce a new flavour every month, but that doesn’t take away from the fact Facebook is also an excellent tool for brand awareness, building relationships with customers and for customer service. Exactly what the Millward Brown report suggests too, but these are the intangibles. There is an opportunity for such brands, like Heinz, to identify one off opportunities to generate sales. It all comes back to why would I buy from your Facebook store?

Facebook Commerce Will Work

The technical capabilities exist to generate sales via Facebook, and even the Forrester report, which was at the center of the ‘no’ argument, agrees unique models will work. I don’t think the models need to be unique to every brand, what won’t work is a one size fits all policy because some brands. In short, f-commerce can work, it just has to be done right.