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Does Facebook deserve an F for ROI?

As early adopters of f-commerce pull back amid low ROI concerns, we ask the big question: Is there a future for f-commerce?
Sean McAuley, Fusepump
Tue, 06-03-2012 05:58
Does Facebook deserve an F for ROI?

It’s all over the news: more and more early adopters of f-commerce shops are pulling back on their investment because of concerns it’s not delivering the ROI anticipated. With a whopping 40 per cent of the world’s internet traffic visiting Facebook daily, it’s clearly a site that offers huge potential for retailers. So what’s gone wrong?

Social media and advances in mobile and web technology have transformed the way in which consumers engage with brands online, creating new avenues for businesses to drive sales and build brand loyalty.

As the most significant example, Facebook boasts over 800 million active users, so it is unsurprising that many retailers have looked to the social network site to invigorate their sales. Forrester Research reports that 52 per cent of companies in the US, UK, Germany and France now have Facebook pages, with 40 per cent sharing products on those pages.

But it seems the jury is still out on whether their attempts at what’s been dubbed ‘f-commerce’ are successful.

I would argue that retailers simply haven’t harnessed the power of these platforms in the right way.The problem is not with the platform per se but in the approach retailers are taking to it.

Translating social behavior into sales
For a start, many retailers seem to have failed to fully understand social behaviour on Facebook.

As with any online retail opportunity, the main challenge for merchants adopting f-commerce is driving traffic to their Facebook page and gaining traction.

But social commerce is not the same one-click buying experience you get from e-commerce sites or comparison shopping engines and shouldn’t be treated as such. Rather, the f-commerce experience is about advocacy – i.e. sharing and recommending products and building brand loyalty.

Where retailers fall down is when they put their whole product inventory on Facebook in a way which is no different to their primary e-commerce sites. This is missing the point. If the whole inventory is on Facebook why wouldn’t a customer just shop from the fully functional website?

Instead, they should be presenting only a highly-targeted selection of products. The power of Facebook lies in its network effect and viral nature. F-commerce allows the retailer to soften its brand message and engage customers with interesting, fun and potentially viral media, reaping the benefits of valuable 'friend' recommendations. It also provides the opportunity for brands to be more adventurous and creative about the way in which they present their products.

For example, last year one UK department store created a Christmas 'gift finder.' Users could 'like' the gift finder, get friends to vote on gifts, select a Facebook friend to buy a gift for (or even someone not on Facebook) and then share this information widely across the web. The gift finder application was powered by product data feeds.

Product data feeds may be relatively unknown outside of technical circles, but their f-commerce applications are already delivering impressive results and helping to drive substantial incremental revenue for many well-known brands.

A data feed contains product information such as availability, description/promotional text, pricing and images and ensures social media applications can be quickly populated with information so that consumers can easily find and purchase exactly what they are looking for.

In the ‘gift finder’ application, the data feed enabled the department store to define and map their product range by the person the gift was intended for (e.g. girlfriend, boyfriend, mum, grandparent etc.) and also their personality type – from 'coffee addicts' to 'health seekers'. They could even use an 'inspire me' option.

The importance of being liked
Data feeds can also be used to create advertising widgets that can be embedded within Facebook. They can then be posted to a wall if ‘liked’ by someone and automatically ‘shared’ to their friend’s wall, thus ensuring a viral media effect. Furthermore, a deep link generator tool can then be employed to drive traffic back to the e-commerce site in order for the transaction to be completed.

It’s fair to say f-commerce has been slow to gain momentum, but it’s still early days for Facebook as an e-commerce platform. Retailers would be wrong to write it off just yet.

Facebook offers an excellent opportunity for retailers to not only gain loyalty but also drive sales provided they get the interaction with their fans. Indeed, there is a lot more that retailers can be doing to drive sales from this channel.

Crucially, the power of Facebook is in its network effect and the opportunity this provides for engaging and interacting with consumers in new and innovative ways. With a little bit more creativity, f-commerce can be successful, it’s just a question of ensuring products are presented to consumers in the right way.

Sean McAuley is UK commercial director of FusePump, who create, manage and integrate product data feeds to maximise revenue from online marketing and e-commerce applications. High-quality data feeds increase product visibility and sales conversion for clients and enable consumers to find exactly what they’re searching for online. FusePump provides an end-to-end service meaning their technology doesn’t demand any technical knowledge or management time on the part of their clients.

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Does Facebook deserve an F for ROI?
SeanMcAuley's picture

Hi Jessica,

Thank you for your comment on the article, I am glad you found it interesting.

I completely agree with you, f-commerce is about engaging potential customers and making it relevant and not always pushing product directly. Take for example Tesco Direct's latest Facebook move with the Delivery Dash Application, Engaging customers with new fun games with product at the forefront but not pushing the hard sell.

I believe it is key for Companies who engage with their customers on Facebook to look at attribution.

Facebook is the perfect environment to push that seasonal messaging and product range, purely because the online customer is expecting this already, they expect to see Easter and Mother’s Day promotions and marketing messages so why not show them relevant product.

With the right strategy behind it f-commerce should be a large part of online retailers 2012 strategy.

Thanks,

Sean

Sean, I love your idea of
jessicahowe's picture

Sean, I love your idea of using Facebook pages to showcase only a small, targeted selection of products. Not only is this a way of distinguishing a Facebook page from the company's website, I see this strategy as adding value to potential customers because it  hones in on relevancy.

I'm curious - what experience have you had with this and how have you seen it improve ROI?

Also, do you see a marked improvement in ROI when the products chosen to be featured on a Facebook page are timely, ie products which are specifically chosen to tie in with Easter, Valentine's day etc?