Facebook May Become e-Commerce Giant Rival To Amazon, eBay

Posted By: Poketors - April 06, 2012
Each month, hundreds of millions of individuals around the world log on to Facebook and this year, the world's largest social network will likely register its billionth user account. It has made Facebook an attractive platform for businesses and marketers looking to reach consumers.

Facebook May Become e-Commerce Giant Rival To Amazon, eBay

Following the adage: 'Go where the users are', companies have flocked to Facebook, and they've increasingly been trying to do more with their Facebook presences in an effort to get the maximum ROI out of the social networking experience.

For some companies, doing more has meant investing in Facebook commerce, or f-commerce as it is widely referred to. The concept is simple - instead of forcing consumers to go to your website to buy your wares, you can hawk them through storefronts on Facebook, eliminating the need for consumers to leave their favorite hangout.

But many of those storefronts are now being shuttered according to a report by Bloomberg. Major brands like Gap, Old Navy, J.C. Penney, Nordstrom and Banana Republic are among those that have decided that f-commerce wasn't worth it.

The reason? For video game Gamestop, which has some 3.5m fans on its Facebook Page, the ROI simply wasn't there. "We just didn't get the return on investment we needed from the Facebook market, so we shut it down pretty quickly," Gamestop VP of marketing Ashley Sheetz told Bloomberg.

In retrospect, the fact that some of the f-commerce hype is subsiding isn't entirely surprising. As Forrester Research analyst Sucharita Mulpuru observes, selling to consumers on Facebook is "like trying to sell stuff to people while they’re hanging out with their friends at the bar." In other words, it's not always a good combination.

That, however, never seemed to bother Facebook and many other observers. Facebook largely appears to believe that it can do just about anything because "this is where people are hanging out." And some went so far as to predict that social commerce would be a $30bn per year business by 2015, with Facebook accounting for much of the sales.

The good news for the companies that experimented with f-commerce is that early experimentation is usually a good thing. Not everything works, but it's better to try and find out than to sit on the sidelines and risk missing out on something that could have positively impacted the business. In most cases, the amount of money invested in f-commerce initiatives by large brands has been relatively small.

The bad news here is really for Facebook. If it's ever going to live up to the type of valuation it will likely go public at, it's going to need to make a lot more money. F-commerce could have helped in two big ways:
  • Encouraging companies to spend more on Facebook advertising to drive users to their Facebook storefronts.
  • Allowing Facebook to expand the use of its virtual currency, Credits, to purchases of physical goods.
Obviously, f-commerce shouldn't be written off as dead. But if Facebook really wants to make a go of it, the world's largest social network will have to be more thoughtful than "this is where people are hanging out" when trying to promote commerce on its platform.

Source : econsultancy

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