Guest comment: Facebook – access to millions, but is it a viable commerce channel?

by Stefan Schmidt

I’m still on the fence with Facebook, despite the fact that I use it every day. There is something in me that is too weak to resist and I have to make an effort to keep in touch with friends who don’t use it. Facebook wants to be so many things: not just a social network or a search engine, but also now a shopping channel. Can it really hope to achieve this?

Granted, it has 500 million users and that size of community can’t be ignored but in terms of its viability as an ecommerce channel, there are some technical and indeed, moral hurdles that need to be crossed first. What is not in doubt is that Facebook is becoming a touchpoint, in the same way that mobile was originally a touchpoint. It can influence our opinions about where and with which retailers we choose to shop, and, in addition, Facebook’s innocent ‘like’ button provides retailers with an incomparable wealth of information. Many consumers are not even aware of the many uses their profile data is being put to. But according to recent Forrester research, social networks in general have failed to drive meaningful revenue for retailers in the last two years.

This has not stopped them from trying – everyone with something to sell can’t resist the lure, and the audience offered by Facebook. They look for the best ways to capture the consumer information it offers to better target their marketing campaigns and create sales.

Ignoring the central tenet that Facebook is about socialising and not shopping, some companies are already offering what they say is ecommerce on Facebook – milyoni and payvment are just two. But in reality, their ecommerce facility is equivalent to hybris’ ecommerce offering of 10 years ago – a shopping cart. Do retailers really want to go back 10 years? The other problems with this are that all the data is loaded into a silo, which makes keeping it current and synchronised difficult. The system is simple and limited, which leaves little room for expansion of business processes and no facility to serve or interact with other channels such as online, mobile or POS. There is also the requirement for the operator to make money, which means they take a percentage from every transaction the retailer makes.

Modern multichannel platforms are capable of hosting multiple sites on the very same stack, which allows the content to be presented with a different look and feel without compromising on the functionality of the platform. Forward-thinking retailers can potentially have the best of both worlds by linking a modern multichannel platform with some of the tools readily available on Facebook.

For example Facebook’s recently announced support of iFrames in Facebook tabs, makes it easy for multisite platforms to expose a Facebook themed site inside Facebook, but with all (or maybe some) of the great functionality that had been developed for the original online store. Transactions are managed by the seller so no margin has to be given, and building the Facebook view is easy to do, the only effort required is in transforming the content to a different layout. There is instant access to functions like search and navigation and data from behaviour, orders, etc. is available and can be quickly used.

Equally, retailers can use Facebook tools to enhance the offer that they make on their own site. As I mentioned before, the ‘like’ button is a potential goldmine for the canny e-retailer, who can link the user’s Facebook wall with whatever product or service they are selling. There are two key advantages: the first is that the retailer is now aware of what the user likes, so can ensure that all subsequent offerings and product listings reflect this preference, and secondly the retailer now has a direct link to the friends listed by the user. This is a lead generation tool, because if the friends click the link on the user’s wall they will then become leads for the retailer, which gives the retailer an opportunity to then convert them into sales.

The Facebook Login button is the most likely of all the logins that people use to be the one they remember, because it is their interaction site of choice. And because it’s convenient they probably use it on other sites and don’t particularly care that this might provide access to their social graph – valuable information about themselves and their friends, which the retailer can use to influence their shopping experience without them ever being aware. There is an irony to this, admittedly morally questionable, activity, because consumers are likely to value this silent influence as it is more relevant to what they like and are looking for.

There is also the question of payment systems. Companies such as Apple or Google command a massive, worldwide audience and could potentially put in place payment systems that would become accepted as de facto standards, and again, this would gather valuable information about users. PayPal have been very successful, for example, but they lack the hardware and the high numbers of users to make it a really powerful tool for e-retailers however the principle is there and it is undoubtedly an opportunity on the agendas of some of the larger web players.

Forrester’s research has found that for most retailers their activities around coupons and promotions on Facebook have generated results, but they don’t believe that particularly valuable shoppers are being attracted through Facebook. In my view, there is an opportunity to build on what is currently just a touch point to create a substantial channel, but there is also the moral question about accessing information and how retailers use it. There is little legislation across the sector currently, although I expect this will change, so individual retailers have to look at how Facebook could fit into their own multichannel plans, and follow their own moral compass.

Stefan Schmidt is director of product strategy, hybris