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Is the Future of Social Commerce on Facebook?

By Michael Olson | Posted on August 17, 2011

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Facebook’s explosive growth from internet users and brands has led many pundits to question whether it will become the hub of commerce for retailers. Commerce on Facebook is alluring because it enables companies to harness social capital. Retailers are eager to tap into the tremendous word-of-mouth potential of fans liking products, making purchases, and sharing those purchases with friends. Social media strategists often tell their clients to “fish where the fish are”, which has caused several retailers to open Facebook storefronts.

Last fall, Procter & Gamble made a splash by launching a direct-to-consumer sales channel on Facebook for its Pampers brand. While certainly not the first retail brand to extend its eCommerce presence to Facebook, P&G’s initiative still attracted a media blitz, and the idea was praised for its ability to induce impulse purchasing. However, P&G actually outsourced the logistics to Amazon Webstore. Consumers could browse products and add to their shopping cart while on Facebook, but the checkout process actually lived within Amazon’s borders.

Why wasn’t the entire experience contained within Facebook? The reason may be due to analytics. Facebook Insights provides valuable data on interactions and engagement metrics, such as number of impressions, likes and comments. But Facebook’s analytics engine simply cannot replicate the breadth and depth of information available from dedicated analytics platforms like Coremetrics or Omniture, or eCommerce platforms such as Demandware, GSI Commerce and Magento.

These platforms deliver rich clickstream data, which lets retailers track browsing behavior and determine methods to optimize the purchase funnel. Traditional analytics platforms also offer intelligence about which marketing programs (email, search, PPC, social or affiliates) are most effective at driving sales. Facebook Insights is great for measuring engagement, but may not yet provide the level of actionable data required for commerce.

A category of promising technology vendors has emerged to address these concerns by making it easier for retailers to integrate Facebook storefronts and track consumer behaviors. And there are encouraging case studies from companies that have sprouted complementary sales channels directly on Facebook, such as JC Penney and 1-800 Flowers. But because many storefronts use iFrames to serve product content, they are often SEO black holes that do not receive much love from the search engines. Given that 25-35% of traffic to large eCommerce sites is organic search, the lack of search engine discoverability for product content on Facebook is a concern.

So, clearly there is value in maintaining a strong commerce component under your roof. Perhaps Ethan Beard, Facebook’s Director of Platform Marketing, said it best last December when he remarked, “We’re not trying to recreate the Internet on Facebook. In fact, I spend most of my time working with people to socialize the web outside of our site.”

David Fisch, Director of Business Development at Facebook, echoed Beard when he added, “the storefronts are really only one piece, and really a pretty small piece, of the burgeoning area of social commerce. Our interest isn’t in getting people to create tabs where people can shop but allowing consumers to shop wherever they are and helping them discover products through their friends.”

Fortunately, with the help of tools like those we provide at Janrain, the benefits of social shopping can be extended to a retailer’s corporate site. Here are three ways for retailers to leverage the power of Facebook commerce on their site to grow conversions and sales.

Social Sharing

Social sharing taps peer recommendations to drive qualified traffic to product pages and conversion points on your eCommerce site. It lets consumers promote their purchases, product reviews, or other content from your site to their friends on multiple social networks. This blends the benefits of word-of-mouth marketing and brand advocacy to drive qualified new referral traffic to your site. Janrain customers generate an average of 13 new referral visitors to their site for each piece of shared content.

Social sharing also helps retailers and brands circumvent the challenges of news feed optimization. Facebook’s EdgeRank algorithm is designed to promote relevance by favoring news feed posts from friends with whom you frequently interact. While your brand page may have plenty of fans and likes, your Facebook posts could get lost in the news feed unless consumers frequently interact with your messages or visit your page.

Peer-to-peer sharing is different because it leverages the high affinity scores that your consumers already have with their friends. As a result, posts that originate from consumers may be more likely to filter to the top of the news feed than those from your brand. In essence, more impressions lead to more referrals and ultimately, increased sales.

Facebook Social Sharing News Feed

Incorporate Friends and Social Graphs

One reason retailers turn to Facebook is to replicate the shopping mall experience online – where consumers flock to stores with their friends to browse and purchase products. But this type of social shopping is also possible directly on a retailer’s site after enabling social login.

When consumers sign-up on retail sites with their Facebook identity, they can choose to grant access to their member profile data and friends lists. This social graph data opens the door to optimize social shopping on your site. Here are a few ways your customers can incorporate their Facebook friends into the shopping experience:

  • Filter product listings or reviews to prominently display content that friends have recommended.  In other words, provide a window into purchases, product reviews and activities from friends.
  • Invite Facebook friends directly to check out a particular product or visit the site.
  • Recommend gift ideas for Facebook friends based on their birthday or interests.  See the image below for an example.

Sears Social hopping Recommendations

Social Ads

Targeted social ads are another effective traffic-driver to product pages and conversion points on your site. Because Facebook now accounts for about 12% of all time spent online in the U.S., it is an incredibly potent channel for advertisers.

Facebook advertising works for retailers partially because of the social network’s scale, but also because Facebook can target relevant ads based on a consumer’s demographics or interests. If I sell athletic shoes, I’m going to generate more conversions and a greater return on my advertising investment by targeting Facebook users who are interested in running.

Facebook Social Ads

Many retail brands use Facebook ads to drive traffic to their brand pages on the social network. While this is an effective tactic if the goal is to build community on Facebook, your product pages or custom splash pages should be the destination if revenue is the immediate objective.

Facebook has the potential to become a viable direct selling channel for retailers. But until it evolves to support the deep level of analytics, SEO and merchandising tactics that retailers already employ on their corporate sites, it is perhaps best leveraged as a complementary sales channel, a branding and engagement tool, and a traffic-driver to your eCommerce site. With the help of the ideas described above, your site can remain as the hearth of your social commerce strategy.

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About the author

Michael Olson

Michael Olson

Senior Product Marketing Manager

Michael Olson joined Janrain more than five and a half years ago and has experienced the explosive growth of the digital marketing technology landscape. Previously, he managed demand generation programs at Janrain. Currently, as the Senior Product Marketing Manager, Michael drives go-to-market strategy for product launches as well as positioning and messaging to communicate the value of customer profile management solutions to companies. Michael's writing has been featured in publications such as GigaOM, Adotas and iMedia Connection.

View all posts by Michael Olson