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[26 comments]

F-Commerce Faces Questions as Facebook Stores Close

February 21, 2012

The decision by high-profile merchants Gamestop, Gap Inc., J.C. Penney and Nordstrom to close Facebook storefronts has some questioning whether so-called f-commerce sites have a future.

"We just didn't get the return on investment we needed from the Facebook market, so we shut it down pretty quickly," Ashley Sheetz, vice president of marketing and strategy for Gamestop, told Bloomberg News. "For us, it's been a way we communicate with customers on deals, not a place to sell."

Wade Gerten, chief executive officer at 8thBridge, which developed the very first Facebook store for 1-800-FLOWERS, wrote on Forbes.com, "The best way to monetize social media is to empower people to promote products to their friends not for brands to spam you on Facebook. Online shopping experiences are better when they're social. ... Almost 90 percent of the shopping activity we've tracked on Facebook over the last six+ months has been between friends sharing things with other friends."

Discussion Questions:

Discussion Questions: Is there a place for Facebook storefronts in retailers' multi-channel selling strategy? What do you think are the keys to operating successful Facebook stores?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

Are you more or less optimistic about the use of social media as a sales channel today than you were a year ago?

Comments:

Facebook storefronts are an uphill battle, but it might not be over yet. The best analogy I recently read for F-commerce is that it's like inviting a salesperson to call on your friends at a cocktail party.

While Amway and other MLM companies might disagree, Facebook is an increasingly cluttered and less relevant environment for brands trying to directly reach customers. Recent statistics indicate that no more than 1% of consumers interact with brands in the medium. While it's not right to compare this to other direct response media, as that is not social's purpose, many will do so.

The best way for retailers to sell across channels is to be relevant to customers across channels, knowing which are important to which customers, and why. Too many practitioners and retailers are looking at Facebook and much of social media as analogous to mass marketing channels, both digital and analog. Social is not a mass marketing channel any more than email is. At its best, it's a channel to inform, acquire and serve customers and especially gather insights about them (e.g,. who's advocating and who's really influencing).

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Phil Rubin, CEO, rDialogue

Facebook commerce was doomed from the start. When it comes to social networks, customers want to be engaged, not sold to. In-your-face Facebook commerce is not only ineffective, it will likely Tarnish Facebook's own reputation and "likeability" in the long run.

Fabien Tiburce, CEO, Compliantia, Retail Audit & Task Management Software

I'm not much of a naysayer, and I get the f-commerce concept -- if there is a channel to take advantage of, do it -- but this didn't make sense from a sustainable merchandising strategy/tactic from the onset. Borrowed interest is not compelling.

David Slavick, Director, Loyalty & Retention, FTD.com

Facebook can exist like a website or a blog, as another online property to utilize for the marketing message and e-commerce. But social media is not about blatant selling or self-promotion: it's a sensitive space, and marketers need to take care to not push communication too hard.

It should be about establishing a two-way, direct line of communication with your consumers, answering their questions to make the brand relevant, and just plain having some fun with them! I think you can, depending on your brand, monetize your social media presence. But the main goal should be engagement with your users, with a secondary focus on driving sales.

The Facebook storefront should therefore be a property in which you need to think outside the box; it shouldn't just be straight sell/buy or 'Like' us for a discount. It should incorporate interactive deals and promotions, as one example, to grab eyes and drive engagement. It's essential to integrate your online/offline marketing efforts. So Facebook should be an extension of your key messaging, with an interactive, unique twist.

I think marketers have jumped on the social media bandwagon a bit too fast -- they know they need to be there, and tend to throw up a Facebook page just like that. But it takes creative thinking and careful execution to ensure that what you launch has real ROI, whether it be monetary or not.

Ronnie Perchik, Founder/CEO, PromoAid

Phil hit the nail on the head. I have been cynical for a while about F-commerce because most of us aren't there to shop and buy, we're there to connect with friends and family. Facebook can be a great shopping referral point, a place to learn about brands and experiences and a key influence node in the path to purchase, but I'm just not convinced the online shopping mall approach makes any sense. Phil has it right -- it's not a mass market channel: use it for research, understanding social influence and providing rich experiences around your brand. Commerce will come but not necessarily in the same breath.

Lisa Bradner, Chief Strategy Officer, Geomentum/Shopper Sciences

All the research I've seen has shown limited purchases coming from Facebook and other social media sites. I don't think it is a place to transact with consumers, but rather a place to brand build. If you think of consumers' mindset when "Facebooking" it is connecting with people, not shopping.

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Robert DiPietro, GVP Product Strategy & Business Development, Affinion Group

I think Ashley from GameStop homed in on the key takeaway for most retail brands -- that their own e-commerce enabled websites are the destination, while social media outlets are marketing channels to drive engagement and awareness.

There may be ways that CPG brands can more directly influence and transact purchases through channels like Facebook. But I would say the value proposition and approach for retailers and manufacturers are considerably different.

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Matt Schmitt, President, Chief Strategy & Innovation Officer, Reflect

Facebook is essentially an open place for people to share. Because shopping is so inherently social, it makes perfect sense to share shopping, buying and using stories. But retailing is inherently merchandising, which doesn't make a lot of sense on the Facebook platform.

My gut tells me Pinterest could be linked to commerce, because what everyone is so intent on pinning is a curation of ideas, etc. that are compiled like a merchandising assortment. Pinterest boards could easily be linked not just to the sourcing website, blog, etc. but to a commerce link, so interested consumers could click right through to buy.

Example: I browsed a wedding planning Pinterset board the other day, found candles I would love to use at a shower, and would have clicked-to-buy immediately. Now I have to chase them down, which I'm frankly too busy to do, since the magazine photo posted didn't even supply the manufacturer information.

Merchandising and display, the perfect segue to purchase. Pinterest, here's your business model.

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Anne Howe, Senior Vice President, Shopper Solutions, part of Acosta Mosaic Group

Of course there's a place for them -- if they are managed correctly and on their own terms!

The problem with all social media is that too many traditional branders want it to perform like ... well ... traditional media.

Facebook isn't direct mail. Nor is it a website. Nor is it a digital billboard.

So ... maybe if people thought their social media strategy through a bit more carefully and fully integrated it into the rest of their go-to-market strategy we wouldn't have to keep having this discussion.

For those that can't -- or won't commit the efforts to -- figure it out, all I can say is fold the tent before you do your brand more harm.

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Ryan Mathews, Founder, ceo, Black Monk Consulting

Facebook may well play a part in your company's promotional strategy. However, using Facebook as a storefront may not be the best form. Depending upon who your consumers are and how they use Facebook and your objectives, companies will use Facebook in different ways. Assuming that a specific Facebook strategy will or should work for all or most companies means that the strategy has not been tailored for your consumers.

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Camille P. Schuster, Ph.D., President, Global Collaborations, Inc.

Attempts to use Facebook for something it was never intended for isn't working out so far. But some company may figure it out yet. I wouldn't bet on it though.

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John Karolefski, Editor in Chief, CPGmatters.com

It's very early in the evolving collision of brand, buyer and tool to think anyone will have gotten any of this right...or wrong for that matter.

Bill Bishop in his BrickMeetsClick efforts has done some pretty remarkable research that indicates there is huge opportunity remaining in advancing the O/Lo/Mo/So toolset in order to "fit" the needs of shoppers. That opportunity exists all the way from Amazon down to less obvious platforms such as Facebook or Google.

Perhaps if FB looked at its asset base from the other end of the puzzle...recognizing that it has 850 million consumer platforms to purchase, rather than to be sold to, it might discover its true potential.

Mike Spindler, Managing Partner, Panther Mountain Companies, LLC

Facebook storefronts merely duplicate a Web store, so that's the wrong approach. Better to leverage the social nature of Facebook using the newsfeed to drive consumers to your Web store, or perhaps do purchases within the newsfeed itself.

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David Dorf, Sr. Director of Technology Strategy, Oracle Retail

We have seen the same principle applied to many highly-trafficked websites:

"A lot of people visit online property X, therefore our marketing tactic Y needs to be there."

Remember display ads on search engines? Virtual billboard ads in video games? Sponsored communications on instant messaging?

They all flopped...fizzled...got an "F." So has storefront F-commerce. But that doesn't mean JCP, GameStop, or other marketers failed. They simply experimented and adapted to what worked -- empowering people rather than brands to promote products.

To paraphrase Walter B Wriston, marketing goes where it's welcome and stays where it's well treated.

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Dan Frechtling, Vice President, Global Product Management, hibu, PLC

Maybe the answer to F-commerce is more of a marketing tool than a sales tool. I have been skeptical of this from the early start, but had thought it might have a chance to succeed. These social media commerce points are in place to communicate which is more in line with marketing. Amazon, etc. on the other hand, have the sales tools working perfectly.

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Ed Rosenbaum, CEO, The Customer Service Rainmaker, Rainmaker Solutions

The real problem is not that Facebook isn't the place for retail. The position that social hangouts can't be places of commerce isn't valid either. Markets, malls and shops have been social hangouts for centuries. In fact, their social nature has fed their performance for commerce.

The problem is that most retail companies have been treating the Facebook opportunity as "just another place" to have a website. There's nothing unique or inherently social about their Facebook stores. They are merely F-versions of their existing sites.

But imagine if you got a notification from a friend that said "Sue is at the Nordstrom's Facebook store and found a shirt she thinks you'd like. Click here to join her there." Then if you and your friend could actually interact together for a few minutes inside the store, it would become a social happening. I dare say, it might even be fun! Retailers should take a look at sites like Second Life, to get a sense of what can be done in the realm of virtual shopping. Then they need to apply those learnings to their endeavors on Facebook.

The key is not setting out merely to sell stuff, but rather to create fun connections between people based on what you sell. It's a totally different mindset.

Doug Stephens, President, Retail Prophet

Facebook is a medium to connect with your customers, develop relationships with them, and gain valuable insights into how they feel about your brand. Pinterest is the same, except more visual. A storefront is a direct sales approach and really goes against the whole community.

Social media as part of an outreach campaign, whether it is Facebook, Twitter, Pinterest or any others, is a great strategy. But the direct selling approach will not work today. As the medium evolves, we shall see if it can be successful.

Phil Masiello, President, VALUChain Associates

Whether it's Facebook or another social channel in the future, I believe there is still money to be made as a retailer storefront. It is simply another channel to populate, just like catalogs, kiosks, etc. These closings don't scare me. Just find the secret sauce!

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Ralph Jacobson, Global Consumer Products Industry Marketing Executive, IBM

Having a Facebook store plus an e-commerce site doesn't seem to make much sense, though Facebook can clearly provide an important supporting role.

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Matthew Keylock, Senior Vice President, New Business Development and Partnerships, dunnhumbyUSA

I think that the Facebook brand is starting to get oversaturated. I personally have way too much information that I have to deal with on a daily basis. It is just too overwhelming to go to my Facebook page daily. As a driver to store fronts, I find it even more difficult to imagine that Facebook would be a great vehicle in the long term.

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Joe Nassour, Chief Technology Officer, RetailTactics

So perhaps "The best way to monetize social media" is not to.

'notcom'

Full disclosure: I was an affirmed skeptic about commerce on Facebook before I read the article in Bloomberg News. I must also confess to an instant of schadenfreude when I read of the closures by Gamestop, Penney and Nordstrom.

Let's not ridicule those retailers for testing the concept and pulling back. They have done the rest of the industry a great service. We analysts now must seek understanding about why these F-commerce shakedown cruises sank. Is there some fundamental incompatibility between Facebook and embedded shopping? Did Facebook users fail to grasp its purpose? Was the implementation just too clumsy or too new?

Just because Facebook attracts a massive user base does not make audience members eager to divert their social time to buying stuff. We've seen errors of assumption made over and over in new media -- any large number of people in one place is an irresistible temptation to advertisers. But context matters.

As the Facebook IPO plays out, investors will need to consider whether its imputed share value accurately reflects the true potential of F-commerce -- F-boon or F-bomb?

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James Tenser, Principal, VSN Strategies

My question is why did retailers rush out to build Facebook store fronts anyway? I believe most did because someone else told them they had to or they would be left behind! Left behind who or what? These web stores are being shut down because they should have never been opened in the first place.

When will retailers realize that their only salvation is to not reinvent retail, but to get back to solid retail principals of service and value? Find your point of value and go to work communicating it and then back that up with appropriate service. If you hop on every train that comes by, you will never get anywhere and if you listen to every conductor you will always be switching trains. The Facebook clan is generally young and isn't necessarily looking for shopping solutions there.

Ed Dennis, president, Dennis Enterprises

I am sick of going on Facebook, and trying to get through all the crap people are trying to sell me before I can talk to my regular friends. You want to know why FB is littered with businesses? Simple answer is that the businesses on FB use it because it is FREE. They are too cheap to promote through regular channels, and want to bombard us on FB with all of their stuff that they're selling out of there garages or basements.... That is my opinion, and I'm sticking to it.

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Tony Orlando, Owner, Tony O's Supermarket & Catering

I don't think we can conclude much about the long-term future of social commerce from the early Facebook experiences. Let's be honest, all the Facebook Commerce sites we've seen to date are pretty poor efforts. For the most part they were dumbed down versions of the brands' e-commerce site, inelegantly slammed into Facebook. They would have failed as standalone e-commerce experiences just as quickly.

A big part of the problem is that the toolset for developing experiences on Facebook hasn't been very consistent. 800-Flowers has had to re-architect their Facebook Commerce page multiple times, from FBML to iFrames to OpenGraph (and good luck getting your app to work well on mobile, even though 44% of Facebook's users access the site via mobile). Given the history of Facebook quickly shifting the platforms they expect developers to work with, who would make a serious investment in an Facebook e-commerce site? Are you going to spend millions of dollars on a unique Facebook-based experience that could become obsolete tomorrow? Nope, you're going to do something quick and dirty, and that's exactly what we've seen to date.

The other HUGE problem is that brands don't own their own real-estate on Facebook. Facebook can kick you off any time they want, and they are completely entitled to redirect your traffic wherever they want. Would you invest a lot of money building a store in a physical mall if you weren't given a lease, and could be evicted from the mall whenever the landlord wanted? Brands are nothing but digital share-croppers on Facebook with virtually no rights.

All that aside, I don't think users really want generic e-commerce experiences on Facebook pages. But I can imagine social e-commerce experiences that could be successful. 1-800-Flowers' business is all about getting users to tell them who the important gift recipients in their lives are, and what their important occasions are. They often pay a $50 bounty to users willing to set up a profile on 800-Flowers native e-commerce site. It's a miserable experience typing all your family's names and birthdays into your profile on 1800flowers.com. Wouldn't you rather make it a one click affair on Facebook which already knows who your family is and when their birthdays are? I'd certainly like to see a Buy-Now button on Pinterest Boards I'm interested in; I'd like to filter reviews on e-commerce sites, based on people that are in my Facebook social graph; And I want to login to e-commerce sites using my Facebook social sign-in.

Writing off Social Commerce because the J.C. Penney f-commerce site didn't work, is like writing off e-commerce because the Pizza-Hut Online page in 1994 wasn't profitable.

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Jason Goldberg, VP Commerce Strategy, Razorfish

Don't confuse the tactical moves of specific retailers with the long term trend. Facebook as a platform is used by more than one sixth of the planet's population. That figure dwarfs the percentage of us who were internet-enabled back in 1995. Yet, at that time we didn't doubt the strength of e-commerce as a business model. The same will be true for Facebook storefronts.

There were winners and losers in the internet world as well. Remember when Yahoo supposedly had the search engine market all sewn up? That was before Google was even founded. Remember when Half.com was one of the biggest online retailers in the world? When's the last time you bought something on Half.com? But just because some companies did better and some companies did worse, we don't doubt the trend.

The same will happen with commerce on Facebook. Big business there, waiting to happen. Maybe not for these individual companies, but that's not the point.

Tim Callan, CMO, SLI Systems

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