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[17 comments]

Will consumers 'Buy' on Facebook?

July 21, 2014

Facebook is testing a "Buy" button that would allow users to make on-site purchases.

Users on desktop or mobile will be able to click the Buy call-to-action button on ads and Page posts to purchase a product directly from a business without leaving Facebook.

At checkout, consumers can use credit card information that they have placed on file with Facebook. Shoppers also have the option not to have their information stored.

"We've built this feature with privacy in mind, and have taken steps to help make the payment experience safe and secure," Facebook's press released stated. "None of the credit or debit card information people share with Facebook when completing a transaction will be shared with other advertisers, and people can select whether or not they'd like to save payment information for future purchases."

While Facebook has experimented with e-commerce before to little success, the big difference is that the new Buy button doesn't force users to leave Facebook for another screen in order to check out. For TechCrunch, Josh Constine wrote, "You just click Buy, and click again to confirm, and the item is on its way to your door. It's like the candy they sell in the grocery line."

For now, Facebook is not charging the "few small and medium-sized businesses" involved in the test, but it could eventually charge a fee for a processing payment. Collecting credit card data is also expected to open up future opportunities for commerce. But the promise of a simpler way to show conversion rates should boost its advertising rates.

"With this step, Facebook is becoming even more firmly established as a major player in direct response advertising, and though this test is still only a test, it's a definite sign that Facebook wants to restart its efforts to become an e-commerce company as well," eMarketer analyst Debra Aho told The Associated Press.

The tool may also support small businesses that have an active digital presence but not an e-commerce platform.

"This represents a tremendous opportunity for savvy small businesses to generate sales in real time," Brian Solis, principal analyst at Altimeter Group, told CNNMoney. "This is an opportunity for innovation."

FINANCIALS:     [NASDAQ:FB] [ ]

Discussion Questions:

How appealing do you expect Facebook's "Buy" button will be to Facebook users? What hurdles does Facebook still face in working as an e-commerce platform?

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:

What's the likelihood Facebook's "Buy" button will prove successful?

Comments:

The idea of the "Buy" button and the notion of integrating e-commerce into Facebook will create another small firestorm of whining, complaining and paranoia, but when it's all said and done it will be enormously successful. The button will make Facebook a giant in e-commerce because Facebook is where people congregate to talk to friends and people they know and trust, and by nature it's an entirely social atmosphere where users will gladly buy things on impulse with a push of a button and without having to leave the page. This will happen.

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David Biernbaum, Senior Marketing and Business Development Consultant, David Biernbaum Associates LLC

The more a consumer has to click, the less likely he/she will purchase. Enabling consumers to buy without leaving a Facebook page is a big step for retailers and for Facebook. This brings true e-commerce to the social media giant.

Small businesses that do not have extensive websites can utilize Facebook as their e-commerce platform. Restaurants can use this to sell gift cards and perhaps take reservations.

Facebook has to insure the security of user information throughout the transaction. Consumers expect no less.

Zuckerberg and team have just opened a potentially huge revenue stream for the their company.

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Max Goldberg, President, Max Goldberg & Associates

Adoption could be significant, especially for gifting to friends for birthdays and other special events.

I think the hurdle is just getting over the initial challenge of getting a user to load up credit card information. And the ongoing tension between Facebook and users over privacy and user data is always simmering.

One thing to look out for is whether Facebook succumbs to the temptation of getting users to hawk sales to their friends. That may not be likely in the short term, but if they do decide to pull that lever it could really tarnish the platform.

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

Amazon has proven the power of "one click." The biggest advantage of the one click "Buy" button is that consumers don't have to leave the page to go to another site. Make it very easy to purchase while the consumer is excited, and sales will more likely happen.

This is the breakthrough that Facebook needs to make e-commerce successful.

HOWEVER, hell hath no fury like a consumer whose credit card data is stolen.

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Chris Petersen, PhD, President, Integrated Marketing Solutions

One Word: Finally.

I am no fan of Facebook, but even I have been waiting for the "Buy" button. Now the promise of Facebook's commercial return can be fully realized.

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Liz Crawford, VP, Strategy & Insights, Match Drive

Facebook is making a huge paradigm shift from people telling you where they are so thieves can break in their houses to e-commerce. I guess I have to be counted as one who is not a potential buyer or user of the "Buy" button. Not for any particular negative thought; but I'm simply not interested in using Facebook as a purchasing conduit. There are too many other proven-successful and direct outlets.

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

I read this with mixed emotions. There are certain categories that will work like a charm and others, not so much. If they swing too far in the wrong direction, this could be a real turnoff to the consumer and backfire.

Gifting a friend, buying a gift card, things that can be delivered through automation? No brainer. Getting into the delivery business? That could make or break them.

... and that's my two cents!

Lee Kent, Brings Retail Executives Together to Meet.Learn.Profit, RetailConnections

I do not see many hurdles here. I may be in the minority, but if I see something I want I have never had an issue entering credit card information, etc., and if it is not one click it has not prohibited me from leaving a site. I see this quite frankly as another huge step for Facebook. Just opens up another shopping platform. Options are good!

David Lubert, Industry Principal, Bridge-x Technologies

When it come to Facebook, I'm not a fan. I would not consider loading my credit card or banking information with them, But I no longer think I can accurately predict what people who already regularly use Facebook will do, since they seem very willing to open up their lives up to public view in ways I can't conceive of in the first place.

'Liatt'

For those looking for convenience, Facebook's, Buy button may be of interest, but for others, like me, I prefer a single purpose Facebook.

Upon returning to the US, I'm annoyed by the TV commercials and internet pop-ups that are so common here. Will Facebook Buy add to that annoyance?

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Jerry Gelsomino, Principal, FutureBest

The Facebook Buy button as described seems like a very wide net aimed at capturing impulse purchases. On a network as vast as it is, this might add up to many millions of transactions in a hurry, but crossing the chasm to a shopping platform is a whole 'nother animal, IMO.

I see no information about order fulfillment yet, but would assume that will be left to the individual vendors. Will Facebook shoulder some of the customer service burden? It may not have a choice since its name is associated with the transaction.

Assurances about credit card security are welcome but that's a minimum ante to play in e-commerce. I suspect that the data flows from analyzing purchase responses may be the real prize for Facebook. If the Buy button evolves past the test stage it will likely try to use those meta-insights to prove its value to larger e-tailers and brands.

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James Tenser, Principal, VSN Strategies

People who have decided to buy do not want additional steps or barriers. This will be hugely popular since Facebook knows that they can present only relevant items in order for it to be effective and not counterproductive.

Sid Raisch, President, Advantage Development System

TechCrunch's Josh Constine sounds like an old school retailer summing this up: "It's like the candy they sell in the grocery line."

On Facebook (for now), impulse buying is hassle free. This will get interesting when they add social, location and profile to target the impulse buy. Oy, I don't stand a chance.

Vahe Katros, Consultant, Plan B

At the marginal level, the "buy" button should help capture unplanned purchases that are deterred by the pain of visiting multiple pages. This could be a significant gain in sales for mobile.

The larger hurdle that Facebook faces is managing the relevance of their ads. The "buy" button will likely do little to change the value of bad ads. The main value of the button might be a small chance for Facebook to change sentiments about the ads. It is a critical time for them to have the highest standards of ad relevance and quality. Starting with a few small businesses sounds like a good way to begin.

Jacob Suher, PhD Student, UT-Austin

I am not sure about people visiting Facebook to buy a planned investment or order but the potential for impulse and trial orders is very large. Of course there will be a need to develop this new venture, but it is certainly worth a serious look.

'gjarnoldjr'

I have no doubt that Facebook will mine the information of purchase as well as other purchases on that card which is stored on Facebook. (BTW, wasn't there an issue in the past that "what you put on Facebook became property of Facebook"?) Anyway, they will mine ALL the potential information and then use that to drive impulse buys galore! And the users will LOVE the convenience, and WILL do that one click purchase—MANY times over and over. Brilliant!

William Passodelis, associate, ML Co.

This is a great idea. With the large share of eyeballs that Facebook has, now it can start pointing to a share of wallet as well when it promotes its advertising. In addition to everything it offers, it can now start to include transactional purchases (albeit simple ones) as another reason to have a Facebook account.

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Kai Clarke, President, Kowa Optimed, Inc.

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