Is Facebook ready to become an e-commerce force?

Discussion
Jul 17, 2015

Evangelists have long touted the potential of bringing social media and commerce together, particularly when it comes to Facebook and its nearly one-and-a-half billion active monthly users. Now, according to reports, Facebook members will be able to make purchases through e-commerce shops within its pages without having to leave the site.

"With the shop section on the page, we’re now providing businesses with the ability to showcase their products directly on the page," Emma Rodgers, product marketing manager for Facebook, told BuzzFeed, which first broke the story.

Facebook has long relied on advertising as its key source of revenues. Earlier this year, the company announced it was adding Messenger so members could interact with businesses and track packages. The addition of direct commerce to Facebook pages would appear to make the social site into a one-stop shop for retailers looking to build not only their brand images but sales as well.

To be sure, Facebook is not alone in adding e-commerce functionality. Pinterest offers buyable pins on its site while Instagram ads may include a buy button that takes consumers to a retailer’s site to complete the transaction. This week, Google launched a buy button for ads that take consumers to a checkout page with pre-filled information from their Google accounts.

Shops in Facebook

Image: Facebook

At this point, it is not clear how Facebook intends to profit from adding e-commerce functionality within its site. Various reports have speculated that the company may look for a cut of transactions once the service has proven itself as a sales driver. On the other hand, perhaps the service will just lead to higher advertising rates for Facebook as retailers buy more access to customers who suddenly have shopping choices galore springing up on pages all over the social media site.

Will shops within Facebook pages become a significant source of retail sales in the years ahead? What do you see as the challenges and opportunities for retailers looking to take advantage of shops on Facebook?

Braintrust
"Way too early to tell, but buy buttons as a "significant source" of retail sales via Facebook is probably not very likely in the short term. Consumers have fallen into a pattern of segmenting how they use social media."
"It makes perfect "dollars and sense" for Facebook to move up to the next level and beyond with e-commerce integration. Facebook today is indeed Main Street, the town square, the gathering place and where people come to meet, talk, exchange, and yes, whether they realize it or not, it’s also a place where they want to make an easy purchase without having to go off-site."
"There are enough people who spend huge amounts of time on Facebook that this will produce significant results. However, I believe it will be limited to that segment of heavy users."

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15 Comments on "Is Facebook ready to become an e-commerce force?"

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Chris Petersen, PhD.
BrainTrust

Way too early to tell, but buy buttons as a “significant source” of retail sales via Facebook is probably not very likely in the short term.

Consumers have fallen into a pattern of segmenting how they use social media. Some media are in fact “social” where consumers go primarily to chat, gossip and catch up with friends and family. Facebook is still the portal of choice for interacting with family and friends, NOT a primary place to search for and buy products.

Could a buy button work on Facebook? Yes, it if is an impulse buy or the consumer is at a point in their purchase path where they are ready to buy.

Buy how many times do you go onto Facebook looking for product pages or purchase options? Even if a friend recommends something, where do you go? Typically not a product page on Facebook!

There are many other better and more frequently visited apps where consumers search for ideas and products. Pinterest certainly comes to mind as a preferred app for that.

David Biernbaum
BrainTrust

It makes perfect “dollars and sense” for Facebook to move up to the next level and beyond with e-commerce integration.

Facebook today is indeed Main Street, the town square, the gathering place and where people come to meet, talk, exchange, and yes, whether they realize it or not, it’s also a place where they want to make an easy purchase without having to go off-site.

Most Facebook users will say negative things about this concept and idea, but most Facebook users will shop until they drop. You wait and see!

Ralph Jacobson
BrainTrust
As social media channels continue to evolve, the dust will settle on some specific areas. One will be the value for merchants to leverage these channels in productive and profitable ways to grow their businesses. “Irrelevant ads — a thing of the past.” That would be such a great tagline because it strikes a universal chord in all of us. There is consensus in the industry that retailers and CPG brands must deliver more personalized experiences to more effectively drive trial in new consumers and loyalty in existing consumers yet we still are subject to ads on Facebook and other platforms that are simply not relevant to us. New capabilities with Facebook are aimed at helping marketers make personalized ads a reality so that brands and merchants can deliver the type of personalized experience that the we have been aspiring to deliver for so long. Facebook will now connect marketers, Facebook’s 1.44 billion active users, Facebook’s rich ad capabilities, and the unique power of deep analytics, industry expertise, design capabilities and research into one package. For example, imagine a scenario in which a consumer expressed interest in a new energy drink on a brand’s website. With the power of Facebook’s… Read more »
Zel Bianco
BrainTrust

There are enough people who spend huge amounts of time on Facebook that this will produce significant results. However, I believe it will be limited to that segment of heavy users. I can’t imagine that the majority of people who use Facebook as a means of sharing and storing photos and keeping in touch with distant friends will be replacing Amazon with Facebook anytime soon.

Facebook should really start their own retail page selling posters for fringe political ideas and inspirational sayings — that will have a huge draw for the people who seem to spend the most time on their pages already!

Mark Heckman
BrainTrust

Certainly Facebook with its sheer size and clout will do well with extending its targeted advertising program to optional online purchase. However, I would hardly consider this “taking on” or directly competing with Amazon and other e-shopping sites. The difference is between shopping in the Amazon environment of looking at choices and browsing through merchandise with an “impulse” buy from an ad.

I think the point made relating to transition from pure ads to an ad with a purchase option makes sense and could easily command a higher fee from the advertiser.

Ken Lonyai
BrainTrust

Things have come full circle back to early 1996 when AOL was a walled garden and the Internet was gaining public awareness. Then, the question was “could AOL contain users and keep them from the Internet,” which is essentially where the discussion is going now for Facebook regarding e-commerce. As AOL found out, the web will always be dominant, but in this case Facebook may be a source of limited revenue for e-tailers.

My view is that although there’s a mass market, Facebook is best used as a supplementary site for things like flash sales, specials or loyalty pitches. It cannot deliver the experience of a well-honed website and falls horribly short on maintaining brand ID.

Smart merchants will use it for what it’s good for and not see it as a lazy solution to creating revenue.

Max Goldberg
BrainTrust

It’s not surprising that Facebook is adding e-commerce capabilities. It’s long overdue. Click to buy should have been a focus of the company years ago.

Vahe Katros
Guest

The information maintained at the user level regarding what a user likes, their background, their demographics and so on enables a level of segmentation that is mind boggling — that’s the opportunity. As far as the challenges it will probably be in how retailers manage and optimize their Facebook budget relative to other channels for their merchandise and support.

The effect on sales will be segment-specific but the social venue that could enable shoppers to find friends who are at the store or connect with friends for advice or store personnel via video using Messenger raises some interesting options. Support and customers can be organized around products, departments, even people from the brand itself. I am not sure how this will play out but the capabilities are there

Tom Redd
Guest

No. Simply no. People will review and learn with the tool but after they see and learn how Facebook is going deeper into their lives and personal data as they shop via Facebook it will stop. Even Millennials will start to say NO MORE.

Once the scams with shopping on Facebook hit and the lack of security shows it will all come to a screechin’ halt. When Facebook opens a store then we know retail needs to be re-invented or re-started. Facebook: the most dangerous place to shop or spend time.

Lee Kent
BrainTrust

Having “Buy” capability within Facebook is a must, but by no means a significant source for retail. Consumers need/want to have that option available wherever they are, just in case they see something they want.

Retail simply needs to be there, however, consumers aren’t looking for more bogus ads from them.

And that’s my 2 cents.

Kenneth Leung
BrainTrust

It will be a piece, but “significant” would depend on the product segment I think. With modern consumers being multi-modal in terms of shopping, retailers basically have to “cover all bases” bases and experiment with this channel. The drive to shop isn’t the Facebook channel, but the content. If there is a compelling tie-in, maybe in fashion, I can see someone shopping on it on impulse. Otherwise I tend to do a lot of “park this item on my shopping cart” and decide to buy later when it comes to social media driven recommendations/capabilities.

Gajendra Ratnavel
BrainTrust

Integration of the commerce into the lives of the users will be key. I mean, it’s an advert on the side that you click on, it is nice as it can be related to the users social interactions, but it will be more powerful if Facebook can scan pictures and conversations and figure out products referenced and automatically post buy buttons.

Arie Shpanya
Guest

I think it’s too early to make any certain claims regarding social commerce, but I definitely think that there’s plenty of potential for it to fail and for it to succeed. I think it could become successful due to the minimal effort required by those who use Facebook to purchase an item. Shopping has been a social activity in real life, and now people can show off purchases to all their friends without having to leave their chair.

On the other hand, a lot of people often use Facebook as a means of escaping the hustle from businesses they face on a day to day basis. While it may be simple to purchase from the social media site, the fact that retailers have joined the consumers’ personal space might spite many customers.

Only time will tell, but I think it’s an ingenuous idea that simplifies the entire shopping process for consumers.

Bryan Brennan
Guest
Bryan Brennan
2 years 29 days ago

I think it will. Facebook is starting to put a significant investment into creating a “one-stop-shop” for marketing, purchasing, and servicing with this “Buy Button” functionality and the new Facebook Messenger.

The biggest challenges exist in truly embracing social media for more than just a place to market. Even today, people use Facebook as an opportunity to look for service on their purchase and by introducing this buy button, it shows Facebook’s true intentions. Companies that succeed will embrace all of social media as a customer communication channel for all stages of the customer experience.

Social media is the most genuine form of communication as it is a channel truly owned by the customer, not the brand.

Seeta Hariharan
Guest
Facebook’s storefronts have the potential to become great sources of sales for retailers in the future. For the customer, they provide a frictionless experience by enabling users to browse and buy without leaving Facebook. This eliminates the need to navigate from one site to another to make a purchase. In addition, with the credit information all in one place, customers do not have to share personal, sensitive information with a number of different companies. From the retailers’ perspective, Facebook storefronts allow them to target offers more precisely based on the wealth of data Facebook has on their users’ behavior and preferences. The flip side, however, is this is very new territory. While today Facebook said they will not be charging a commission for sales from Facebook pages, there is no way to tell if that will change in the future. Consumers are quickly becoming savvier about how to create a shopping experience that uniquely suits them. They expect retailers to deliver exceptional experiences where ever they are in this physical/digital world. Generational disposition will also be a factor in success or failure. Cass Knowledge states that 99% of the digital native generation has an active profile on at least one… Read more »
wpDiscuz
Braintrust
"Way too early to tell, but buy buttons as a "significant source" of retail sales via Facebook is probably not very likely in the short term. Consumers have fallen into a pattern of segmenting how they use social media."
"It makes perfect "dollars and sense" for Facebook to move up to the next level and beyond with e-commerce integration. Facebook today is indeed Main Street, the town square, the gathering place and where people come to meet, talk, exchange, and yes, whether they realize it or not, it’s also a place where they want to make an easy purchase without having to go off-site."
"There are enough people who spend huge amounts of time on Facebook that this will produce significant results. However, I believe it will be limited to that segment of heavy users."

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