Beach Bagenal, an analyst at iris Concise discusses the difficulties brands have had with F-commerce and what the future holds for it.
F-commerce promised so much. Zuckerburg, in 2011 said, “If I had to guess, social commerce is next to blow up”. It offered an answer to those asking how social presence could drive more sales? But F-Commerce is not currently delivering on its potential. Of the top 101 brands that were selling on Facebook in 2011, only 40 remain. What, if any, do the remaining companies have in common? And is there a case to be made that F-commerce is best suited to SMBs?
To understand what F-Commerce is, it is first useful to understand the wider context of what we mean by social commerce. Steve Rubel gives an umbrella definition of social commerce as “creating places where people can collaborate online, get advice from trusted individuals, find goods and services, and then purchase them. “
In “The Social Commerce Handbook: 20 Secrets for Turning Social Media into Social Sales” Paul Marsden breaks social commerce down into four key areas:
1. Social apps for E-commerce stores
2. E-commerce apps for social sites
3. Mobile apps for social shopping
4. Web apps for social shopping
F-Commerce can cross a number of these quadrants but is primarily about the second[IM1] . F-commerce in this sense has had various faces, 2007 saw the introduction of ‘virtual gifts’, ‘The Marketplace’ and ‘Beacon’. Through lawsuits and adaptations, this has moved through ‘Facebook Credits’ (2011), Storefronts (2011), and ‘Facebook Gifts’ (2012).
For many the most interesting of these initiatives was Storefronts. This enabled brands to sell directly through their page, meaning that the abrupt transition away from Facebook onto their existing E-commerce site could be circumnavigated. Tapping into their fan base to increase sales and grow peer-to-peer referrals.
There was an initial adoption by major brands such as Asos and Gamestop, with many simply transferring their existing E-commerce platform directly onto Facebook. This was a fundamental failure, with many quietly shutting up their social shop within six months. In the words of Sucharita Mulpuru, an analyst at Forrester Research in Cambridge, Massachusetts “it was like trying to sell stuff to people while they’re hanging out with their friends at the bar.”
However, it’s not all doom and gloom for F-commerce. There have been some success stories, though more often than not these come in guise of PR stunts. In 2011 and 2012 Heinz released their ‘Get Well Soup’ campaigns. This enabled users to purchase cans of soup from Heinz’s Facebook page, personalise them with a get well message and send them to their ill friends. Despite these campaigns increasing monthly unique visitors by 4000%, they will not substantially help the bottom line, which many hoped. This campaign is estimated to have brought in £8000.
An area where F-commerce does appear to be growing is apparel. There have been a number of small-scale, online businesses that have taken to Facebook and are doing extremely well. The Polkadot Alley is a good example of such stores, whereby within a year of migrating onto Facebook, the company is on course to quadruple its revenue to $1.5m. The store uses a payment app called Soldsie, which automatically sends out invoices to registered users who leave ‘sold’ as a comment on the product. The app launched in early 2011 and currently reports over $10m of processed transactions.
The jury is still out on F-commerce. It certainly hasn’t been the silver bullet that many big brands hoped and expected it to be, and I don’t think it ever will be. However, it does seem to be lending itself to a growing start-up/SMB scene that seems to be championing social commerce, in a way that big name brands have failed.