The Rise Of Facebook Commerce [Research]

[This is a guest post by Diarmaid Byrne. Diarmaid works as a Chief People Officer at Kuliza. You can read more of his posts at Kuliza’s blog]

Here in this article I would like to cover some of the reasons behind the immense F-commerce buzz and why should your brand be interested in it.

What is Facebook Commerce?

Social commerce refers to the use of social technologies to connect, listen, understand and engage to improve the shopping experience. F-Commerce is a form of social commerce that is executed on or influenced by Facebook. This involves the range of different activities all related to buying and selling products and services with Facebook.

Why are brands on Facebook?

There are three reasons that I see why brands are establishing themselves on Facebook:

1. Customers are already there

This is an obvious reason. Brands need to follow the action and eyeballs, and that is all happening on Facebook. They are already enjoying significant traction:

  • There are over 600m active users (or about 1 in 11 people), 50% of whom log on to Facebook every day
  • 90% of social network users in the US use Facebook
  • 57.1% of internet users in the US use Facebook
  • A brand’s Facebook fan is 41% more likely to recommend the company and 28% more likely to continue using them in the future (reference)
  • The average fan is worth $133.38 and spends $71.84 more per year than a non fan (reference)
  • Facebook users spend 1.5 times more online that other Internet users (reference)
  • Facebook customers spend more than double that of non-Facebook customers (reference)
  • There is a 51% increase in likelihood that a customer will complete a purchase after clicking the ‘like’ button (reference)

2. Biggest brands are investing on F-Commerce

Because people are already spending time on Facebook, brands – and investors – are investing in F-Commerce. Brand adoption is accelerating and those who already have a presence are finding that it is driving their E-Commerce:

  • Major global brands already sell directly on Facebook
  • More than 50% of the global top 100 websites have integrated with Facebook using its social plugins
  • There are 50,000 independent retailers who have opened a Facebook store with Payvment
  • 76% of marketers plan to leverage Facebook for social commerce initiatives (reference)
  • 67% of retailers plan to use Facebook to drive traffic to their E-Commerce sites (reference)
  • Facebook commerce conversion rates range from 2% to 4% and are on par with E-Commerce websites

3. Shopping is social experience

Shopping is a social experience for most people. Not only do we seek out opinions and feedback before we buy, but we also prefer to shop with friends and family rather than alone. Along with shopping as a social act, people shop not just for themselves but to manage their public image and personal identity, things that can be advertised on Facebook where the average user has 130 friends.

How are brands establishing a presence on Facebook?

There are 2 basic types of approaches that brands are using on Facebook (reference: Social commerce today’s research on F-Commerce):

1. On Facebook F-Commerce

This form of F-Commerce is the purchase of real goods and services inside Facebook. There are 3 types of ways that brands can enable users to purchase on Facebook:

1.a. Facebook Stores

These are E-Commerce enabled Facebook pages that allow users to browse and purchase without leaving Facebook. Two examples of this are Coca-Cola’s store that allows fans to buy merchandise and JCPenny where people can browse and pay for goods without leaving Facebook. On JCPenny’s site users can share, like, and post comment on items on their Facebook wall.

Another example is Delta Airlines Ticket Counter that allows users to book and pay for flights through Facebook (though unfortunately only for flights originating in the US at the moment). Along with Keep Climbing, for their frequent flyers, and Delta Assist, all Delta interactions can be completed through their Facebook page without visiting their website.

1.b. Facebook Credits

This is Facebook’s own exclusive and mandatory currency used for purchases of virtual goods in games and Facebook Deals. They are used for in-game purchases of virtual goods on Zynga games such as Farmville and Cityville. More recently, Warner Bros. allow people to stream movies in Facebook using Facebook Credits.

1.c. Facebook Deals

Launched in April 2011, this service offers deals inside Facebook that are paid for using Facebook Credits. Deals are sourced from local retailers and are displayed on the left-hand navigation column. Users can ‘Like’ or share deals with their friends and publish an update on their News Feed if they buy a deal.

2. Off Facebook F-Commerce

This form of F-Commerce takes advantage of Facebook’s Open Graph, allowing shoppers to sign into Facebook from any online site through a computer, tablet or mobile.

2.a. Facebook-enhanced websites

These are traditional E-Commerce websites that integrate with Facebook to offer instant personalization. The Levi’s Friend Store allows shoppers to use Facebook Connect to see what their friends “Like” and share their favourite Levi’s products.

Amazon allows users to activate their Amazon Facebook Page once they have logged into Amazon. This shows a user’s Facebook photo and profile, birthday notifications and gift suggestions, Amazon items popular among your Facebook friends and recommendations based on your profile data, making it a more personal and social shopping experience.

2.b. Facebook-enhanced retail stores

These are traditional high-street retailers that provide in-store shoppers a Facebook experience. The first brand to experiment with this was Diesel with their Diesel Cam. This gave shoppers the options to take a photo of clothes they try on and then log into Facebook to share the photo with their friends

Macy’s took this idea much further by developing a Magic Fitting Room. This included a full-length interactive, camera-enhanced mirror that allowed shoppers to scroll through clothes on the mirror and virtually try them on by flicking them over your reflection on the mirror. Shoppers could then take a photo and post it on Facebook to elicit feedback from their friends.

What type of store should your brand choose?

Understanding where your customers already are can help brands choose what type of store to set-up on Facebook. For large brands like Amazon or Levi’s that already have large traffic on their sites, adding a social element provides customers with a more personal shopping experience; shoppers learn what their friends like and buy and get valuable recommendations from them.

For smaller brands that don’t have a lot of users on their site, or for brands that are considering developing an E-Commerce site, then it makes more sense to bring their store to Facebook. Potential customers are already there and an On-Facebook store will help bring traffic and increase awareness of the brand without additional marketing efforts to direct consumers to their E-Commerce website.

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