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Each month, hundreds of millions of individuals around the world log on to Facebook and this year, the world's largest social network will likely register its billionth user account.

That, for obvious reasons, has made Facebook an attractive platform for businesses and marketers looking to reach consumers.

Following the adage: 'Go where the users are', companies have flocked to Facebook, and they've increasingly been trying to do more with their Facebook presences in an effort to get the maximum ROI out of the social networking experience.

For some companies, doing more has meant investing in Facebook commerce, or f-commerce as it is widely referred to. The concept is simple - instead of forcing consumers to go to your website to buy your wares, you can hawk them through storefronts on Facebook, eliminating the need for consumers to leave their favorite hangout.

But many of those storefronts are now being shuttered according to a report by Bloomberg. Major brands like Gap, Old Navy, J.C. Penney, Nordstrom and Banana Republic are among those that have decided that f-commerce wasn't worth it.

The reason? For video game Gamestop, which has some 3.5m fans on its Facebook Page, the ROI simply wasn't there. "We just didn’t get the return on investment we needed from the Facebook market, so we shut it down pretty quickly," Gamestop VP of marketing Ashley Sheetz told Bloomberg.

In retrospect, the fact that some of the f-commerce hype is subsiding isn't entirely surprising. As Forrester Research analyst Sucharita Mulpuru observes, selling to consumers on Facebook is "like trying to sell stuff to people while they’re hanging out with their friends at the bar." In other words, it's not always a good combination.

That, however, never seemed to bother Facebook and many other observers. Facebook largely appears to believe that it can do just about anything because "this is where people are hanging out." And some went so far as to predict that social commerce would be a $30bn per year business by 2015, with Facebook accounting for much of the sales.

The good news for the companies that experimented with f-commerce is that early experimentation is usually a good thing. Not everything works, but it's better to try and find out than to sit on the sidelines and risk missing out on something that could have positively impacted the business. In most cases, the amount of money invested in f-commerce initiatives by large brands has been relatively small.

The bad news here is really for Facebook. If it's ever going to live up to the type of valuation it will likely go public at, it's going to need to make a lot more money. F-commerce could have helped in two big ways:

  • Encouraging companies to spend more on Facebook advertising to drive users to their Facebook storefronts.
  • Allowing Facebook to expand the use of its virtual currency, Credits, to purchases of physical goods.

Obviously, f-commerce shouldn't be written off as dead. But if Facebook really wants to make a go of it, the world's largest social network will have to be more thoughtful than "this is where people are hanging out" when trying to promote commerce on its platform.

Patricio Robles

Published 20 February, 2012 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

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Comments (5)

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Mark

In my opinion the main reason why these store fronts have not worked for the companies mentioned is, primarily that it is not good enough just to put product on facebook and expect users will flock to it and purchase. You have to give the user / customer something more than just product in a facebook frame. Personalisation of content is the key here, creating an environment where companies can serve information based on that persons likes and interests including that of their friends adds value. So it is no surprise that people have not visited and purchased in their floods.

over 4 years ago

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Nick Stamoulis

Facebook is always evolving and it's likely that they will make changes to the f-commerce format in order to be more attractive to brands. Facebook users still aren't used to the concept of purchasing directly via Facebook. Maybe it's just not trusted. Privacy seems to be a big issue now with Facebook, especially with the launch of Timeline.

over 4 years ago

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Mel Wood

Sucharita Mulpuru is right, you need to treat your Facebook presence like a clubhouse/bar. It's where your product development team should hang out and get what's "next", not where you're sales and marketing team gives them what's "now". By all means send them off to the store but really, do what you do best in a RW bar, listen and flirt.

over 4 years ago

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Mia Perry

Bloomberg decided to show only a few failed attempts of F-commerce, and didn't provide even one brand that succeed in F-commerce (You have to question their motives here).

We at StoreYa, see enormous traction, there's an amazing daily growth of merchants, creating their own Facebook shops. There's no doubt that F-commerce is the next step in the eCommerce evolution, but it will take some time.

You must provide the merchants with engagement tools, like Fans-firsts, Fans exclusive deals & discounts, this adds an important added value to the social shopping experience.

over 4 years ago

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Zeal Digital - Shaeeb

It was always unreasonable to think you could have a fully fledged e-commerce store plugged in to Facebook and expect it to trade similarly to how your website does. Facebook is not an active search medium, and I am very much of the disposition that users are not in a purchasing frame of mind. That being said, it's also naive to think they are absolutely not going to part with cash; a group of friends discussing a ski trip, shown a product such as a ski jacket, with content such as videos, reviews, and live discussion with their friends on the product - makes them considerably likelier to purchase the product.

Create the environment; all the tools of social media are there, they need to be leveraged.

Also, it may be worth thinking about a 1 click to buy feature like Amazon - perhaps connecting your card details to your FB account so you could use Facebook as normal, come across contextually displayed products and make purchases with a click? Whatever the solution, I'm very skeptical to decide there is the 'death of' a particular model just yet.

over 4 years ago

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