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F-commerce is proving to be a tough nut to crack for many big high street retailers.

Major brands like Gap, J.C. Penney, Nordstrom and Banana Republic have shut down their Facebook stores in recent months after the predicted boom in socially driven sales failed to materialise.

Yet thousands of small and medium sized businesses are making a good living from f-commerce through integrated sales platforms such as Payvment.

Payvment currently powers 150,000 stores and adds 1,500 more each week, accounting for 80% of Facebook shopping

So what is the future for f-commerce and where do the opportunities lie?

We spoke to Payvment CEO Christian Taylor to find out why he thinks the big brands failed and how SMEs are getting it right.

We’ve seen several big retailers try and fail with their Facebook stores. What are the potential benefits of f-commerce, beyond the obvious advantage of Facebook’s massive user base?

The core reason we’ve grown is because we really have a different philosophy when it comes to what shopping on Facebook should be about. 

For us it’s just about discovery. 

Some larger brands have tried and failed on Facebook recently, and it’s kind of funny as we have been telling these brands for about a year that they are doing it wrong.

The big difference between us and almost any other brand in that space is that Payvment is integrated into the social fabric of Facebook, unlike a lot of these larger sellers where they are building their own custom store and it adding to their Facebook page. 

If you think about it, that sort of concept doesn’t make any sense.

You’re really just selling to fans who already know you exist, and if that’s the case then why not just send them to your dotcom site?

Payvment has a completely different business model - most of our sellers are small or medium sized businesses, so when we ask them why they are interested in f-commerce they don’t tell us it’s because they want to add a store to their Facebook page.

They are asking us: “Hey, there’s 850m people on Facebook, how can we connect with them?”

They’re not interested in some island store that fans already know about, so what we do is we give them their own store on their Facebook page so they can give their existing fans special offers and things, but 80% of the actual discovery of these brands happens within the shopping mall we power.

That puts all these brands in one location where Facebook users can browse products and discover new sellers.

Not only that, but we look at ourselves as our own social network that is embedded into Facebook.

And what I mean by that is that we are developing our own social graph, we call it the ‘Taste Graph’, and that helps Facebook users discover new brands through users who have similar interests to them.

So if you go to any of the 2.5m products that we power on Facebook, you’ll be able to see people who have similar interests and then discover new products.

One of the things that can be off-putting for brands is the limits to how much a Facebook page can be customised. Is this something that Facebook will ever overcome?

One of the main reasons the big brands failed is that they wanted way too much customisation, so even if someone did stumble across their store it was a completely foreign experience.

So one of the things that has helped our sellers become successful is the fact that Payvment feels likes it’s native to Facebook. 

Our shoppers probably don’t even know we exist, they just go from store to store and it’s one unified experience, it feels like it’s part of your Facebook page, and users know where to find the tools – the shopping cart is always in the same place for example.

And your shopping cart is linked to your page, so we are the only shopping solution where you can take your shopping cart across the different stores.

So the problem was that the big brands actually over customised. It’s a really simple concept that the bigger guys got wrong.

But isn't that what the want big brands want? Having spent millions on building their brand they want to be able to deliver a  tailored experience rather than compromising it on Facebook? 

Well no, if you think about it, it’s no different to shopping on Amazon or eBay. 

If you have a brand like The Gap and you have your products on Amazon as well, Amazon isn’t going to let you change and customise your own store front. 

It’s important that Amazon shoppers know where the reviews are, know where the shopping cart is, etc, and it’s the same on Facebook.

Facebook is under one domain, it’s Facebook.com, and really the driving force behind Payvment is that we are just the operating system that is powering the shopping on Facebook. 

But uniformly a Facebook user knows how to shop across all the different stores if it's powered by Payvment if they’ve done it once before.

It seems weird that all shop fronts would look different, when it should feel like its and ingrained shopping experience within Facebook.

Do you think f-commerce doesn’t have long-term future for big brands? Is it really just a solution for SMEs?

Sure, this is no different than when the internet first started. Small businesses were the first to innovate and really nail it.

We are going to see these really large brands learn from their mistakes and watch what these small brands are doing and duplicate it.

Payvment is launching this really cool feature this week called Social IQ, which comes off the back off watching how our sellers have been able to success over the past two years.

We have now built this tool, sort of a social media technology expert technology, that helps our sellers increase their sales.

Large brands can pay a social media consultant to tell them what they need to do, but small businesses are left alone to do it for themselves.

Social IQ will give daily advice and tips on how sellers can be more social and really increase their sales by taking specific actions.

An analyst at Forrester Research suggested that “trying to sell people goods on Facebook is like trying to sell them something when they’re hanging out in a bar.” Is there still a mental barrier that prevents people from seeing Facebook as a place where you go to buy consumer goods?

We don’t see that at all to be completely honest. 

We account for 80% of the stores on Facebook and our sellers are knocking it out of the park, meaning our business is growing.

It’s all about perspective, those larger guys that failed did so because they were trying to force feed shopping down peoples' throats through the newsfeed and stuff like that.

But like I said, it’s all about the discovery and what Facebook users like is when they’re not being force fed something, they truly feel like they’re discovering something new that they are passionate about and that’s probably the big difference with us.

10% of our shoppers are actually from the UK, this is one of the fastest growing segments.

Open Graph actions mean users can now engage with brands in new ways. For example, instead of just ‘liking’ a brand they can ‘want’ or ‘own’ a product. What impact will new actions and timeline have on f-commerce?

It has a huge impact. We were the first self-serve platform on Facebook, and one of the first things we told Facebook was that the ‘like’ button never really worked for e-commerce as it was too ambiguous.

‘Like’ was great for videos or articles, but when I see that one of my friends liked a product I was never sure if they liked it because they owned it, or they just thought it was cool, or if they actually wanted it for their birthday.

So the new Open Graph and ‘want’ buttons are a huge driver for social commerce. 

I can now see this snowboard that I want and press the ‘Want’ button and my friends can see that and they can get it for my birthday.

Or if I see something that I own and I’m really passionate about, my friends can also see that and it adds this great sense of discovery.

And one of the really unique features is that everything you ‘want’ is attached to your timeline, so you can create this wishlist.

The wishlist is huge for us as it can drive the overall transactions - we are seeing a 10% growth month-to-month in the number of shoppers that use Facebook.

Before the holiday season we saw probably around 100,000 Facebook shoppers and now we see around 1.5m, and a lot of that has to do with the new social functions.

Usually you see a drop off in shoppers after the holidays, but we haven’t seen that at all.

It’s exciting, it shows that people discovered Facebook shopping for the first time over the holiday season, but they enjoyed it and are continuing to use it, which is unheard of in e-commerce.

One of the results of Facebook’s IPO is that the company will need to maximise its profits. Is there a danger it may create a Payvment rival and prevent you from operating on the Facebook platform?

I don’t think so. It would be so outside of their comfort zone to do what we do.

And if you think about when social gaming became really big with Zynga, Facebook didn’t suddenly move into making social games. 

Instead it looked at how it could create an open market for people making games and then make revenue by fostering that.

And what they did was make Facebook Credits, so instead of making games they became the economy that people could use to purchase things through the games. 

I think if you look at that, that is how Facebook will eventually get into shopping.

When anyone buys something through Payvment they have to enter their credit card details, so what would be exciting for us would be if Facebook was to allow users to use Facebook Credits to purchase items across our network.

For us that would be huge – but they are a long way from that as they charge 30% at the moment, which doesn’t work for physical goods.

Is it possible Facebook may simply buy Payvment?

Who knows? But they didn’t acquire Zynga, and we’re probably the social commerce version of Zynga.

Instead they found a way to become a part of that economy. 

I mean never say never, but I think it’s unlikely.

David Moth

Published 28 February, 2012 by David Moth @ Econsultancy

David Moth is Editor and Head of Social at Econsultancy. You can follow him on Twitter or connect via Google+ and LinkedIn

1682 more posts from this author

Comments (2)

Avatar-blank-50x50

Zach

I think Mr. Taylor makes a very valid point regarding the success possibilities for small to medium businesses on Facebook.

We at Zibaba have many clients who experience an increase in sales and fan engagement through their Facebook store.

With the Zibaba storefront, shops can offer group sales, coupons, fan only discounts and other promotional features designed especially for the social media....all of these increase traffic and of course - revenue!

Zibaba's Ads Direct, which is integrated into Facebook's Advertising API, enables the shop owner to easily and quickly run advertising campaigns using the existing store catalog. This of course results in acquiring new customers and extending the client base.

On top of this, Zibaba offers an analysis and reporting system which gives our clients valuable insight into how to increase revenue and ROI.

We believe that every business who invests in F-Commerce today will enjoy substantial growth in the near future!

Check us out at www.zibaba.com

over 4 years ago

Avatar-blank-50x50

Malte Schulze

Ok, stop. You are not the social commerce version of Zynga. There is no social commerce version of Zynga, yet.
Zynga has about 240m MAUs, Payvment has 1.5m. Zynga has a stickyness in some games of >25%, Payvment reaches 4-6%.

A user can not even search for Levi's Jeans for men in the Payvment mall, because he can not filter for either men/ women, nor for price, color, or brand. Same holds for DVD players or in fact any other product. The search is horrible, so are 95% of the products.

And congratulations for adding sellers from Thailand, but is the 149 Baht cookie card really a bestseller? And why do I see it? You have my Facebook-Data you know where I'm from, I'm not from Thailand dont show this stuff to me.

By the way, I love browsing your 'live animal' section. Wouldn't have guessed I could order a baby hedgehog for $200. But presenting baby hedgehogs next to Nike shoes, sure does not drive conversion.

I'm sorry, but the Payvment Shopping Mall is far, far away from being a good app.
Nevertheless, the people at Payvment are smart and I'm sure they have some improvements and new functionalities up their sleeves.

Best regards from Germany,

Malte

over 4 years ago

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