Cracking the ‘Commerce’ Part of Social Commerce

The potential for Facebook commerce has been a topic of much debate. eMarketer took a close look at this trend in its recent report, "F-Commerce: Evolving, Not Extinct," stating that "nearly every leading online merchant in the U.S. now has a Facebook page. The question is whether retailers can crack the commerce half of social commerce and use Facebook to go beyond awareness and engagement."

This question is being answered now, and not by the major retailers whose highly visible f-commerce failures led many to believe social commerce doesn't work. Rather, as it turns out, it's the smaller businesses that are defining success in f-commerce. As Facebook's most popular shopping cart application, Ecwid's customer base consists largely of SMB retailers, and it's been tracking their success closely. For merchants with online stores on both a website and on Facebook, online orders placed on Facebook storefronts in this year's first quarter rose 37 percent over the same period in 2012, while dollar sales increased by 26 percent.

So, what can we learn from the SMB's experience? The following are the core strategies and perspectives Ecwid has collected from its most successful Facebook stores:

1. Recognize that Facebook will not be your primary online sales mechanism; it will be one of many. Right now few would recommend Facebook as a stand-alone sales channel. Instead, Facebook stores should complement other e-commerce channels like websites, blogs, mobile apps and other social networks like Pinterest. Facebook's ubiquity and large audience (more than 60 percent of all internet users in the U.S.) make it critically important for retailers to establish a presence there, even if actual sales transactions ultimately occur on another site. Facebook visitors aren't necessarily looking to make a purchase when they encounter a product on the social network, but it helps to be aware of the product and how it's regarded by other Facebook users in order to peak their interest in buying it later.

The advantages of having a strong Facebook presence, including a Facebook storefront, are twofold: First, merchants are giving omnichannel consumers an opportunity to interact with their brands and make purchases wherever they may be "hanging out" (which increasingly is social networks). Second, f-commerce stores can be integrated tightly with other online storefronts, allowing merchants to manage and administer their entire online sales ecosystem from a single control panel.

2. Develop the ability to quantify Facebook-driven sales leads and monetize the investment. There are two key points here: First, better aggregate tracking of directly influenced purchases is required. Today's analytics technologies can track the last-clicked URL preceding a purchase, and that's a good start. However, the indirect influence of social networks like Facebook is harder to measure. If Facebook wasn't the last click before a sale, that doesn't mean it didn't inspire or influence the purchase.

Retailers also should consider cross-channel attribution models in order to better understand the customer journey. Social networks are so influential that they've rendered traditional, one-to-one, last-touch methods of attribution as outdated. As Forrester Research noted in a report on attribution modeling, "customer intelligence (CI) professionals must adopt a cross-channel attribution model in order to optimize marketing budgets, accurately calculate customer value and acquisition costs, and develop a holistic view of the marketing ecosystem. Failure to embrace this new standard is expensive — firms will be plagued with continued channel conflict and an inefficient marketing budget."

3. Be highly active and experimental; find out what works for your particular business. On every social media site, including Facebook, engagement is the key to success. While it's true that many Facebook users go to the site primarily to view friends’ photos, a certain segment enjoys mingling with brands and talking about products with other consumers. A retailer's job is to make these users as "contagious" as possible, because the more "liking" and "sharing" these users do, the more people will be attracted to the merchant's Facebook page.

Today's e-commerce technologies take a first step by incorporating the option of liking, tweeting or pinning products, as well as sharing of purchases. But beyond this, retailers must continually "feed the beast" and give users something good to like, share or talk about. Contests, giveaways and fan incentives can go a long way in keeping social conversations vibrant and productive.

4. Take a page from the SMB playbook — abandon traditional one-way marketing chatter and learn how to "get social." How a merchant interacts with customers on social networks may be the most important determining factor in the success of a social storefront. Every successful Facebook merchant I know tells a similar story: once it abandons "trying to sell" and starts interacting with customers socially, sales improve. This is because social commerce cannot be approached like selling on an e-commerce website.

This is a real mind-set shift for retailers, as they're naturally hesitant to let users directly share the conversation. Social media interactions are truly a two-way street, and finding the right tone may take some time, but the sales results are worth the time investment.

Since SMBs may be more adept at communicating personally with customers in the way that social media demands, they appear to have an advantage. Younger retailers in particular who were raised on social media understand this and know how to work the social system quite effectively. Social interaction combined with the convenience of buying right on Facebook creates an environment that's conducive to sales vs. shoehorning an e-commerce website into a social conversation.

5. Don't wait for the f-commerce rulebook to be finalized; enough is in place now to take advantage. In our view, the time for adding a Facebook store as an online sales channel is now. While there are no set rules for how merchants should optimize their social presence, enough success stories are in place to justify including social commerce as a key source of incremental sales.

Jim O'Hara is the president of Ecwid, a provider of a shopping cart and e-commerce solution that can be added to Facebook.