Setting Up Shop on Facebook

By Ken Lane

Baby boomers, college students, young professionals, empty nesters — you name a demographic, it's represented on Facebook. As a result, social networking sites, particularly Facebook, present tremendous opportunities for supporting your strategic needs for new customer acquisition every day.

Facebook is currently the dominant social network, boasting more than 600 million active users, with half of this group logging in at least once a day. The typical Facebook user is female, has 130 friends, is connected to 80 different commu- nity pages/groups/events and creates 90 pieces of content each month. Their reasons for being on Facebook are to connect with friends, relatives and colleagues, and to share ideas, tips, articles and links. Combine that with the amount of time people spend on Facebook, and marketers are provided with multiple opportunities for brand placement. This now includes a new opportu- nity: putting your storefront directly on Facebook.

More and more retailers, both large and small, are turning to Facebook storefronts as a way to offer shoppers "anywhere e-commerce," the ability to purchase merchandise wherever they happen to be online. Last year, for example, small brands such as CobraHead and Orglamix Cosmetics opened Facebook stores, but so did more well-known brands such as Lands' End, Nine West, 1-800-Flowers.com,The Home Depot and J.C. Penney. Facebook is accomodating this trend by ramping up its e-commerce efforts. According to a BusinessWeek article published late last year, the Palo Alto, Calif.-based social networking site formed an e-commerce partnership group that will help retailers set up shop on its pages and build tools that let users interact while buying. The effort may turn Facebook into an online shopping alternative to retailers such as eBay and Buy.com, some analysts predict.

While this feature discusses how to incorporate a Facebook storefront into your long-term strategy, there's one caveat: In my opinion, it would be suicidal to even consider moving your company's entire e-commerce strategy and façade away from a self-hosted website and onto a third-party site like Facebook. You need to maintain as much control as possible of your own brand equity and identity, transactions, copyright issues, and inventory during the process of expanding to Facebook or other third-party storefront opportunities. As was done with "web-only" items years ago, consider Facebook-only items or limit your Facebook store to certain items or specials. There's no need to put your entire product catalog on Facebook.

Certainly part of the rationale is that on Facebook, the primary brand associated with activities is Facebook itself, not your brand. Interaction with consumers via Facebook can and will build relationships for brands, but everything hosted on Facebook is identified with the Facebook brand — again, not yours. The best way to use Facebook is to take advantage of its traffic, audience, demographic and plethora of engaged consumers to further develop your relationship and eventually push e-commerce transactions over to your website. Given your brand equity and investment levels over time, isn't this how you'd prefer it?

How to Do It
For established merchants, a Facebook storefront offers yet another way to put product in front of consumers, increase sales, and support new customer acquisition strategies and tactics. There are two ways to do this:

use a shopping application that allows consumers to purchase items from you without leaving Facebook; or
use a shopping application that begins the shopping experience on Facebook but then transitions over to the brand's e-commerce site.

There are free and paid apps available. For basic e-commerce options, free applications are the way to go. Planning a larger, glitzier, more public relations-focused effort? Considering employing a custom solution.

Storefronts That Stay on Facebook
Several Facebook applications let retailers sell items on Facebook without making shoppers leave the social networking site. 1-800-Flowers.com uses Alvenda's (now 8thBridge) Shoplet feature to allow its fans to select, purchase and ship items without leaving the floral retailer's Facebook page. Alvenda and Fluid both offer custom shop-like programs that load JavaScript on Facebook tabs. This allows retailers to conduct commerce through their own merchant accounts while remaining within the Facebook framework.

Payvment offers a Facebook app that allows retailers to create free Facebook shops. A unique aspect of Payvment's offering is that it allows consumers to shop all Payvment stores on Facebook and keep items in their cart while browsing other shops on Facebook. Since products can be carried through the sometimes erratic path that individuals take while interacting with Facebook, there's a better chance that those items will eventually be purchased. PayPal handles all Payvment stores' transactions. This takes the responsibility of managing transactions away from the retailer and moves it to a third-party provider.

Storefronts That Transition to a Main Website
ShopTab's application lets retailers build Facebook storefronts that begin the shopping experience on Facebook but continue it on the merchant's main website.

"With a growing number of Facebook fans, we figured for a modest monthly fee, what have we got to lose," says Anneliese Valdes, director of customer service for Madison, Wis.-based CobraHead, a niche gardening "hard goods" manufacturer and marketer that uses the ShopTab application. "It's easy to use, requiring just a brief product description and link to the product page on your own site. We've had enough activity to date to warrant loading up the rest of our product offerings."

On a larger scale, Lands' End expanded its marketing efforts for Cyber Monday this past holiday season to include a contest for its Facebook fans and a Twitter-only promotion. Lands' End used the occasion to announce the launch of its new Facebook and mobile Lands' End shops.

J.C. Penney last year launched a fully integrated Facebook e-commerce application powered by Usablenet under the "Shop" tab on its Facebook page. Consumers now have the ability to add items to a cart, check out, edit and remove items from their cart, specify shipping address, ship to store, and pay with a credit card all from its Facebook page.

ShopTab lets Facebook fan pages display a storefront, but once a user clicks to view more about an item on the tab, they're taken to the retailer's main website. Usablenet keeps the user on Facebook. ShopTab is a Facebook application that any small boutique owner can implement, while Usablenet's tool is better suited for larger, global companies, as functionality includes extending features, functionality and information contained on clients' websites to customers wherever they are, including via mobile phones, mobile applications, tablet devices and more. Each method has its pros and cons.

Pros: ShopTab's Facebook storefront allows merchants to quickly transition the shopping experience to their main e-commerce site. It can list a few SKUs on a Facebook storefront to entice shoppers to continue the shopping experience on the brand's e-commerce site — and perhaps add to their shopping cart. Low cost, easy to use.

Cons: Some consumers don't like to be taken to another site to complete a purchase. It feels like phishing is taking place. That doesn't inspire trust the way a self-contained Facebook shop would.

The Bottom Line
With so many people spending so much time on Facebook today, ignore the social networking site at your own peril.

The best way to integrate Facebook into your marketing mix is to keep one foot in the social space and one on your website. Social sites haven't yet progressed to where all e-commerce orders can be transacted on them.

Ken Lane is president and founder of direct marketing consultancy Hathaway & Lane Direct. Reach Ken at klane@hathawayandlance.com.