A Debate On The Pros And Cons Of Investing In Facebook Commerce

Although many retailers are implementing strategies to drive sales using social media, some industry insiders remain skeptical because they are unable to prove the business case. This and other topics related to Facebook commerce, or F-commerce, were brought to light in a recent webinar presented by PowerReviews. The presentation featured Sucharita Mulpuru, Analyst at Forrester Research, and Cathy Halligan, SVP of Marketing and Sales at PowerReviews.

According to The State of Retailing Research, a study conducted by Forrester, 62% of social marketing strategies are unclear because the benefits of social media have not been tangible.

The webinar, titled “The Case for (and Against) Facebook Commerce,” concluded that the success of Facebook as a commerce channel is overshadowed by traditional web sites. In fact, 68% of retailers surveyed said if Facebook no longer existed, there would be no negative effect on 2011 web sales.


During the webinar, Mulpuru compared four marketing tactics in terms of ROI for pure plays, multichannel and manufacturers. Among the four tactics, Facebook ranked the lowest, while email was considered the most effective for companies because it is inexpensive and delivers a high ROI.

To date, the most common retail-oriented activities on Facebook include product sharing and peer-to-peer interaction. As many as 20% of Facebook users are willing to share their purchases with their Facebook friends by posting the information on their personal page.

Following the post, “A fraction of those in that social network will see the post, resulting in a 1% click through rate and a 2% conversion rate of those who clicked,” said Mulpuru, referencing a 2010 online benchmark survey conducted by North American Technographics.

Another way retailers can take advantage of Facebook activity is by integrating Facebook data with web site information. When the shopper is visiting a brand’s web site, she is closer to a transaction. With Facebook data in hand, retailers can create a more relevant customer experience on their web sites.

Based on research conducted by the 2010 Social Shopping Study, consumers use their Facebook profile as their profile for all web activities. Whenever a person shares content about a product on Facebook, retailers receive $15.72, according to Halligan. Through the process of ratings, Facebook friends can relate to one another, causing a greater impact on purchase decisions, and in turn, emerge as a source of sales. The study also pointed out that 68% of Facebook users are more likely to buy a product or visit a retailer based on a positive Facebook friend referral.

Halligan shared four key points in driving sales:

  1. Sharing with Facebook friends
  2. Two-way “Like” button or shared content
  3. Building profiles and verifying with Facebook
  4. Personalization

Halligan concluded: “E-business marketers and executives are overly focused on social media, or programs and service of brand development and have not developed the share of mind to social commerce.”

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