Almost every retailer now has the expertise to use Facebook to grow consumer awareness of their brand, however, there are only a handful of retailers that have truly monetised Facebook and extended its reach from a sharing space to a retail platform. A number of retail commentators have argued that whilst connecting with the consumer through social media is key, the monetisation of Facebook as a standalone platform has not happened, and will possibly never be a success.
This argument originated in the US after online retailers posted poor sales forecasts after Christmas from F-commerce sales. The argument focuses on the fact that Facebook is where people come to connect with their friends - and sometimes brands - but they do not go on to buy from Facebook pages and never will. I disagree with this sentiment entirely.
I do agree that F-commerce is in its early stages, however it should not be dismissed; I would go as far to say that ignoring it could have a detrimental effect on a company's bottom line in the near future. To understand my argument, you only have to look at how technology has transformed the way people shop over the last 15 years, and subsequently how the evolution of technology will continue to change consumer habits. If you combine this with the need for Facebook to continue to diversify its revenue streams, I believe Facebook itself will push for F-commerce to be a success, as it's a natural progression/transition.
I also have reason to believe that Facebook will become an influential sales platform. As CEO of BrandAlley, an online retailer that specialises in designer 'flash sales', I have seen first-hand how F-commerce works; it has both driven sales and further engaged our Facebook followers. Since launching our F-commerce platform late last year, it already generates five per cent of sales and this is set to rise over the coming year.
It was 10 years ago that people questioned whether online shopping would become a viable platform for retailers, but with online sales generating £68.2bn last year and counting for 17% of retail sales in the UK, it is clear that the consumer will continue to look online to make purchases. However, I believe that with the increase in people using social media platforms and accessing the internet on their mobile phone or tablet device, customers will begin to move away from the traditional homepage and seek sales in other locations.
Other retailers are with me on this argument. For example, Burberry has committed 60 per cent of its marketing budget on online and social media channels and companies as diverse as Procter & Gamble, Levi's and Delta AirLines have committed to selling their product or services on Facebook.
The evolution of how the consumer shops will undoubtedly have a positive effect on F-commerce but how Facebook pushes the concept itself will also heighten the success of the platform. With Facebook's recent floatation, there is now a push from its shareholders to grow and further monetise Facebook and I believe F-commerce will form part of its growth plans. It is likely that Facebook will encourage brands to have fully functioning online stores. At first this will be free but eventually they will ask for a small percentage of the sales once they have consumer buy-in.
So, how do you convert a growing fan base to buying your product? I think the answer is relatively straighforward in that you simply need to give them a reason to make that first jump into spending on the site. Exclusive previews or sales plus competitions are the easiest ways to quickly engage the consumer. Admittedly BrandAlley's flash sale format has helped us convert our customers into buying through Facebook. For example, we held an exclusive preview sale recently with 7FAM (Seven for all mankind) onFacebook which accounted for 50% of revenue for that particular sale.
A few years ago it was only a select few retailers who saw the importance of engaging with their customers via social media platforms. Now social media is very much part of the marketing mix but retailers need to start being commercially aware and monetising Facebook. I do not believe that F-commerce will overtake any other e-commerce platform right now, but when you have a captive audience of people who you know are interested in your brand, then the next logical step is to directly sell to them. Web users spend one in every eight minutes on Facebook which only goes to show the future and need for retailers to capitalise on this.
Facebook users may be in 'share mode' with their friends at the moment but I believe it is only a short time before they are in 'spend mode', buying their favourite brands through F-commerce.