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© 2011 Forrester Research, Inc. Reproduction Prohibited 1
The Case For (and Against) Facebook Commerce
with special guests
Agenda
1. Introduction
2. The Case Against Facebook Commerce
3. The Case For Facebook Commerce
4. The Great Debate: F-Commerce Opportunity Perspectives
5. Q&A
Webinar Hashtag: #FBDebate
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The Case Against Facebook Commerce
Sucharita Mulpuru, Vice President, Principal Analyst
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The challenge
The real opportunity in Facebook commerce
The real challenges with Facebook commerce
What this means
Agenda
#FBDebate
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This seems very logical
$100B+ 1B??? +
#FBDebate
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However, things haven’t really changed for retailers
Source: The State of Retailing Online 2011, a Shop.org study conducted by Forrester Research
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Overall, Facebook is outranked by traditional web marketing tactics across the board
Source: The State of Retailing Online 2011, a Shop.org study conducted by Forrester Research
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Social has hardly been a search slayer
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Is Facebook commerce just too early? Or is it just not coming?
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The challenge
The real opportunity in Facebook commerce
The real challenges with Facebook commerce
What this means
Agenda
#FBDebate
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Three ways we see retailers using Facebook
Data layer extraction
Off-Facebook
On-Facebook
Greater value to large retailers Illustration Description
fCommerce initiatives such as stores, fan pages, peer-to-peer contacts “within the four walls” of Facebook
Example retailers: JCPenney, 1-800-Flowers.com
Extraction of Facebook’s Open Graph data onto key selling pages, “likes” on product detail pages
Example retailers: Levi’s, JanSport, Wet Seal
Using Facebook data to extract trends, identify influencers, monitor competition, glean customer insights
Example retailer: Zappos.com
Dire
ct s
ales
“T
op a
nd b
otto
m o
f the
funn
el”
Indi
rect
sal
es
Source: Spinback; Levi’s Facebook page; JCPenney Facebook page
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Some pockets of success
“Kembrel . . . [drives] 20% of all transactions . . . within Facebook with a 7% to 10% larger shopping cart size.”
Internet Retailer, December 1, 2010
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But metrics are generally anemic even after shoppers share their purchases
Many retailers cited social commerce as a customer retention tool rather than customer acquisition.
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The retailers with the most promise
1. First column 2. Last column
3. Middle columns
4. Gray shading
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The challenge
The real opportunity in Facebook commerce
The real challenges with Facebook commerce
What this means
Agenda
#FBDebate
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Why fCommerce has been challenged (and will likely to remain so)
The Facebook algorithm for what shows up on a wall is a mystery.
People don’t use Facebook as a search engine.
#FBDebate
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Facebook looks closer to an email substitute than a proxy for Google
Source: North American Technographics® Retail Online Benchmark Recontact Survey, Q2 2010 (US)
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Why fCommerce has been challenged (and will likely remain so)
The Facebook algorithm for what shows up on a wall is a mystery.
People don’t use Facebook as a search engine.
Facebook Credits are not a realistic payment option for most merchants.
Facebook has a spotty reputation with respect to consumer privacy. – “Beg for forgiveness” culture
UGC often has a quality and sparsity problem (for both product discovery and validation).
– Product discovery is an opportunity, but item-level validation is challenged.
– Solutions like “Ask Owners” makes much more sense for item-level validation.
The Open Graph is viewed by some as a new evil.
#FBDebate
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The challenge
The real opportunity in Facebook commerce
The real challenges with Facebook commerce
What this means
Agenda
#FBDebate
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What this all means
There will be a cottage industry of “social network providers.” – Facebook as a corporate entity will be less a player than a supporter.
Look for the rise of “inbox marketing.” – Cross-training of email marketers
Amazon.com won’t have much to fear, but eBay will.
Facebook may be the metaphorical kick in the pants to bring attribution measurement to the mainstream.
Expect attention to float to other “hot” opportunities in mobile, tablets, and behavioral marketing.
#FBDebate
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Facebook is unlikely to be an email replacement but rather a complement to it
Source: The State of Retailing Online 2011, a Shop.org study conducted by Forrester Research
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Thank you
Sucharita Mulpuru smulpuru@forrester.com +1 617.613.8809 Twitter: @smulpuru
www.forrester.com
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The Case for Facebook Commerce
Cathy Halligan, SVP Marketing & Sales
Facebook; THE consumers’ community of choice
#FBDebate
• The case for commerce is emerging. It’s early days
• Ecommerce sites should take steps now and give customers the option to connect via Facebook, to build a Facebook-powered profile and lay the foundation for future innovation
• The Facebook UI will rapidly improve to leave room for commerce and community to beautifully coexist
• Facebook is a Net New source • Facebook is complimentary, not replace traditional ecommerce programs
• Facebook on Site • The sales opportunity for Facebook commerce exists outside the walls of Facebook, on
ecommerce sites where consumers are comfortable making purchases
• On-site Facebook integration will be most useful when merged with native customer data (e.g. order history, customer reviews)
The core case for commerce
#FBDebate
Traffic * Conversion * Average Order Value =
Sales
Net new source of traffic
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comScore and J.P. Morgan (January 2011).
Facebook and Google are complementary
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The catalyst
Introduction of the Like Button (anniversaried on 4/21)
• More than 2.5 million websites have integrated the like button
• 10,000 new websites integrate with Facebook Like each day
• Every month, more than 250 million people engage with Facebook on external websites
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The Driver
#FBDebate
What consumers tell us
I want relevant experiences BUT I don’t want to manage multiple profiles across the web
Reviews are the #1 community and social tool with the greatest impact on my buying behavior
Facebook Friends, People Like Me, and experts are the “online voices” with the greatest impact on my purchase decisions1
1 Source: 2010 Social Shopping Study, the e-tailing group/PowerReviews
Facebook is the consumers’ profile on the web – Facebook Connect
Consumers are sharing their endorsements on Facebook at an increasing rate and each ‘share’ = $15.72
Facebook is emerging as a source of sales
#FBDebate
Facebook Friends impact purchase decisions
Source: 2010 Social Shopping Study, the e-tailing group/PowerReviews
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Endorsements from Facebook Friends drive sales
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PowerReviews’ customers see value first hand
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http://powerreviews.com/facebook-calculator.php
5X Increase in Sharing with Facebook Connect
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Today retailers and brands are integrating facebook into their on-site experience; open commerce
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Evolution of Facebook Integration
Op
en
2-w
ay
1
-wa
y
On Facebook
On Facebook & lightly on-site (Like/share count)
On Facebook & Facebook-powered on-site profiles
Personalized commerce experience (Facebook + native data)
You are(likely) here
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2: Multi-directional Like Integration
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3: Facebook-powered Profiles/Community
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3: Facebook-powered Personalization
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Integrate Facebook Connect now in a meaningful way
#FBDebate
Facebook; THE consumers’ community of choice
#FBDebate
• The case for commerce is emerging. It’s early days
• Ecommerce sites should take steps now and give customers the option to connect via Facebook, to build a Facebook-powered profile and lay the foundation for future innovation
• The Facebook UI will rapidly improve to leave room for commerce and community to beautifully coexist
• Facebook is a Net New source • Facebook is complimentary, not replace traditional ecommerce programs
• Facebook on Site • The greatest opportunities for Facebook commerce exist outside the walls of Facebook, on
ecommerce sites where consumers are comfortable making purchases
• On-site Facebook integration will be most useful when merged with native customer data (e.g. order history, customer reviews)
Opportunity for Commerce Sucharita Cathy On Facebook
Facebook Ads
Fan Storefronts
Brand Communication (company updates in stream)
Friend Recommendations (Like, Share, Reviews)
Email (inbox moves to Facebook)
Search (Facebook as a search engine)
Off Facebook
Sharing
Facebook Registration (profile based on Facebook data)
Personalization (relevant experience based on Facebook data)
Social Insights (extract trends, identify influencers, etc.)
The Great Debate: F-Commerce Opportunity Summary
#FBDebate
Thank you. @PowerReviews @CathyHalligan @Smulpuru
To learn more about the PowerReviews social commerce suite, please contact: info@powerreviews.com
Please take a moment to complete our brief survey at the end of Q&A.
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