And up and up.
There has been a recent spate of stories in the mainstream press about the struggles of Facebook shopping. The current twist is that Facebook shopping is failing because people don’t want to shop on Facebook.
One social media pundit recently quipped: “Turns out shopping isn’t that social.”
The reason for this outlook is because several retailers (notably The Gap, J.C. Penney and Gamestop) recently closed their Facebook stores. This has, of course, led to some industry hand-wringing. Forrester Research analyst Sucharita Mulpuru recently told Bloomberg:
“There was a lot of anticipation that Facebook would turn into a new destination, a store, a place where people would shop. But it was like trying to sell stuff to people while they’re hanging out with their friends at the bar.”
Let’s forget the fact that people in bars buy a lot of stuff (drinks and food for example) and focus on the reality of Facebook shopping (which many have labeled F-Commerce).
First let’s remember that many people rejected the notion that people would ever buy anything online – period. Then the dot-com craze (and crash) happened and online shopping has been growing ever since. E-commerce now accounts for more than $200 billion in U.S. retail sales in the United States (about 6 percent of all retail shopping). And 87 percent of consumers say that buying online is their top shopping preference.
Amazon.com, one of the largest online retailers, saw its sales increase 40 percent in 2010 to more than $24 billion a year.
No one doubts the power of online shopping anymore.
Secondly, social commerce, including Facebook shopping, is at its nascent stage. Sales on social media channels were about $1 billion in the U.S. and $5 billion around the world in 2011, according to eMarketer. Booz & Company, a global consulting firm, predicts social commerce to grow to $3 billion in the U.S. and $9 billion globally in 2012 and reach a whopping $14 billion in the U.S. and $30 billion globally in 2015. That is impressive growth.
A report by Oracle last November found that 9 percent of U.S. internet users in North America had purchased a product on a brand’s Facebook page and another 10 percent would consider doing so.
As Krista Garcia, an eMarketer analyst, noted last month:
“As social media, and Facebook in particular, plays a larger role in consumers’ lives, people are becoming accustomed to performing routine tasks like reading news, watching videos and listen to music, as well as discovering products and shopping, all while staying logged in to a single site. Instead of compartmentalizing daily routines, social media users are treating Facebook as a one-stop shop.”
Thirdly, Facebook shopping isn’t simply putting a buy button on your Facebook page. It need to incorporate the strengths of the platform – namely engagement and sharing. Like any new technology platform, it takes time to develop best practices and customer preferences for how to best utilize it.
So companies are still figuring out how to use Facebook shopping – just like they are trying to figure out how to best use mobile, location-based services and other social networks to both market and sell.
So – no pun intended – don’t buy into the meme that Facebook shopping isn’t working.
It is and it will.
Bloomberg article on brands shutting down Facebook commerce
Newsweek story “Flight of the Dot.coms” from 2001