Tuesday, 5 April 2011

When does F-Commerce Work for Brands?

The push for Facebook Commerce (known sometimes as the more exciting F-Commerce) has seemingly increased throughout the later parts of 2011 and the early bits of 2012. As more brands embrace the 'F-Commerce' trend, its not only worth stepping back and analyzing exactly when the concept can work for a product, but also what Facebook Commerce actually entails. Stepping away from the most clear example of commerce on Facebook, micropurchases for in game content, and focusing more on product transaction opportunities, the line between promotion and commerce seemingly blurs.

What is F-Commerce vs. Sales Promotion?

Driving purchase on Facebook is a much broader concept than just a Facebook store and therefore begs the question, where does external network promotion (voucher codes and other sales promotions) end and proper 'F-Commerce' start.

Activities such as posting voucher codes and product give-aways have been a developed part of Facebook for much longer than the current e-commerce push, but have recently refined to include activity based discounts through functions such as Facebook Deals. While promotional links, fan page giveaways, branded applications & check-in deals may speed the consumer's journey down the purchase process, they exist more distinctly as 'Sales Promotion' activities than F-Commerce.

If the previous activities are placed firmly in the SP arena, then explicit Facebook Commerce activities must involve opening a direct path to purchase for the consumer. While sales promotion may drive consumers to purchase through traditional methods, F-Commerce instead opens new avenues to purchase or fundamentally shortens existing avenues. So far, 3 broad approaches to a Facebook Commerce model have been tried:

1.) Single Product Purchase
 An evolved form of the product give away sales promotion mechanic, singular product stores (such as Heinz's launch of their Balsamic Vinegar Ketchup) can, at a low price point, harness a similar mechanic to giveaways, while defraying the cost of golds sold and shipping required in the promotion.

2.) Static In-Network Storefront
The majority of Facebook stores seem to have taken this approach, with either a boutique selection or full range of products being offered in what is essentially a Facebook reproduction of their initial store experience. While brands have managed to leverage the social power of Facebook, through either clever activity of their fan bases or curating an interesting product selection (in the case of stores such as Roots Canada). Though retailers can currently leverage the novelty of Facebook store fronts, coupled with developed fan bases, to drive interest in static stores, Facebook based commerce seems to be rapidly requiring a more developed offering to drive user interest.

3.) Socially Enabled Storefronts
Making a Facebook Storefront more effective than a static deployment is where the true power of Facebook Commerce becomes clear. While stores such as Best Buy's 'Shop + Share' may not directly link purchase within Facebook, its use of a social recommendation feature (allowing friends to provide feedback on possible purchases) shows how F-Commerce storefronts can leverage the inherent power of Facebook and a user's friends to bridge new paths to purchase. It isn't true 'F-Commerce' in the strictest as the price of products on offer may still require a transaction to occur on the retailer's site (easing consumer concerns about security and allowing for easier integration to existing stock systems), but it indicates where social reference can aid commerce going forward.

What Products Work with F-Commerce?

So if F-Commerce is a combination of increasing stock on offer and store front functionality, working in concert with sales promtion techniques and brand engagement, what approach works best for various products?

Though their are many different ways to classify products, two sets of categorizations that work for products on Facebook are involvement and social visibility. Involvement roughly entails the amount of thought and resource a consumer dedicates into considering the purchase of a product. High Involvement products (such as a TV, Car, Life Insurance etc.) involve a large amount of consideration of alternatives and even whether to purchase at all. Low Involvement products involve little consideration and can entail routinized or quick purchases (such as grocery products, cleaning goods and generally low priced items). In driving purchase, the challenge in marketing high involvement products is providing information and purchase justification, while low involvement products require disrupting the consumer's normal routine/gaining attention to drive consideration and purchase.

Social Visibility involves the extent to which a product purchase is visible and influenced by friends/family and external reference groups. Low Social Visibility products involve those that are relatively private (such as life insurance, home improvements), while High Social Visibility products are those that have social capital and/or play a social role as a possible status item (i.e. a Car, home, TV, designer clothing).

Graphing involvement against visibility, 4 general categories start to form for possible products on Facebook. High Involvement/Low Social Visibility products (such as bank accounts and insurance) show the worst initial possibilities for F-Commerce given their required level of consideration and the lack of any real benefit from social features.

Ignoring that quadrant, the remaining three each show different opportunities, risks & alternatives to creating F-Commerce channels. As shown, high involvement products risk losing direct links to conversion (stemming from price or reluctance to purchase within network), while lower involvement products must articulate either their social benefits (high social visibility) or ease to purchase (low social visibility). Within each, if quadrant specific risks aren't addressed by an F-Commerce strategy, alternatives such as traditional or dynamic sales promotion may work as a more efficient solution.

While Low Involvement/Socially Visible products seem to be the most prominent driver for in-Facebook purchase currently, this may change as commerce possibilities are refined and the new features are launched. The opportunities for higher involvement products may lie in the retooling of Facebook Deals coming soon, which focuses more on a Groupon type hyperlocal buying model. Such a service may bridge the gap between F-Commerce and existing sales promotion mechanics, creating new opportunities to drive sales amongst a variety of products.