The e-retailer reports a $126 million net loss, stemming from a $640 million year-over-year increase in spending in the quarter on technology and content ...
Millions of consumers socialize on Facebook. Some e-retailers are learning what it takes to sell on the social network.
Avon Products Inc.’s Mark brand faced a growing problem last summer. Only 10% of its customers, mainly young women in high school and college who buy products from the nearly 50,000 Mark sales representatives, were opening the company’s marketing e-mails.
“We saw that they were hanging out on Facebook,” says Annemarie Frank, Mark’s head of e-commerce and digital media. “E-mail was like a dinosaur to them.”
That realization drove Mark to follow its audience by launching a direct-selling widget on Facebook in November. The stand-alone application allows for the brand’s representatives to sell Mark cosmetics right on their customers’ Facebook news feed, which is the first page Facebook users see when they log on to the site. Mark is especially well suited to Facebook because its salespeople often are selling to their friends and workmates-who are also often their Facebook friends.
Far more efficient
It’s “Avon calling” brought into the 21st century. “In the old days a sales rep would knock on doors, come in for coffee and show you their products,” Frank says. “Now they don’t have to leave Facebook to make a sale. It’s a lot less cumbersome and far more efficient.”
But it’s not yet common to sell directly to consumers on Facebook. While virtually every major retailer has a Facebook fan page for communicating with its customers, among the 50 largest online retailers only Avon and 1-800-Flowers.com Inc. have a permanent e-commerce presence on Facebook-and they’re not disclosing sales.
Still, more big players are experimenting, including multichannel retailer Limited Brands and consumer goods giant Procter & Gamble. The intelligence they gather from these tests will help determine whether social networks like Facebook can become a major selling channel for online retailers in the future.
What’s clear is that lots of consumers love Facebook. In December, there were 37.7 million unique visitors to Facebook.com from the U.S. every day on average and 111.9 million unique visitors over the course of the month, according to web traffic measurement firm comScore Inc. And those Facebook users linger, spending on average 23.7 minutes on the site each day, says comScore.
Given those numbers, what’s surprising is that only a half-dozen or so retailers regularly sell on Facebook pages. Why aren’t there more? In part, it’s because Facebook skyrocketed to Internet stardom by constructing a site designed to let people share their thoughts and photos with each other, not to display an extensive catalog of products with all the associated images, descriptions and prices.
Many of the features that online retailer ThinkGeek puts on its e-commerce site can’t be brought over to Facebook, such as large home page hero shots, says the e-retailer’s marketing chief, Jamie Grove, whose official title is director of evil schemes and nefarious plans.
“On the surface it sounds like a good idea because our audience is there,” says Grove. “But the flipside to that is that we have great stuff on our own site and having complete control of customer experience is important to us. If you don’t have ultimate control over your page that lessens the customer experience.”
Besides, consumers haven’t shown massive enthusiasm for shopping on Facebook, or even getting information from their favorite retailers via Facebook. For all the retailers that have Facebook fan pages, 56% of online shoppers are Facebook fans of less than six retailers, according to a survey by ForeSee Results Inc., which measures consumer satisfaction with web sites.
“Consumers are there to hang out and are not focused on shopping,” says Fiona Dias, executive vice president of strategy and marketing at e-commerce platform provider GSI Commerce Inc., who says none of the company’s retailer clients have asked for new technology that would let them sell on Facebook.
But while many online retailers are observing from afar, 1-800-Flowers is learning by doing. It became the first retailer to launch a store on Facebook last July and is already on the second version of its Facebook store. The big change is that the sales pitch is much more prominent.
Before the change, buying something via the 1-800-Flowers Facebook store required a shopper to find the retailer’s Facebook fan page. That was no easy task since a Facebook search of “1-800-Flowers” brings up 73 groups and eight pages. Even once he found the page, he had to find the store, which was just one of 15 tabs on the page, before he could begin browsing.
“Our customers had to come find us,” says Kevin Ranford, director of web marketing. Ranford said sales were good, but would not provide details.
Only seven months after starting to sell on the social network, the retailer revamped its Facebook shopping feature to increase the visibility of its sales. The week before Valentine’s Day it shifted its approach. 1-800-Flowers, which worked with ad network and e-commerce applications developer Alvenda Inc. to develop its Facebook e-commerce functionality, now pushes out special offers that feature select items to its fans’ news feeds.
Fans now can complete a purchase without leaving that news feed page. “Users come to Facebook to do certain things, like update their statuses and engage with friends,” Ranford says. “Buying things may not be the foremost of what they’re looking to do. But if we engage them where they already are, it seems like an obvious way to change that.”
With 1-800-Flowers’s new approach, every fan of the retailer can see and immediately act upon its offers on the news feed. A click on the offer expands the window into a fully functioning shopping space where a shopper can enter in all his pertinent information.
If he wants to buy something else from the retailer, he can click on a button that redirects him to the 1-800-Flowers Facebook store that features around 10% of the company’s inventory. And, each time a fan engages with the offer-by making a purchase or clicking the site’s “like” button-his friends see that activity.