Can only small businesses make money from Facebook?

  • Author: Lauren
  • Lauren Fisher,

Following a report  on the Forrester blog into Facebook commerce, there's been a lot written about the potential for the site to make businesses money. Stats included in the report are that Facebook has a 2% clickthrough and 1%t conversion rate, while email marketing enjoys an 11% clickthrough and 4% conversion rate. The findings are certainly compelling, and also highlight that only smaller retailers are seeing any significant uplift in sales. This is an aspect of the report that I wanted to look at further, as I think it reveals a lot about the way smaller retailers are doing business online, specifically through Facebook. It begs the question - are these businesses the only ones with sales small enough to recognise an impact from Facebook, or are they approaching it differently, making their sales efforts more effective? Use Facebook

Facebook-Only Commerce?

One of the most telling factors is that there are many smaller businesses emerging now, whose only way of doing commerce online is through Facebook. They may not be able to invest in a website or full ecommerce solution but can, for next to nothing, introduce a shop onto their Facebook page. This would no doubt impact their sales, as the majority of their consumers are likely to purchase through Facebook as opposed to in-store as it becomes easier and easier to access. Indeed, a recent report on Social Media Explorer found that 5% of small businesses actually planned on removing their own site in favour of their social media activity. They wouldn't be going there if it wasn't working for them as a viable business channel and I think this figure is actually surprisingly high when you consider how many years websites have on Facebook business pages. That such a significant number of businesses are willing to forego their site altogether, followed by an additional 4% who are investing in their Facebook page instead of their site, shows that Facebook can indeed be a viable channel for commerce, provided you know what you're doing.

And this may just be the key. It could come down to the fact that rather being uniquely positioned for their size, small businesses are actually approaching Facebook commerce in the right way. There's no doubt that to operate a business effectively through your Facebook page you need to be flexible, to adapt to change quickly. The Facebook platform changes day to day and while small businesses can be reactive to this to benefit their customers, larger businesses are not in such a fortunate position. For many small businesses accepting sales through Facebook through whatever means available is a no-brainer and easily manageable. For larger businesses however, it presents unique problems. Adding an entirely independent sales channel isn't necessarily easy, and larger businesses will try to make the Facebook commerce platform fit their existing practices, instead of the other way round. And though the implementation of iframes on tabs has now made it easier to plug your own shop in, smaller businesses are still able to do this much more easily, in such a way that consumers on Facebook will be comfortable with. They can make their commerce practice fit with Facebook in whatever way their customers have become accustomed to.

Building Customer Relationships

To encourage your customers to transact with you through Facebook, there has to be a certain element of trust. This is something that small businesses can achieve much more easily, as they can build direct, intimate relationships with their customers. They will build closer relationships, albeit on a much smaller scale than larger businesses, but these could end up ultimately being more valuable. As consumers we are just starting to get used to the idea of commerce on Facebook, and this is something you have to remember in the wider context of the Forrester study. What this means is that we need to trust the person at the other end even more. If you're on a small business page where there's a small number of comments all being answered, you'll be confident that you can make a query that will get answered. The impression when landing on a larger page is that they may not be able to accommodate you should something go wrong with your sale. So you stick to what you know and buy it in the shop or online.

Personalised Recommendations

An additional benefit to small businesses fostering smaller communities is that they're able to interact with their customers more closely and even make personalised recommendations. Small businesses will build up very real relationships where they keep conversations going continually and they actually get to know what people like and don't like. They're able to replicate the very experience of going into your regular shop where you know the owner, you know they know what you want and you're 99% more likely to convert the shop visit into a sale than by walking into somewhere that you don't know. In this way small businesses are very much proving the business case of social media way ahead of their larger counterparts. They're able to prove that people actually do respond to being treated personally online and that if you do it right, you'll get the eventual sale. Only the business doesn't really have to try that hard and the person on the other end doesn't really feel like they were being sold to anyway.

There's no doubt that Facebook commerce is at the very early stages and we've only just begun to see what's possible when integrating our personalised networks with our buying habits. But I think a lot can be learned from looking to the small businesses here and seeing what practices work for them.