JC Penney, Gamestop and GAP are among a slew of companies who are shutting down their stores on Facebook, as they find that they're not generating the revenue that justifies the investment in time and money to manage. Gamestop's store lasted just six months before they decided to shut it down, with many others now following suit.
Given that very little sales were being processed through this channel, it would suggest this is the right business decision. And many commentators are also deeming Facebook commerce to be a complete flop, stating that this 'quick failure' demonstrates Facebook isn't the place for selling.
But with many high profile retailers shutting up shop, so to speak, after just a few months - is it too early to deem Facebook commerce a complete failure?
Sure, as consumers we are adapting to new ways of doing business online quickly, as we keep up with the change of pace in technologies that facilitate this, but shutting down a store on Facebook after six months, a platform itself that has only been around since 2004? Make no mistake that Facebook is a very, very young company and that both brands and consumers are still figuring out the best way to make it work for them and what we are/aren't comfortable doing on there.
The snowball effect
Before we go and abandon retail on Facebook and claim it is a complete failure, it's worth gaining a bit of perspective on the overall history of ecommerce. The validity of online shopping now is not something we even think about. It simply is, and for a lot of people, it is the preferable way to shop. But the success of ecommerce was not proved within a short period. The very first online shopping transaction was made by 72 year old Mrs Snowball in 1984, five years online commerce had even been invented. And even though this was the start, it took years for ecommerce to begin to match the growth rates of offline commerce.
It wasn't until 2006 that the $100 billion mark was broken, with e-commerce reaching this revenue level for the first time. And that was a full three years after Amazon posted their first annual profit, and four years after eBay acquired PayPal for $1.5 billion. Add in a little dot com crash in the middle of all that, and ecommerce has had a fairly colourful history. Yet that hasn't stopped it from reaching the heights that it has today, adapting to new consumer concerns such as payment security, ease of delivery or even how to send back returns.
If you were to say that in the midst of this a large retailer had closed down their online store after six months to a year because they weren't seeing their desired revenue level, it would seem completely illogical and pretty insane.
Ecommerce did snowball, in more ways than one, but it took more than six months to do so.
Facebook's Growth
Now of course there are external factors to consider here, such as the ease of access to the internet in the early 00's compared to now, and the fact that Facebook is already handling 800 million users. You would expect to be able to ascertain the success of something on Facebook's platform when you're in front of an active audience, engaging daily all over the world.
Yet just because the numbers may be there on Facebook, that doesn't mean users' behaviour is going to follow so quickly. We are not that amenable to change and for brands to successfully promote buying and selling in a place that's supposed to be a hangout for friends, it is going to take time. And some serious thinking outside the box.
Honestly speaking, I would probably not use a standard Facebook store front all that much. For a few reasons. Firstly, the inventories are often a lot smaller than the full website and also because the process is often messy. While many retailers claim to have 'Facebook stores', what they actually have is a brochure site sitting on a tab, where you must then still go through to the website to complete the purchase. So why not just start on the website anyway?
What Facebook commerce needs in order to succeed is a new way of selling, making it into a social experience instead of trying to turn social experiences into retail opportunities. Things like the Facebook newsfeed are vital here. The fact is that since Facebook changed their newsfeed on the site, I have been going to Pages and profiles a lot less, as so much of the interaction can now be done through the wall instead. And these are the kinds of things that will change Facebook commerce altogether and make it a more worthwhile experience for both the consumer and the brand.
Facebook commerce will not be going anywhere but up. It may not look like it does now, with standard Facebook stores being the most prominent way of activating 'Facebook commerce', but there is huge growth potential here, boosted by Facebook's new ventures with Facebook Credits and also partnering with more and more brands through the platform.
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