Facebook’s Failure: Why F-Commerce Doesn’t Work
Gamestop (NYSE:GME), J.C. Penney (NYSE:JCP), Gap Inc. (NYSE:GPS), and Nordstrom (NYSE:JWN) are among the many stores that have both opened and closed storefronts on Facebook after the social-networking site failed to drive commerce.
Facebook, which earlier this month filed for an initial public offering, has sought to be a top shopping destination for its 845 million members, but has so far failed to prove its value to retailers.
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“There was a lot of anticipation that Facebook would turn into a new destination, a store, a place where people would shop,” said Sucharita Mulpuru, an analyst at Forrester Research in Cambridge, Massachusetts. “But it was like trying to sell stuff to people while they’re hanging out with their friends at the bar.”
Only a year ago, investors were calling Facebook commerce the next big thing, speculating that the company could threaten Amazon (NASDAQ:AMZN) and PayPal (NASDAQ:EBAY), but despite being the most-visited website in the world, persuading visitors to shop has not been easy.
David Fische, Facebook’s director of business development, said in June that the site would aim to make shopping online a more social rather than solitary experience. But the company aims to use e-commerce more as a way of getting users to stay longer than as a way to boost revenue, said Krista Garcia, an analyst at EMarketer Inc. in New York.
Facebook’s ad sales surged 55 percent to $1.13 billion in the fourth quarter, and even though some businesses have shut storefronts, many companies continue to devote advertising dollars to the site.
Customers had no incentive to shop at Gamestop’s Facebook store when the company’s regular website was already convenient, said Ashley Sheetz, vice president of marketing and strategy at Gamestop. “We just didn’t get the return on investment we needed from the Facebook market, so we shut it down pretty quickly,” Sheetz said. “For us, it’s been a way we communicate with customers on deals, not a place to sell.”
Gap Inc. has 5.6 million Facebook fans from its namesake, Banana Republic, and Old Navy pages, but discontinued a storefront last year after discovering customers preferred shopping on its own sites. J.C. Penney features assortments in a Facebook “shop” tab beginning in 2010, but took it down in December 2011, while Nordstrom is still testing ways to make shopping “seamless through Facebook,” said spokesman Colin Johnson, and has decided on a broader social media focus.
Wade Gerten, chief executive officer of social media developer 8thBridge, opened Facebook stores for 1-800-FLOWERS, Delta Air Lines (NYSE:DAL), Diane Von Furstenberg Studio LP, and denim-maker Seven for all Mankind, all of which have either shut or scaled back their offerings.
The problem with Facebook is that “it was basically just another place to shop for all the stuff already available on the retailer websites,” Gerten said. “I give so-called F-commerce an ‘F.’”
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