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Facebook: The Case for Commerce Is Emerging

  |  December 21, 2010   |  Comments

Facebook as a meaningful source of referral traffic for e-commerce is a trend, and the business case is arriving.

Facebook is the consumers' community of choice; half a billion users, 250 million of which engage with the brand daily, contributing on average 90 pieces of content a month. No brand, ever, has seen that intensity of engagement from the range and number of consumers. The community is clear, but where does commerce fit in? Will consumers use Facebook in the shopping process and businesses deliver real value to the consumer via the open graph? The business case is emerging.

The core of the case for commerce:
Traffic * Conversion * Average Order Value = Sales

Sales originate through traffic. Sources of qualified traffic have been delivered in large part via Google, both through SEO and SEM. At my company, we've been monitoring traffic to retailers and brands from Facebook and as was expected, in Q1 and Q2, referral traffic was not particularly interesting. Then, in Q3, the "Like" button was launched, seemingly every brand had a Facebook fan page, and SaaS (software as a service) providers introduced deeper Facebook integration. Referral traffic to retailers and brands from Facebook began to climb. In August, a few commerce brands even had more referral traffic from Facebook than Google! Was August a point in time or the beginning of a trend? What we've seen in Q4 is considerable evidence. Facebook as a meaningful source of referral traffic for e-commerce is a trend, and a case for commerce is emerging.

First Evidence: Q3 2010

Compete data shows that in August, social networks sent more referral traffic to several websites than Google did. While the genre of websites included in the graph varies, Forever 21, Etsy, and Threadless are all online retailers that have benefitted from the trend.

competegraph2

Second, the Fab Four clearly have Facebook cred, with Experian Hitwise reporting that it was social networks - not search - that drove the majority of traffic on iTunes' Beatles launch. "Consider this stat," says Search Engine Land. "On November 16, the first day Beatles songs were available on iTunes, 26% of UK traffic to Apple.com came from social media, about double the amount that came from search. And Hitwise says Apple received a 'huge spike' in UK traffic coming specifically from Facebook."

beatles

Third, a recent Forbes article notes that last year, top sites for driving holiday traffic to major e-tailers included search sites such as Google and Yahoo. But this year, Facebook and Twitter are topping the list, providing more evidence.

A Real Trend Exists

Very few people, even retail insiders, expected the case for commerce to emerge this year. Anecdotally, many retailers and brands have told us directly that engagement on the community section of their site is flat to down, but engagement on their Facebook fan page is up significantly. What's more, contributions to retailer communities on their sites, even for lifestyle brands, are meager. Facebook is where the consumer conversation about products and services is increasingly taking place. The ability to "Like" products and brands, the Facebook wall, the ease with which consumers can share created content like reviews and video, and e-commerce sites integrating Facebook in a more meaningful way are all features contributing to Facebook's emergence as the community of choice for consumers.

Converting Facebook Referral Traffic

The case for traffic is emerging. The case for conversion is not yet proven. Will Facebook-referred visitors turn into buyers at the same rate as visitors from Google? There's not enough data to answer that question yet, but one would expect it to be a lower rate, since the intent of visitors coming from Facebook isn't as clear or uniform as that of Google-referred visitors. The quantity of Facebook referral traffic is growing, but what's the quality? Frankly, even if it's low now, retailers and brands will find ways to optimize and improve conversion rates.

Steps Retailers and Brands Can Take to Boost Facebook Referral Traffic

"More than 2 million websites have integrated with Facebook, including over 80 of comScore's U.S. Top 100 websites and over half of comScore's Global Top 100 websites," according to Facebook. Facebook is where consumers are interacting, and is serving as the hub from which they branch out to other sites. For retailers and brands to benefit from this trend, they need to take steps to leverage the aspects of Facebook that are driving this phenomenon.

  • If you haven't yet, consider implementing the "Like" button on your product pages and give shoppers the opportunity to endorse your brand and products with the click of the mouse. As the early numbers above suggest, a little "Like" can go a long way in terms of driving traffic back to your site.
  • It's never too early to start building your fan base on Facebook with the Like Box functionality. Integrate the Like Box into your website or ask customers to "Like" your brand on Facebook in post-purchase e-mails, just be considerate about how you converse with the fans you've earned.
  • Make sure you have the capability for site visitors to easily share and connect their user-generated content with Facebook. Customers contributing content to your site are already engaged and likely more willing to share their product reviews or other created content with their network of friends.

More referral traffic is always good, so there's really no downside for retailers and brands to this trend. How big the upside is depends on your ability to convert visitors coming from Facebook into buyers.

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ABOUT THE AUTHOR

Cathy Halligan

Cathy has over 20 years of experience in both multichannel and online retail and a deep understanding of consumer needs and goals. Cathy's proven track record spans a range of industries and companies, from start-up ventures to multibillion dollar operations. Cathy is currently a Board Member at Ulta Beauty (ULTA), the largest beauty retailer that provides one-stop shopping for prestige, mass, and salon products and salon services in the United States. She has served as SVP, marketing & sales at PowerReviews, the world's most widely deployed social commerce platform, where she was responsible for overseeing the company's rapid customer and revenue growth. Prior to PowerReviews, Cathy held executive-level positions at Walmart: chief marketing officer Walmart.com, vice president of market development, global e-commerce, and vice president of product management and multichannel integration. Ms. Halligan has also held executive positions with leading retailers Williams-Sonoma, Gymboree, and Blue Nile, and was an associate partner at Prophet, a leading management consulting firm. She started her career as a marketing coordinator at Lands' End.

For real-time social commerce news and updates, follow Cathy on Twitter at @CathyHalligan.

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