The Rise of F-Commerce

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Much has been discussed about social media's ability to generate sustainable ROI for businesses. As you can see from this infographic, there is a sizable investment required for businesses embarking into social media.

An important point to note for client-side marketers looking to tap into the earned media possibilities that social media presents as a means to drive awareness and engagement amidst reduced marketing budgets: although most social media tools are free, social media marketing on the other hand requires a huge amount of time and resources to do well. In the age of an "always on" conversation with consumers, brands have to make a sizable amount of investment to maintain that conversation.

Managing an effective Facebook presence for a large brand may require a business to either hire a social media strategist or community manager (and sometimes both), or outsource the function to an external specialist agency.

Many organizations are still trying to decide whether it is necessary to hire a full-time social media person, especially when it is just to manage a Facebook or Twitter presence. And yet, if you really look beyond the surface and into the details, the life of a social media manager can be a very hectic one.

In order to justify the returns for such investments, we have seen brands go beyond just engagement models and metrics and directly leverage their Facebook presence to generate sales. Businesses have long figured that there is no need to link their customers from Facebook to an external website or microsite when they want to make a purchase. Why not have them buy directly on Facebook?

This model of e-commerce on Facebook is increasingly known across the industry as "F-commerce" and it's a fascinating area of development. This model was further enhanced when Facebook moved to scrape FBML and replaced it with iFrames to allow for better selling functionality in addition to better tracking.

We know that these days, most consumers almost never start their online journeys on a brand website - it's either on search, looking for a specific piece of information, or on social network sites like Facebook. Naturally, the extension of having F-commerce works because it's about being present and relevant in the space where our customers already are.

Social media empowers customers to decide how, where, and when they would like to engage in various stages of the consumer purchase funnel - whether it is awareness, consideration, intent, or purchase - and F-commerce simply acts as a logical opportunity to drive seamless sales and conversions.

Looking at businesses' participation, the top three brands on Facebook (by fans) all already sell directly on Facebook - Coca-Cola, Starbucks, and Disney. P&G, in its first foray into Facebook commerce, famously sold 1,000 diapers on its F-commerce store in under an hour.

For businesses that are interested in venturing into this area, there are a number of vendors and platforms you can choose to work with to deliver F-commerce, such as Payvment and 8th Bridge.

For a brand manufacturer, an F-commerce store provides the additional benefit of being able to sell direct to the consumer in an elegant, non-threatening way to its retailers and distributors. At the same time, it also allows the brand to learn more about its users and their shopping habits, which they can use to devise rewards and incentives around, to drive loyalty and word of mouth.

Think of the opportunities of furthering this with Groupon-type F-commerce deals. That would really drive home the social amplification aspects of Facebook commerce.

Having a commerce platform within Facebook comes with great benefits and risks. No other marketing channel can compare to what Facebook offers; access to a user's likes and interest. However, the dependence on Facebook as a platform brings along the loss of control over the entire customer experience. In addition, and as we have all experienced at some point or another, everything is subject to Facebook's terms of service, and changes can happen with little or no notice, requiring marketers to scramble to adjust and comply.

It will be interesting to see how this trend further develops. But one thing is for sure, F-commerce is already changing the way we shop online.

This column was first published June 1, 2011 on ClickZ.Asia.