Why Facebook’s new Shop section matters

When Facebook makes a move in e-commerce — or anywhere else, for that matter — people take note. Facebook, after all, is the digital era’s de facto town square and when something changes in the town square, conversations ensue.

So plenty of news outlets noticed when the social network this week announced that some of its 1.5 billion or so users would be able to discover and buy products from its “Shop” section without ever leaving Facebook.

While Facebook’s latest move might seem like a turn of the screw after the Menlo Park company’s work with Pages for retailers, the buy button and other forays into e-commerce, in fact, the effort could be a tipping point — at least when it comes to the future of retail.

For now, the latest initiative is available to a relative few retailers and a subset of consumers who use Facebook’s mobile app. But its inspiration is no doubt drawn from the rise of mobile, personalization and the shifting ways in which consumers go about discovering products.

Mobile and personalization are key to Facebook’s initiative

Let’s start with mobile, which frustrates many retailers with high traffic and relatively low conversion. Facebook’s stated reason for launching Shop is to improve the mobile experience for shoppers and increase mobile revenue for retailers.

“We’re looking to give people an easier way to find products that will be interesting to them on mobile, make shopping easier and help businesses drive sales,” Emma Rodgers, Facebook’s head of product marketing for commerce, said in a company statement.

And there is something to that, says Kevin Eichelberger, CEO of South Carolina-based e-commerce agency Blue Acorn.

“I have a better opportunity for you to approach your customers in the mobile environment then you currently have,” is the message Facebook is sending, Eichelberger tells me. “In many cases that’s probably true. In many cases, Facebook’s mobile store is going to be faster, more familiar, to customers, in terms of the experience; and I think there are some benefits to that.”

Next, personalization. It’s a given that with Facebook’s vast store of user data, showing the right products to the right individual is a key piece of the value the social network can offer to retailers. Selling gardening tools?

“If I keep posting pictures of my garden and (saying) how nice my property is, then the algorithm will figure out that you’re the right person for these offers, which goes back to (the) often-discussed issue of relevance,” Carl Boutet, a retail innovation specialist for Canadian retail co-op Mega Group, tells me by phone. “Facebook says, ‘We’re relevant. Our feed is more relevant than the others. Amazon has the algorithms for trying to get the right products before your eyes, but they don’t have the depth.’”

Facebook’s move reflects the battle to win discovery

But perhaps the most interesting thing about Facebook’s move is what it says about discovery and the whirl of changes in the way consumers are searching for and finding the things they want to buy. BloomReach last week released research that found that 44 percent of consumers bypass the wider Web and go straight to Amazon.com when they are shopping for a product. That’s up from a Forrester Research finding in 2012 that said 30 percent of shoppers started on Amazon.

(The BloomReach study, conducted by Survata, found that 34 percent of consumer start their product hunts on search engines, such as Google, and that 21 percent start on retailers’ sites.)

That shift leaves retailers who run their own e-commerce sites in a tough spot. And now Facebook appears to making a big move into the discovery game.

“You have brands, or retailers, that are looking to engage their customers where they are,” Eichelberger says. “I think it’s part of an overall trend and shift we’ll see over the next, probably, 10 years. I think the biggest innovation in retail is changing where consumers shop and I think this is a big part of that.”

Eichelberger says the idea of “destination” shopping will fade; the notion that a shopper goes to a store or a digital site or calls a number to buy what he or she wants won’t be predominant in a decade or so. Instead, retailers will find consumers where they are.

Boutet says the timing of Facebook’s announcement this week could well have to do with the chatter about Amazon and the changing habits of consumers.

“I think there is a definite tie-in into that, where it’s Amazon vs. Google vs. Facebook and that they’re kind of jockeying for position,” Boutet says. “Facebook is saying, ‘Hey. Hey. What about us? We’ve got to make sure we’re relevant. We want people on our platform. We don’t want them spending any more time on Amazon or anywhere else.’ ”

And while retailers could view Facebook as another threat, unlike Amazon, Facebook’s e-commerce foray is not a zero sum game. Retailers would still be the ultimate seller on Facebook’s platform. It’s unclear whether or what retailers will pay for the privilege, but Boutet and others note that Facebook realizes benefits beyond direct cash payments from retailers.

Facebook wants you to live your life on its site

“They want to be in people’s lives from A to Z,” he says, “and shopping is a big part of that. Obviously there is some money to be made in doing that. They’re just trying to figure out what’s the best way for them to be a part of that equation.”

The more time a user spends on Facebook, the more data the company can collect and the more opportunity it has to present the user with personalized advertisements and products.

“In the perfect world for Facebook, you would be on their platform and there would be no reason for you to leave,” Boutet says. “You’d do your banking on their platform. You’d order your dinner from their platform, your groceries, and get your dry cleaning done from them too, probably.”

When you look at the world of mobile — and mobile apps in particular — Facebook is approaching Boutet’s scenario in a relative sense. The company’s app is the top one in the United States, accessed by 69 percent of smartphone users, well ahead of No. 2 Google Play, used by 52 percent, according to comScore, as reported by Marketing Land. The same Marketing Land report said that Forrester discovered that Facebook accounted for the most time spent on apps, capturing 10 percent of all the time spent on all apps — again, significantly ahead of No. 2 YouTube, which captured 7 percent, according to Forrester data.

All of which explains why retailers want to be selling on Facebook and why Facebook believes it has a key role in the e-commerce game.

Retailers need to find consumers where they are

“The concept being, if I can engage a customer when they’re at their moment of inspiration, at the moment when they’re going to do product discovery,” the chances of a sale increases, Eichelberger explains. “The current process, you have to go scour the Web, do a Google search, go look for it, then buy it. I think any (way) you can remove the friction from that process, the more likely you are, as a brand, to sell that product to that customer at the point of inception.”

How big a deal is this shift away from destination shopping? Eichelberger says even Amazon — the digital destination — is keeping an eye on it. Consider the Dash Button, a gizmo that allows consumers to instantly buy a particular product with the push of, well, a button.

“Even Amazon sees the writing on the wall and is shifting,” he says. “They send you a little button. Then, when you’re in your laundry room and you’re out of laundry detergent, you just press a little button and, boom, the next day, another box is at your door.”

And that, of course, is just the beginning.

“It’s an ever-evolving and changing world in retail,” Eichelberger says. “We’ve seen a lot of changes in the last 10 years. I think we’ll see more changes in the next 10 years and the way we buy products will be radically different.”

Wouldn’t it be something if we look back a decade from now and determine that Amazon’s biggest innovation of the decade wasn’t launching drones that deliver packages to your house by air or a system that knows what you want to order before you order it,  but a small button that they sold consumers that lets you buy soap when you need it?

Stay tuned. This is e-commerce, after all.


Photo by Kirstina Sangsahachart/Daily News

This is an edited version of a post that originally appeared on the BloomReach blog. Mike Cassidy is BloomReach’s storyteller. Contact him at mike.cassidy@bloomreach.com; follow him on Twitter at @mikecassidy.


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