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How Facebook is revolutionising online retail


UK retailers are embracing the emerging medium of social commerce with ever increasing zeal and it is easy to see the appeal.

Online trade has been the only area of growth for many retailers in difficult market conditions and any way of significantly increasing traffic to transactional sites is coveted by the industry.

Social networking site Facebook is becoming a valuable tool to the sector in other ways and fashion retailers have been spearheading the crusade to cultivate the online community.

Topshop now has over one million fans on Facebook and according to a recent report from research company eDigitalresearch, the majority of online retailers have more than doubled their following on the social media platform in the last six months.

Only just this week hugely popular online fashion retailer launched its Facebook store, allowing customers to purchase its items directly from the global giant in what some people are calling F-commerce.

Blake Brysha is the Senior Marketing Manager for Power Reviews, an online community company which links, collects and analyses product and service reviews on behalf of retailers and other online business. The company now has a service via Facebook.

He sees Facebook as an essential tool for e-tailers that want to stay connected with their customers and predicts that it could become the primary driver of online traffic.

“Facebook is the dominant online community now and we expect it to remain so for the foreseeable future,” Brysha commented.

“Young American retailers like Forever 21 and Threadless are actually receiving more referral traffic from Facebook than from Google right now.”

Seeing as ‘Google’ is now commonly used as a verb for describing how we search for information online, this is no small achievement.

The potential uses of Facebook for retailers are almost endless, from product reviews and F-commerce to expanding customer bases and promoting deals.

Extole is a company that provides refer-a-friend services via Facebook, which rewards customers who recommend retailers to their online friends.

Co-founder and Vice-President for Marketing at Extole Blake Hayward argues that acquiring fans and gaining ‘likes’ on the global site is becoming the best way to promote an company online.

“Its about making it really easy for happy customers to raise their hands and say I really like this service and I think my friends should know about it,” Hayward said.

He believes that social commerce is overtaking PR and traditional advertising in terms of influencing online consumers, with comments from faceless commentators far less effective than a thumbs up from a friend.

Hayward points towards a promotion campaign recently launched by Extole for US retailer Babycenter, in which 40 per cent of participants were directed via Facebook by those initially targeted for the deal.

Earlier this week Facebook CEO Mark Zuckerberg unveiled ‘sponsored story’ adverts that take status updates and ‘check in’ details from users’ accounts to create branded ads visible to all of their friends.

People may object to their personal thoughts, feelings and profile images being used without consent to promote a company but with Starbucks and Coca-Cola already said to have signed up, the demand from retailers for this service is likely to be huge.

Although fast growing, industry use of the site is not all-encompassing, and recent research revealed that none of the top 100 retailers currently allows customers to purchase their goods from Facebook.

The study by research company One Iota also showed that 65 per cent of retailers have fan pages on Zuckerberg’s site but only four per cent have an integrated shopping function on it.

Youth brands will inevitably be the fastest to exploit Facebook’s potential because the demographic of their customer base most closely matches the platform’s audience.

This may be deterring some retailers from investing in social commerce but legal worries may also be causing concern.

There is an increasing regulationary focus on online marketing via social media, with the Office of Fair Trading launching unprecedented action in December against bloggers who had promoted goods or services without declaring that they were paid to do so.

On March 1st the Advertising Standards Authority (ASA) will begin to regulate advertisers’ marketing communications on their own websites and in other non-paid-for space online under their control.

The change in the ASA’s remit will mean misleading promotions or product descriptions posted on blogs or microblogs like Twitter may now lead to prosecution, and this action was spurred by over 3,500 complaints between 2008 and 2009 relating to these issues.

Rather than hinder the site, Hayward thinks that increasing customer caution around anonymous commercial promotions will just increase the power of friend recommendations on Facebook.

He does not think that retailers will migrate all of their online services onto Facebook but most e-tailers will see it as an essential part of their strategy in the years to come.

“F-commerce will not be limited to,” Hayward added.

“If Facebook is making it easy now for an online retailer to authenticate a user onto their service, in turn that opens the door for Facebook extending transactional data to the retailer.”

In short the most powerful asset Facebook has is the information about you, and it should surprise no-one that retailers want it too.

Published on Thursday 03 February by Editorial Assistant

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