In the past, we have used the Facebook Like button as a baked-in promotional mechanism to drive referral marketing of deals, and that formed the core functionality of our product (see screenshot below for an idea of how we did it with our SaaS group buying solution for online retailers). After nearly 6 months of collecting data and experimenting with the Facebook Open Graph API and plug-ins, we have decided once again to use Facebook like how every other business uses it – as an independent, bolt-on, add-on sharing mechanism, and nothing more. We will no longer be giving Facebook VIP status in our product.

Here are some problems with Facebook:

1. The Facebook API changes too often. The plug-ins are buggy, the API changes without notice rather often, and there are too many rules constraining how developers can use the API in building applications. As a platform, it is unstable, period. It may be a good idea to use Facebook as a platform for consumer applications, but it might have been a mistake for us to use Facebook as a platform for an ecommerce application.

2. Facebook is overhyped. Personally, even though Facebook actually has 600 million active users, developers still tend to overestimate how many people actually 1) have a Facebook account, 2) use it regularly, and 3) are comfortable using it as a third-party authentication method. Many consumers across different niche markets are simply not familiar with how Facebook works; developing Facebook-only applications marginalizes this segment of users, who may be substantial in number.

3. Facebook is still mainly social for most, and exclusively social for some. We are still not completely convinced that Facebook can be an effective platform for ecommerce or any commercial activity, i.e. does anyone even care about commercial offerings on Facebook? Low sales on so-called f-commerce platforms seem to support our view. Some businesses may be too quick to assume that, just because Facebook works for games, it will work for ecommerce. Of all the new variants of ecommerce, the one that might actually take off is, in our view, mobile commerce.

So which direction are we now taking with our product, Zuupy CrowdDeals? We are now focused on point-of-sale transactions, working more like a sales tool that facilitates group buying transactions and processes, leaving the marketing of deals largely to our customers (online retailers themselves). We hope that this small product pivot would serve as a better fit to what the market wants. After all, Likes are ultimately useless. Sales are what matters, and that is what we aim to bring to our customers from here on.

A recent Harvard Business School study has found that, if your customers are heavy social media users, they are more likely to refrain from making purchases as a result of encountering commercial offerings on social media, particularly those from friends. The results are succinctly summarized in this article.

The interesting question is obviously why. According to the study report, heavy social media users are “well connected, high status members” who are less likely to be positively influenced by the purchase behaviour of people in their network. Instead, they are likely to be influencers themselves and essentially see no reason in following their followers. In fact, they would probably actively go against what their so-called followers advocate, as it is unbecoming that a leader would want to look to her followers for direction, even when it concerns something trivial like online shopping. Pride seems to be the underlying reason.

The study did not authoritatively pinpoint the reason for the negative effect of social media on the purchase behaviour of heavy social media users but merely made speculations as to the explanation behind the results. What is relevant, however, is that more impressions and more buzz do not necessarily lead to an increase in positive engagement. There is also the possibility that heavy social media users are just not active purchasers in general, i.e. the negative engagement observed is not caused by their being heavy social media users. The results can truly be interpreted in many ways.

Does this mean that, if your customer base comprises heavy social media users, social commerce may be a futile investment? It is perhaps so, but if your customer base consists primarily of influencers by definition, there may be an opportunity to use them as a conduit to reach a wider audience, driving an increase in awareness and reach. So while their own purchase tendencies may be suppressed, their ability to affect the purchase tendencies of others may not be diluted.

After all, you do not have to purchase an offering yourself to (want to) promote it to your friends. What is your take?

In the past, we have chastised the idea of selling on Facebook (f-commerce): here and here. Recently, there have been several reports that social commerce may just be a bunch of hype, and, more relevantly, there are now compelling sales data pointing towards the infeasibility of Facebook as a platform for commerce. Forrester Research, Inc. released its latest report on the so-called f-commerce phenomenon, which has been neatly summarized in this SocialCommerceToday.com article.

Simply put, the results are pathetic; nobody has made any major money on Facebook to make it a worthwhile customer acquisition channel to consider. Worst of all, online retailers infected with the herd mentality still often charge ahead with plastering their website with Facebook Like buttons, buying fans (seriously?), installing f-commerce software on their Facebook Pages, etc. without a clear idea on how to turn a profit on those efforts. We have always wondered if Facebook’s explosive growth and hype have actually clouded the judgment of brands and retailers into believing that Facebook is the elixir to all marketing and branding woes.

No, Facebook is not the panacea for all ills. Use it for customer service, user feedback, or even for short-term deals and promotions if you want, but do the actual commercial transaction elsewhere – somewhere more stable and less vulnerable to API/policy changes. Any Facebook developer can testify that developing Facebook applications can be a nightmare sometimes; we never know what will change tomorrow. Platform issues aside, we really should also consider what or who we are competing against when we decide to peddle our goods on Facebook. No, your competitors are not other brands within your niche; think again.

Consider this quote by Paul Marsden:

“Facebook is a people-centric forum, and whilst huge – a forum it is. And the forum has been around since the 1970’s – do you know any businesses that made money from connecting forums with retail?”

Try competing with a consumer’s closest friends and family members. We would be very surprised if a large number of consumers would prefer to pull out their credit cards and make a purchase on a cramped “Facebook store” than to comment on their friends’ new haircut or post witty status updates to garner Likes and congratulatory comments. The blue bar on top of Facebook.com is an f-commerce retailer’s biggest enemy, just as the back button in a browser is a website owner’s biggest enemy. Once a red notification number appears, it is game over (or cart abandonment, whatever you prefer to call it).

We have in the past stated that infusing social into commerce makes more sense than vice-versa. Recently, Ethan Beard, director of the Facebook Developer Network, suggested that Facebook storefronts are a “pretty small piece” of the “burgeoning area of social commerce.” Also, many retailers have said that Facebook storefronts are negligible, according to Sucharita Mulpuru of Forrester Research, Inc. (source).

At the risk of reiterating what we have already said, the biggest problem with selling on Facebook is that it is frowned upon by consumers. Consumers are already bombarded by multiple marketing messages almost everywhere in the day; Facebook serves as the escapist online platform for people to interact and socialize with their friends. Any overt selling is bound to put people off. Next, even if consumers are somewhat interested in the offering or brand, it is unlikely that a miniature storefront within the confines of Facebook and sporting all the technical limitations brought about by Facebook’s development environment can create a user-friendly shopping environment that maximizes buying satisfaction. Facebook is simply not built for shopping, especially with the major distraction called the top navigation bar.

At Zuupy, we do not see merit in the idea of creating an all-in-one brand HQ within Facebook that takes care of everything from promotions to point-of-sale transactions. There clearly is value in using Facebook for limited purposes, such as customer care and direct marketing, but the larger value still lies in manipulating Facebook for use on third-party websites and online stores. In fact, this is also what Facebook wants, at least according to Ethan Beard.

As social commerce is in its infancy, it remains to be seen if selling on Facebook can be a sustainable distribution point for retailers. Our core philosophy remains the same since our inception: the trend is social commerce, not commercial social.

I came across an article on social selling a few days ago that derided the concept of selling on social networking websites. I fundamentally agree with the author; selling on social media platforms is irrelevant at best and invasive at worst. Still, Facebook storefront solution providers, such as Payvment, Alvenda, and a truckload of other so-called f-commerce vendors, continue to woo online retailers with the prospect of maximum exposure and access to Facebook's 500-million strong user base.

Payvment argues, “If you have to send a customer to another location to make a purchase, you are more likely to lose the sale. Payvment transforms your Facebook page from a marketing platform to a sales platform, instantly enabling you to generate more revenue and gain new long term customers.”

The assumption behind this claim is that people go to social networking websites to shop or conduct product research in the first place. The fact is that, while purchase intent is perhaps the most important factor affecting conversion rates, most consumers with purchase intent are rarely found on social networking websites. In 2010 Social Shopping Study conducted by PowerReviews and the e-tailing group, only 5% of consumers conduct product research on social networking websites (3% use Facebook while 2% use Twitter) – that is 1 in 20 consumers, for perspective’s sake. Conversely, 57% start with a search engine query and 38% start on a manufacturer’s or retailer’s website. If the statistics are accurate, setting up a Facebook store only panders to the needs of 3% of the consumers with purchase intent.

Commercializing Social

The problem with Facebook stores is not that they are technologically green but that they are predicated on illusions: imagining purchase intent where there is none and taking advantage of Facebook’s and Twitter’s heavy foot traffic when really there is no advantage whatsoever to be taken. The hypothetical situation of selling irrelevant products in a social setting illustrates the extreme conflict between consumer intent and vendors’ perception of consumer intent. In a social setting, people are seeking specific sensory experiences (e.g. the relaxing feeling of socializing in a bar and the adrenaline rush in an amusement park), and anything contextually irrelevant is likely to be perceived as a distraction, an obstruction to whatever experience consumers are seeking.

Unless the goods on sale are complementary to the experience sought after by consumers (e.g. selling ice-cream at a fun fair), the idea of selling where people are having fun, in real life or otherwise, is likely to be met with limited success. Another related reason for its limited success – apart from the misperception of consumer intent – is that retailers neglect to factor in the cognitive costs associated with shopping. Evaluating product quality, assessing product-need fit, comparing prices, and making choices are all mentally-expensive tasks that would naturally be avoided, unless there is underlying purchase intent.

Trying to create purchase intent where there is none is difficult but not impossible (I believe that they call that “demand generation”), but trying to create purchase intent and harness it to close a sale, all at one go, approaches the realm of Sisyphean tasks. The only example in which f-commerce might be useful is where purchase intent suddenly arises in the course of socializing (e.g. a boy is reminded of his girlfriend’s birthday via a Facebook reminder and suddenly needs to buy some flowers – perhaps this is why 1-800 Flowers exists on Facebook). Consider, however, that 1-800 Flowers is an early adopter when it comes to web technology, having set up its first online website in 1992. They probably know what they are doing... or not.

Socializing Commerce

What about introducing the social aspect into ecommerce? Is infusing the social graph into the shopping occasion a distraction, an obstruction to the shopping experience sought after by consumers? I believe that flipping the relationship between social and commerce brings about an opposite effect. Providing a social experience where consumers shop and giving consumers access to advice, experiences, and even the mere company of friends make the social aspect facilitative and supportive of the shopping process.

Obviously, people can be a distraction too, an attention-consuming entity that detracts from the core offering. However, social is fluid; people are fluid. Creating an environment where consumers are encouraged to share product knowledge with and seek trusted information from each other is likely to augment the shopping experience more than anything else.

At its core, the phenomenon of social selling reflects a fundamental misunderstanding of the mechanics of social media, possibly due in part to the infancy of social media and the breakneck speed at which it is evolving. Social media is not for selling, period. Social media is for conversations, engagement, and brand building. If that statement sets off a “where is the ROI in that” knee-jerk response, consider that there is more than one aspect to social media ROI besides the financial, at least according to Augie Ray of Forrester Research.

Ultimately, brands and retailers should use social media for what it is really suited to do. Only then can brands and retailers harness and truly benefit from the immense value of social media, instead of forcing unrealistic expectations upon it and then facing inevitable disappointment.