255-The Advent of the F-Commerce Revolution
Don’t look now, but we are entering the world of F-commerce. What is that, those of you older than thirty will ask? F-commerce is selling through a Facebook page.
The trend is early yet, but likely to turn into a stampede. JC Penney and 1-800-Flowers.com both have established full E-commerce stores within their Facebook page. The stores include check-out and other features you typically find on an E-commerce web site. Facebook claims that twenty-five of the largest retail sites are already integrated with Facebook, as are seventeen of the twenty-five fastest growing retail sites.
Think of Facebook as a virtual mall. There are all kinds of people wandering around there, talking to one another. Facebook offers a nice opportunity for a company to interact with customers and allow them to bring their friends into the conversation to evaluate styles and colors and so forth. If a company integrates its storefront with the Facebook page, its Facebook “friends” will never have to leave the virtual mall in order to purchase. This is an important product innovation.
Product innovations reduce customers’ effective costs in one of three ways: add information about the product and how it is to be used, reduce the resources the customer must use with the product, or improve the customer’s experience with the product.
This innovation improves the customer’s experience with the product by increasing the customer’s sense of security in using the product. It allows the customer to get friends’ opinions on what the customer is purchasing. Secondarily, the Facebook store reduces the customer’s resources used with the product by reducing the time the customer must spend in using the retail product. The innovation reduces the steps the customer must take to make a purchase and it places the company’s product closer to the customer’s location.
This is going to be a train to the destination of millions of customers. Every mainstream retailer has to get on board.
Facebook has proven to be wildly attractive to businesses wishing to sell online. Its Facebook Marketplace product enables an individual to sell products on the individual’s Facebook page. Its Facebook Shops product creates an online storefront for businesses to post products for sale directly on Facebook and Instagram. No business can afford to ignore a Facebook presence. To date, more than 200 million businesses, about 90% of all businesses, have established an online presence on Facebook. Facebook estimates that 16% of its 1.85 billion daily average users buy something on its website. Facebook accounts for 80% of all the referrals to e-commerce sites.
Interestingly, Facebook has chosen to monetize these highly valuable services through advertising. Most of the services in Marketplace and Shops are free to the user. Facebook derives over 95% of its revenues from advertising.
These Facebook innovations reduce its customers’ resource requirements in selling their products. See HERE for more perspective on product innovation.
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