Monday 17 August 2015

How Facebook plans to ride the new e-commerce wave

Facebook wants to be more than the place where you like your old roommate's wedding photos, watch viral video clips, or share links to your favorite quizzes. It wants to be the place where you make your next impulse buy.

As part of its budding ecommerce ambitions, Facebook recently started allowing a small number of brands to sell their products directly through a new "shop" section on their Pages, BuzzFeed's Alex Katrowitz reported in July.

In Facebook's early experiments, companies can display their available products on their Page and let customers check out and pay with out leaving the site. If the concept sounds familiar, that's because it is. Firms first started selling things directly through Facebook in 2009. Then, in 2011, FB convinced a bunch of big, high-profile brands like Gamestop, Gap, JC Penney, and Nordstrom to open stores on the site through their business Pages. They all ended up closing their stores within a year.

Analysts and industry experts who had coined the term "Fcommerce" for Facebook's first foray into online shopping, snarkily commented that the "F" stood for a big, fat failure.

In the last year, a bunch of the biggest tech companies have launched some version of a buy button. Facebook was actually early -it started to test a new type of call-to-action ad last summer that would let people make a purchase directly from an advertisement, without leaving Facebook.

Twitter, Pinterest, and Google all followed with various types of "Buy buttons." These companies aren't necessarily hoping to be come the next Amazon. Instead, they're all trying to make mobile ads more effective so they can charge more money for them.

Generally, shoppers who click ads on their phones are less likely to actually buy something.

When they click through to the advertiser's mobile site, it's usually harder to use than the regular website. So they end up leaving without buying. That means a lower "conversion rate" in advertising terminology. So brands pay less money for those ads (and potentially buy less of them). Buy buttons - which keep the shopper contained on the original site with a more frictionless checkout experience should lead to more people actually completing their purchases.

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