Is the future of social commerce on Facebook?

Facebook’s explosive growth has led many to question whether it will become the de facto hub of commerce for retailers. Facebook Commerce is alluring because it enables companies to harness social capital, and retailers are eager to tap into the tremendous word-of-mouth potential of fans liking products, making purchases, and sharing with friends.

Social media strategists often tell their clients to “fish where the fish are,” but while Facebook storefronts can be effective to facilitate impulse purchases, are they the right long-term strategy to grow sales through social media?  Perhaps not.

Traditional analytics and e-commerce platforms deliver rich clickstream data, helping retailers track browsing behavior and determine methods to optimize the purchase funnel on their site. These platforms also offer intelligence about which marketing programs (email, search, PPC, social or affiliates) are most effective at driving revenue.

Facebook Insights does provide valuable data on interactions and soft metrics such as impressions, likes and comments. While these are great for measuring engagement, retailers must ultimately make decisions based on factors that directly influence transactional metrics like conversions or acquisition costs, and Facebook’s analytics engine does not yet provide the level of relevant data required for effective merchandising.

Many Facebook storefronts use iFrames or Flash to serve product content, which often results in SEO black holes that receive very little love from search engines. Given that 25-35 percent of traffic to large e-commerce sites is from organic search, the lack of search engine discoverability for product content on Facebook should be a concern.

Clearly there is value in maintaining a strong commerce component under your roof. Perhaps David Fisch, Director of Business Development at Facebook, said it best when he remarked “the storefronts are really only one piece, and really a pretty small piece, of the burgeoning area of social commerce.  Our interest isn’t in getting people to create tabs where people can shop but allowing consumers to shop wherever they are and helping them discover products through their friends.”

Fortunately, with the right mix of tools, the benefits of social shopping can be extended to your e-commerce site. Here are three ways to leverage Facebook and social commerce on your site to grow conversions and sales.

1. Social sharing

Social sharing taps peer recommendations to drive qualified traffic to product pages and conversion points on your e-commerce site. It lets consumers promote their purchases or product reviews to their friends on multiple social networks, which fosters brand advocacy and drives qualified referral traffic to your site.

Social sharing also helps retailers circumvent the challenges of news feed optimization. Facebook’s EdgeRank algorithm is designed to promote relevance by favoring news feed posts from friends with whom you frequently interact. While your brand page may have plenty of fans and likes, your Facebook posts could get lost in the news feed unless consumers frequently interact with your messages or visit your page.

Peer-to-peer sharing is different because it leverages the high affinity scores that your consumers already have with their friends. Posts that originate from consumers may be more likely to filter to the top of the news feed than those from your brand. In essence, more impressions lead to more referrals and ultimately, increased sales.

2. Incorporate friends and social graphs

One reason retailers turn to Facebook is to replicate the shopping mall experience online – where consumers flock to stores with their friends to browse and purchase products. But social shopping is also possible directly on a retailer’s site after enabling social login.

Shoppers can choose to share their social profile data and friends lists when they sign-up on your site with their Facebook identity.  This social graph data opens the door to social shopping on your site. Here are a few ways your customers can incorporate their Facebook friends into the shopping experience:

• Filter product listings or reviews to prominently display content that friends have recommended.
• Invite Facebook friends to check out a particular product or visit the site.
• Recommend gift ideas for Facebook friends based on their birthday or interests.

By making the shopping experience social, retailers can turn on word-of-mouth to expand product awareness, increase time on site, and improve the likelihood of purchase.

3. Social Ads

Targeted social ads are another effective traffic-driver to product pages and conversion points on your site. Because Facebook accounts for about 12 percent of all time spent online in the U.S., it is an incredibly potent channel for advertisers.

Facebook advertising works for retailers partially because of the social network’s scale, but also because Facebook can target relevant ads based on a consumer’s demographics and interests. If you sell athletic shoes, you will generate more conversions and greater return on your advertising investment by targeting Facebook users who are interested in running.

Many retailers use Facebook ads to drive traffic to their brand pages on the social network. While this is an effective tactic if the goal is to build community on Facebook, your product pages or custom splash pages should be the destination if revenue is the immediate objective. Your e-commerce site remains the best place to track consumer behavior, influence conversions and measure performance indicators through more robust analytics tools.

Facebook has the potential to become a viable direct selling channel.  But until it evolves to support the sophisticated analytics, SEO and merchandising tactics that retailers already use on their commerce sites, it is perhaps best leveraged as a complementary sales channel, a branding and engagement tool, and a traffic-driver to your e-commerce site. Fortunately, the aforementioned ideas can channel the power of Facebook Commerce on your site.

Michael Olson manages marketing campaigns and demand generation programs at Janrain, a Portland software company specializing in social media and identity management solutions.

Image courtesy of  Flickr user Shlomi Fish.