Forget Facebook: big retailers beat a retreat

Michael Baker
February 29, 2012
The Age

ANALYSIS

Online retailing accounts for about 5 per cent of Australia’s retail sales, and is growing much quicker than traditional sales, new data from National Australia Bank revealed this week.

That figure came on the back of similar findings by Urbis and the Commonwealth Bank last year.

But not all online selling channels are turning out to be as promising as they once seemed.

While even wary retailers are now investing resources in e-commerce and moving to omnichannel marketing and sales strategies, some land-based retailers who adopted the technology early are stepping back from the internet.

So-called F-commerce, or selling on Facebook, has at least temporarily gone into the too-hard basket, with a number of high-profile retailers, including Gap and upscale US department store Nordstrom, terminating their Facebook storefronts.

For a retailer to test and then abandon a particular channel is not unusual. It happens on land every day – for example when a brand decides to open its own store, rather than wholesale through a department store.

The difference with F-commerce is that Facebook is a social site, so trying to market and sell products on it is a bit like someone making a sales pitch to his friends at a Christmas barbecue.

As social media consultant Todd Michaud noted on a recent Citigroup conference call, social media platforms are all about “relationship formation” and do not lend themselves to the traditional modus operandi of marketing, which is essentially to put a product in the faces of as many people as possible and push as hard as you can.

Not to be discouraged quickly, some retailers have been looking at techniques for integrating the purchasing and social experiences more subtly, hoping to blur the difference. The jury is still out.

However many retailers are still maintaining a robust Facebook presence, even if they haven’t quite figured out how to leverage the fan visits they receive.

Marketers are accustomed to aggregating and clustering consumer behaviour in ways that enable them to tailor the same product and promotion to large audiences through mass media. Now they are dealing with a peer-to-peer model in which tailoring for the individual is the new norm.

Michaud has some simple advice for those who are still figuring out how to participate in social media and which social media platforms to use: “You need to make your bets. But don’t be on a platform without seriously participating.”

To be on the platform at all means seriously putting resources into it – otherwise it can do more harm than good to your brand.
F-commerce is not the only child of e-commerce that retailers are struggling with.

Some retailers are continuing to question the value of marketing themselves through daily deals websites.

The sites themselves are currently undergoing a process of retrenchment. According to a report out of the US, the world had almost 800 fewer deal sites at the end of 2011 than it did a year earlier.

The fact that there were more than 800 to begin with is indicative of the cottage industry that has blossomed in this niche.

There have been perennial doubts among the retailers that used such sites as a marketing device about whether they are genuinely bringing in repeat customers or just selling something one time only at a loss (and being temporarily swamped in the process).

One thing is for sure – internet-based marketing and sales models are in a constant process of evolution, evaluation, growth and consolidation. Being a late mover in internet marketing channels may not always put you at a disadvantage.

Michael Baker is principal of Baker Consulting and can be reached at michael@mbaker-retail.com and www.mbaker-retail.com.

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