Facebook Commerce

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FACEBOOK
COMMERCE
September 2011
Trading Commerce

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ForewordWe live in fast-moving times in which changes happen on a daily
basis. Some of these changes demand decisions about the
future, and many companies are now confronted by one such
challenge, because something is heading their way which could
permanently change conventional online retailing. Facebook
Commerce has got underway, and we should look carefully to
see whether it is a train onto which it is really worth jumping.
Up until very recently, Facebook was simply a social network
in which friends met in their own communities and kept each
other updated about their activities. That has now changed.
More and more brands are establishing a presence on Facebook.
Nowadays, many Facebook users are friends with numerous
brands, which have thus become part of their networks.
This kind of direct dialogue within a very private sphere is at the
centre of F-Commerce, and it is becoming an effective marketing
tool with which products will soon be able to be sold extremely
successfully.
In this study, BBDO sheds light on the subject from four different
angles: Facebook, users, businesses, and service providers. We
then draw up some recommended actions for businesses on the
basis of these different points of view.
One thing, after all, is certain: it is crucial to get firmly to grips with
this transformation in retail. If F-Commerce is going to establish
itself as a relevant sales channel, then it is important to make use
of the opportunities and to occupy vacant ground.
So stay tuned.
I hope you enjoy reading the study.
Michael Schipper
COO, BBDO Germany

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Contents
MANAGEMENT SUMMARY | F-COMMERCE
BACKGROUND AND SETUP | STUDY FOR ACTION
STATUS QUO | F-COMMERCE IS STILL IN ITS INFANCY
PLAYER 1: FACEBOOK | FROM FRIENDLY SPACE TO MARKETPLACE
PLAYER 2: USERS | FANS BECOME BUYERS
PLAYER 3: COMPANIES | SELLING BY COMMUNICATING
PLAYER 4: SERVICE PROVIDERS | NEW PLAYERS EMERGE
GLOSSARY
6 – 7
8 – 11
12 – 19
20 – 27
28 – 41
42 –55
56 – 65

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The commercialisation of Facebook is moving ahead at full steam. Numerous brands
and games have paved the way for commercial offerings on Facebook. Up until
recently, most companies used the platform primarily for customer loyalty purposes.
Half of the people surveyed as part of this study are friends with at least six brands
on Facebook. Two-thirds of those asked consider Facebook a central place for all
kinds of interesting themes. This situation has led to products being sold via the
platform alongside pure dialogue activities.
F-Commerce is currently in a relatively early stage of its evolution. But it is safe to
assume that it will be taken up by consumers more quickly than e-commerce was a
few years ago, because it is no longer necessary to accept a completely new
technology as it was with e-commerce. Furthermore, shopping online is now
absolutely normal. F-Commerce, therefore, will expand over several stages. In the
first stage, product recommendations will be generated by incorporating Facebook
functions, and then disseminated in the social network. In the second stage,
products will be presented in Facebook storefronts. In the third stage, complete
purchase transactions will be put on offer.
Facebook wants to get its foot in the door of online retailing because it can see the
enormous potential that lies in retail activities on its platform. The social network
already has its own currency, called Credits, and it earns 30% of the turnover
generated by social gaming through virtual goods traded in social games. In order to
push F-Commerce forward, Facebook set up an internal Commerce Partnership
Group at the end of last year which is intended to help retailers to use Facebook as a
sales tool. Retailing inside Facebook does not cost companies anything at the
moment, but that can change. The question is not whether, but when, Facebook will
capitalise on retail within, and using, its platform.
Convenience is one of the most important motives for buying on Facebook.
It is the clinching argument for 36% of those surveyed. Great offers and discounts
come second (32%), followed by exclusive products (30%). Only 8% of those asked
have already bought things on Facebook, while twice as many have browsed through
an F-Store. One in five people stated that the social component is an advantage.
What they mean by that is shopping together with friends and commenting on the
purchases they have made. Products that can easily be shared with others and given
away are especially well received on Facebook: two-thirds of those asked can
definitely imagine buying vouchers and tickets on Facebook.
F Commerce
Management Summary

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But F-Commerce is still more suitable for impulse buying. That is because most Facebook
users still visit the site without any particular intention to shop. Instead they are more likely
to stumble upon product recommendations for interesting products from their Facebook
friends or brands they are friends with. Instant rewards as a shopping incentive will play a
major role in F-Commerce for this reason. Products requiring a lot of information, on the
other hand, are less in demand, and are more suitable for e-commerce channels.
For companies, F-Commerce is also a place to try out new concepts. They can experiment
there with time- and volume-dependent offers, fan-first and fan-only items, and group
purchases. The results from this will give rise to new marketing and sales concepts which
will aim at attracting attention and creating relevance. Merging communication and retail in
this way will produce unique possibilities which are only feasible on Facebook. Dialogue
with the brand will always be at the centre of F-Commerce.
At this point, Facebook has not yet fully undergone the transformation into a sales channel.
This means that for companies, F-Commerce is currently an investment, and primarily a
marketing tool. The monetary benefits are still low. Emphasis is very much on customer
loyalty and customer involvement, because there are few buyers, and the ones there are
are not very willing to spend. Not until F-Commerce establishes itself fully (stage three) will
companies be able to convert these customer relationships into hard cash.
The development of F-Commerce will depend very much on Facebook as a platform.
If users abandon the social network, then F-Commerce will fail. Half of the people polled
expressed reservations about data privacy and security, but only one in five fundamentally
distrusts Facebook. For Facebook to establish itself as a retail platform, it will not only
need to demonstrate more dependability to businesses, but it will also have to make
security and data privacy its priorities.
Management Summary

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Study
for ActionDefinition of F-Commerce:
F-Commerce describes retailing inside or by means of Facebook.
Retailing inside Facebook means that either the products are presented
on the platform, or the complete purchase transaction takes place there,
while retailing using Facebook enables companies to generate traffic on
their own e-commerce sites, or to collect user data.
This study focuses on retail inside Facebook. That includes (fully
integrated) F-Stores, product presentations (storefronts), group
purchases (deals) and trading in virtual goods within Facebook games.
BACKGROUND AND SETUP

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“Exciting Commerce is one of the most prominent German
e-commerce blogs. One of its authors, Jochen Krisch, deals
with themes that include social commerce, and advises
e-commerce businesses.”
Jochen Krisch, Exciting Commerce
“Smatch implemented numerous Facebook Commerce
activities for the Otto Group starting in 2010. Stephan Wolk is
responsible for marketing and product developing at Smatch.”
Stefan Wolk, Smatch
“ShopShare is one of the best-known providers of Facebook
Store solutions. This Austrian company offers both customised
and standardised store concepts.”
Hendrik Maat, ShopShare
“HORNBACH has maintained its own successful
brand fan page on Facebook since 2009. Christoph
Strassburger, its Director of Social Media, is responsible
for managing all social media channels.”
Christoph Strassburger, HORNBACH
And in order not to neglect the corporate perspective around this theme, one of the clients of
the BBDO Group was interviewed.

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Criterion 1: Facebook users.
The people in this category use Facebook at least every two or three days. They
are divided up as follows:
• 64% are heavy users: they use Facebook several times a day.
• 36% are occasional users: 12% use Facebook every two or three days,
24% use the social network once a day.
Criterion 2: brand friends.
In this category we only asked people who have made added brands and
companies to their list of friends on Facebook.
Criterion 3: regular online shoppers.
In this category we only asked people who shop online at least once every six
months. This is how their shopping behaviour broke down:
• 75% are heavy online shoppers: 13% of those asked buy things at least
once a week online, 32% several times a month and 30% at least once a month.
• 25% are occasional shoppers: 20% of those asked buy something online
every two months, 5% every half a year.
Research
step
Research
step
Research
step 1
2
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Method:
Desk Research
Existing, published knowledge in industry magazines, blogs and
surveys on the subject of Facebook Commerce was gathered
together, and on that basis hypotheses were formed as the starting
point for the next research steps.
Interviews
Three experts were interviewed in order to gain an understanding of
how Facebook Commerce is likely to develop in the future. Each
expert embodied a specific perspective of the subject.
Online User Questionnaire
As part of the study, a representative cross-section of 504 people
were polled online. These 504 people were selected according to
three criteria:
Authors: This study was produced by BBDO Germany in conjunction with
Jelden Trend & Transformation Consulting and brand foresight.

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F-Commerce
is still in
its infancy
STATUS QUO
Over the past three years, Facebook has established itself as the world’s
biggest and most important social network. Brands and games have
discovered Facebook for themselves in a big way, and are helping to drive
the commercialisation of the platform. Retailing will be the next step of this
commercialisation.
More than mere friendship: Facebook is currently approaching the
750-million-user mark (source: Facebook, April 2011). No other social
network is anywhere near as successful or far-reaching. All of its rivals are
exhausted and are losing users or simply serving niches, while Facebook
steadily gains users. Facebook is already much more than just a place to
chat with friends. To 65% of the people polled in this study, Facebook is the
central place at which they follow all interesting themes. To its users,
Facebook has become a real-time newsletter.
Facebook is booming thanks to openings: Two revolutionary openings have
enabled this ascent. Firstly, Facebook made its own interfaces available to
external developers back in 2006. This had a networked effect: the more
offerings Facebook users found there, the more attractive the platform
became to them, and the more users there were on Facebook, the more
attractive it became for external developers and companies to programme
applications and set up a brand presence. Secondly, in April 2010 Facebook
began to integrate its social elements into external websites. This included
features such as Likes, Comments and Shares. It was these two decisions
which were the key to Facebook’s victory over other social networks.

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First come the brands, then comes the commerce: The current commercialisation of
Facebook is based on two key developments. The first is the growing presence of
businesses who use their brand communities to build up customer loyalty. This kind of open
dialogue with companies has found widespread acceptance among users. Around three-
quarters of all Facebook users are friends with at least one brand (source: AdAge/Ipsos,
February 2011). The second key development is the spread of social gaming inside Facebook.
The goods purchased within these games have caused the virtual goods market to grow to
835 million dollars (source: Fast Company, April 2011). In response to this, Facebook has
introduced its own virtual currency, Facebook Credits, through which it earns 30% of the
turnover generated by social gaming. Around 600 applications currently use these Credits,
and 85% of the turnover in those applications is generated through Credits (source:
Facebookbiz, May 2011). These developments have laid the foundation for transactions.
STATUS QUO
65% 35%
Most people use
Facebook to follow
themes they are
interested in
To me, Facebook is a
place where, as well as
exchanging information
with friends and relatives,
I can follow all kinds of
themes.
Basis: 504 people polled between 20 and 39 years of age; Facebook users
who are friends with brands and who shop online regularly.
To me, Facebook
is simply a place
where I can stay in
touch with friends
and relatives.

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“Facebook is now
big enough to
support further
commercialisation.”
Stefan Wolk, Smatch
STATUS QUO
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F-Commerce is the personal version of social commerce:
Retail inside or using Facebook makes use of its social
components. As in social commerce, F-Commerce is about
stimulating sales by means of ratings, reviews and
recommendations.
The difference is that in F-Commerce, this word-of-mouth
propaganda takes place within dedicated networks, which
means that product recommendations come from your own
Facebook friends. Because we befriend people who are
similar to us, and because we trust people more whom we
know personally, these recommendations have a much
greater effect than recommendations from people we do not
know. That is why 90% of Facebook users state that they
trust in recommendations received from their Facebook
friends (source: ExactTarget, August 2010).
STATUS QUO

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Facebook is becoming Amazon’s and eBay’s most dangerous
rival: Facebook is now so big that these recommendations and
ratings are scalable. But it is not only Facebook’s reach which
makes it Amazon’s and eBay’s most dangerous rival, but it is
also its ability to locate users within the zones of their friends,
products, places and all of the things that they “like”.
F-Commerce is establishing itself more quickly than
e-commerce: Where e-commerce took around ten years to
establish itself, F-Commerce will be accepted much more
quickly among consumers. There is no new technology that
needs to be accepted, since F-Commerce is based upon the
already existing components of e-commerce: from shopping,
to wrapping up the deal, to payment. People learned to
shop online a long time ago. Furthermore, companies have
already created the structures required to retail products
on the Internet. The main obstacle to F-Commerce is the
demand for shopping among Facebook users, without which
retail will not be able to assert itself inside Facebook. But the
first F-Commerce success stories do seem to indicate that
Facebook will be able to support further commercialisation
(See chapter “Player 3: Companies”).
STATUS QUO

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I click on Like on brand or company websites
65 %
36 %
29 %
19 %
20 %
12 %
12 %
23 %
15 %
I click on Like or Recommend for certain products on websites and online shops
I click on Share in websites and online stores in order to tell my friends about particular products
I visit brand and company websites or online shops whose brands or products my friends also Like
I use the option of logging in to other websites and online shops using Facebook
I tell my friends using Facebook about what I have bought
I tell my friends using Facebook about what I want to buy
I only use the Facebook functions on websites or in online stores in order to obtain discounts or take advantage of special offers
I do not know about or I do not use these functions
Basis: 504 people polled between 20 and 39 years of age; Facebook
users who are friends with brands and who shop online regularly.
Many websites and online shops belonging to brands and companies (e.g. Amazon) have
already integrated Facebook functions. Which of the following functions do you use?
Open Graph features are already being used
STATUS QUO

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The two spheres of F-Commerce: F-Commerce consists of retail inside Facebook as
well as retail using, or by means of, Facebook. Retail inside Facebook is the heart of
F-Commerce. It includes all buying activities that are concluded through Facebook
such as Facebook Stores and the retail of virtual goods using Credits. The extended
sphere of F-Commerce constitutes retail using Facebook as a means. This includes
incorporating Facebook mechanisms on e-commerce sites using social plugins
such as Likes, Shares and logins. This is known as the “Open Graph” and is about
generating traffic on e-commerce websites and gathering data. This extended sphere
is already widespread. Two-thirds of those asked (65%) use the Like button on
external websites belonging to brands and companies, and one in three (36%) click
Like or Recommend for certain products on websites and online stores.
Shopping as a personalised social experience: More than 250 million people use
Facebook features on external websites every month (source: Facebook, April 2011).
These widespread social plugins enable companies to collect data about their users
and generate traffic. This way they can find out which of their offerings are most
popular, and which are most frequently shared in user networks. But that is not all.
The Open Graph stores all of a user’s public data, which means all of the interests
he or she has listed (and made public) in Facebook, as well as all of the websites,
articles, products and many more things which he or she prefers. Facebook currently
provides companies with this data free of charge. Evaluating this data not only helps
companies to optimise their range of products, but it also helps them to personalise
their e-store to comply with user preferences. Visitors to an e-store can also see which
of their friends also Like the e-store and products. This makes shopping both more
personalised and more social at the same time.
“F-Commerce is a variety of social commerce. Companies
that have mastered all things “social” have the
potential to become the new eBay or the new Amazon.
I see enormous potential turnover in the social arena, because
there you can sell very close to your target group.
In this respect, Facebook is a very suitable platform with
hundreds of millions of users who can be activated.”
STATUS QUO
Facebook Commerce expands step by step: F-Commerce will spread over a number
of stages. The first stage is that the use of the Open Graph will make shopping
a personalised social experience. Users’ attention will be drawn to new products
by recommendations from their own networks, and they will also learn to share
their shopping experiences with others. The second stage is searching for products

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and presenting products directly on Facebook. Many brands are beginning to set
up storefronts on their Facebook pages, where they can present their products. The
purchase itself, however, takes place at the retailer’s own e-store. P&G, for instance,
currently uses its brands’ F-Stores as a learning platform on which to gather knowledge
about the shopping behaviour of its target group, and, as a non-retailer, about
e-commerce in general. Users have also yet to experience shopping on Facebook.
Once the acceptance of commercial offerings inside Facebook rises, then fully
integrated F-Stores will establish themselves in stage three.
Stage 1:
Generate and disseminate
product recommendations
[Open Graph]
Stage 2:
Product
presentation
[Storefronts]
Stage 3:
Complete purchase
transactions
[Fully integrated shops]
The success of F-Commerce depends on all of the players involved: As a multi-faceted
market, Facebook must remain an attractive platform to users as well as retailing
companies and service providers. But it is up to all of the players involved to shape the
future of F-Commerce.
“F-Commerce is made up of elements which users already
know and accept from e-commerce. All users have
to learn is that shopping is now possible on Facebook as well.
There is no need to build up trust in a new technology,
only in Facebook itself, and store-holders.
That will not take long: 18 months may be all we need.”
“F-Commerce is currently in a trial-and-error phase.
Companies are watching to see what others are doing,
and how much of that can be adapted.”
Stefan Wolk, Smatch
STATUS QUO

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From friendly
space to
marketplace
To Facebook, the rise of F-Commerce means entry into a new sphere since it opens up
additional sources of income. If F-Commerce succeeds, Facebook will be able to extend its
influence massively and will finally achieve key player status alongside Google, Apple and
Amazon. But Facebook will first need to prove itself to commercial enterprises and users
alike as a reliable partner.
Facebook is becoming the new online advertising giant next to Google: Facebook already
has more users per month than Google. On top of that, Facebook has access to extremely
sensitive personal user information, something which the social network is capitalising on by
means of advertising. According to eMarketer, Facebook posted a two billion US dollar
advertising turnover in 2010 (source: eMarketer, June 2011), a figure which is set to double
in 2011. Using Facebook, companies can reach target groups more effectively and efficiently
than ever before. The TechCrunch blog predicted back in June that Facebook would soon
overtake Google in terms of advertising turnover (source: TechCrunch, June 2011). But
Facebook still does not have any data about its users’ shopping habits. If the social network
manages to include a shopping history and product recommendations in its data set, then a
completely new range of business possibilities will open up to it.
PLAYER 1: FACEBOOK
“Facebook is giving F-Commerce a high priority. Positive results
in the field of social gaming have motivated Facebook to turn to
e-commerce as a source of sales – and e-commerce here is very
broad, ranging from music all the way to goods retail.”

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PLAYER 1: FACEBOOK
Facebook is giving a high priority to commerce: Facebook has
identified considerable potential sales in retail activities on its
platform, and in providing its data pool from the Open Graph.
The company can expect serious profits both as a retailer and
as a data aggregator, and it is pushing ahead with both types
of F-Commerce. Which of the two will in the end assert itself in
the market, and which will be the more profitable, is something
we cannot yet foresee. What is most important for Facebook is
to get a foot in the door to the retail world. That is why they set
up an internal Commerce Partnership Group in November 2010,
which is aimed especially at retailers and which will help them
to utilise Facebook as a selling tool. At the moment, companies
do not have to pay anything to use data from the Open Graph,
but this could change if at some point it becomes essential
for commercial businesses to access this data. In order not to
become dependent upon Facebook’s data pool, Amazon has
already installed its own “Like” button.
Mobile devices as an F-Commerce driver: 250 million users
are already accessing Facebook today using mobile terminal
devices. What is more, these users are twice as active as
stationary users. F-Commerce is currently unfeasible using
existing mobile apps. However, in June 2011 it became
apparent that Facebook is to pursue a new app strategy
by establishing an HTML5-based platform under the name
Project Spartan. In this way Facebook intends to bypass
Apple and Google and land its own cross-platform apps on
mobile terminal devices. Developers will be able to make
and market their own apps, and utilise Facebook instead
of Apple or Google as their infrastructure for processes like
payment, identification and so on. Facebook Credits would
then become the central payment system. It is still unclear
exactly what this platform will look like. What is certain is that
if Facebook succeeds in integrating mobile terminal devices
into F-Commerce, then F-Commerce will take off massively,
because so far only very few online retailers have managed to
sell anything via mobile devices.

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“It is still unclear whether Facebook will
become a kind of aggregator like Google, or
emerge as a retailer like Amazon. As an
aggregator Facebook would display products
while the purchase transactions would take
place on external websites. As a retailer,
Facebook would conduct the transactions
itself. What is probable is that Facebook will try
to keep users on its platform by means of a
payment and log-in solution.”
Stefan Wolk, Smatch
Growth is not infinite: So far Facebook has enjoyed constant,
rapid growth, but lately things have begun to falter. Although
the number of global users is still on the rise, user figures in its
core markets have for the first time declined for two
consecutive months. Six million users left Facebook in the USA
in May 2011 alone, and negative figures are also being posted
in Canada, the United Kingdom, Norway and Russia. This
development does not indicate a general exodus, but it does
indicate saturation. After all, Facebook has already reached
approximately 60% of the populations of the USA, Canada and
the United Kingdom. In any case there is no getting around the
fact that F-Commerce will depend for better or worse on
Facebook itself. What we can also say is that the half-life of
online platforms like AOL and social networks such as
Friendster and Myspace tends to be short. An exodus of users,
with the concomitant negative network effect, would have
colossal consequences for F-Commerce. There are certain
preconditions which Facebook will have to establish for both
users and businesses if it is to assert itself as a communication
and sales platform.
PLAYER 1: FACEBOOK
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What do you or would you dislike about shopping via Facebook?
I don’t want Facebook to know what I am buying
I don’t know whether shopping on Facebook is secure
I don’t want companies or brands to be able to access my personal data
I am afraid that companies or brands will be able to access my friends’ data
I don’t want to bother my friends with my shopping activities
I only want information from Facebook, not shopping
I don’t want to be disturbed by shopping activities on Facebook
I fundamentally distrust Facebook
I have no idea where to find stores on Facebook sites
I already have enough technical difficulties with Facebook as it is
55%
54%
53%
47%
41%
36%
31%
21%
21%
??%
PLAYER 1: FACEBOOK
24

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Facebook needs to become dependable: Facebook’s unique
status allows it to test its limits. New rules, regulations and
features appear unannounced, often without companies
receiving any notification or warning beforehand. Security and
data privacy are further concerns. If Facebook is to establish
itself as a retail platform, it will not only have to prove itself to
companies as more reliable, but it will also have to prioritise
security and data privacy.
Facebook must achieve security: Users still feel very uncertain
about shopping inside Facebook. Half of those asked do not
know whether it is secure to shop there (see chapter “Player 2:
Users”). These security concerns will disappear with time,
since only one in five people fundamentally distrust Facebook.
At some stage Facebook will introduce securer, i.e. encrypted,
data transmission; this will include, for example, the
introduction of secure HTTPS sites. But as well as that,
retailers will also need to convince their customers that it is
safe to buy from them (see chapter “Player 3: Companies”).
PLAYER 1: FACEBOOK

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Offer high security standards: Security will be a hygiene
factor in the still relatively unknown world of F-Commerce.
In that world, companies will have to offer the same security
standards as they do in their own e-stores. Collaboration
with entities such as Trusted Shops will ensure that F-Stores
fulfil all of the legal criteria as well.
Respect users’ private sphere: Users are worried about
how their and their friends’ data will be used. They also
value Facebook as a medium of information, and are
worried that a deluge of additional commercial messages
will destroy that experience. Restraint and data privacy
should be given the utmost priority.
Use F-Commerce as an accompaniment: F-Commerce
offers users (and retailers) new benefits over e-commerce.
At the moment, F-Commerce has the status of an
additional channel through which companies can offer
their customers a particular shopping experience; an
F-Store can complement an e-store, but not replace it.
Since the development of F-Commerce will depend very
much upon Facebook itself, companies would be well
advised to focus primarily on e-commerce so as to
preserve the greatest possible leeway for future decisions.
Lessons
for companies
PLAYER 1: FACEBOOK
DRIVERS
OBSTACLES
Summary: drivers and
obstacles from the point of
view of Facebook as a player
The commercialisation of Facebook
may not find acceptance
Facebook’s lack of credibility in
financial services
Reservations about data privacy
and security
Positive results in social gaming /
Facebook Credits
Potential source of income
Growing retailer demand
Users do not fundamentally
distrust Facebook

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Facebook is among the most private areas of the Internet, and brands and media are
gaining increasing access to this area through their fans. Yet this acceptance is something
they have to keep earning anew, in return for which they are granted access to their fans’
personal recommendations. Tact is required to sell things in these zones. The majority of
users view F-Commerce favourably at the moment, even though the actual benefits are as
yet unclear; users have insufficient experience.
Facebook is the new TV: Not being on Facebook
is becoming more and more uncomfortable for
users. All kinds of social activities are posted on
Facebook. “I’m not on Facebook” is the new “I
don’t have a TV”. The adaptation speed around
Facebook is however quite different from that of
television. Two-thirds of all users have not even
been members of the social network for two
years (source: Pew Research Center, June 2011).
As a result, users’ general experience of
Facebook is quite scant, and since the platform
is in continual change, the Facebook experience
itself is also in flux for its users.
From interaction to transaction: Facebook was originally used to stay in touch with friends
and relatives and to keep up to date with what they are doing. Like emails, Facebook dealt
with a very private sphere. This is now changing massively on account of the growing
presence of media and brands. Half of those asked in this study (52%) are friends with at
least six brands on Facebook. Two-thirds of them consider Facebook a place to follow all
relevant themes centrally (see chapter “Status quo”). With the spread of F-Commerce,
shopping activities and product recommendations are filtering into users’ private realms, and
since they come from users’ own Facebook friends, they carry considerable personal relevance.
Fans become
buyers
1–5 Brands
6–10 Brands
11–20 Brands
21–30 Brands
31–50 Brands
More than 50 brands
Don’t know
42%
30%
13%
4%
2%
3%
6%
Basis: 504 people polled between 20 and 39 years
of age; Facebook users who are friends with
brands and who shop online regularly.
HOW MANY BRANDS OR
COMPANIES DO YOU FOLLOW
ON FACEBOOK?
PLAYER 2: USERS

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Seeking relevant content: People who are networked with brands mainly want to
keep up with the latest news. The majority of those asked wish to be informed
about new products (86%), activities (84%) and special offers (77%). Two-thirds of
people (68%) want access to exclusive content which is only available on
Facebook. Three-quarters of those asked (74%) use brands as part of their own
identity, by showing their friends the brands and products that they think are great.
One-third of those asked (37%) seek direct dialogue with brands.
Discrepancy between desire and reality: However, what is revealed is that brands
only succeed in fulfilling their fans’ expectations to a limited extent. What people
want and what actually happens are two very different matters. If you ask users
why they follow the activities of brands and companies, then the discrepancy
emerges. Only 67% of those asked rate the information as interesting; 66% take
note of exciting events that are publicised; and only half (46%) think that they
receive good offers and discounts.
PLAYER 2: USERS
“Facebook is a communication channel and that
affects the mode in which members use it. Facebook
is used in a very different way from how people
browse e-stores. On Facebook, you mainly want to
entertain and be entertained, while in e-stores you’re
looking specifically for products.”

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PLAYER 2: USERS
Why do you befriend brands and companies by clicking on “Like”?
I want to find out early about the brand’s or company’s new products
I want to keep up to date with the brand’s or company’s activities on Facebook
I want to take part in special offers and competitions
I want to tell my friends that I like these companies and brands or products
I want access to content which is available only on Facebook
I want to be entertained by the brand or company, and to have fun
I want to be inspired and surprised by the brand or company
I want to contribute actively and comm unicate with the brand or company
86%
84%
77%
74%
68%
61%
59%
37%
PLAYER 2: USERS
31

32
Why do you follow the activities of certain brands and companies?
I receive lots of interesting information from the brands and companies
I am informed about exciting events and campaigns
I always receive good offers and discounts from the brands and companies
I find the activities of the brands and companies entertaining
I find the activities of the brands and companies inspiring
I follow what other users write on these brands’ and companies’ Walls
I forward interesting information from these brands and companies to my friends
I myself post things onto the Walls of these brands and companies
67%
66%
46%
39%
33%
32%
27%
16%
PLAYER 2: USERS
32

33
Shopping is highly viral: Anyone who supplies relevant or inspiring content will benefit
from Facebook’s highly viral nature. According to a recent ShareThis study, links relating
to entertainment and shopping are especially popular for sharing on Facebook. And
indeed, one in four of those asked passes on interesting information that he or she has
received from brands. Sharing is the new expression of appreciation (source: ShareThis,
June 2010). But for users to share product information, they have to feel genuinely
enthusiastic about the product or the information itself; contentment alone is not
enough. After all, by making these recommendations, users define their own profiles
within their networks.
“Mail-order and long-distance retailers can tap into new
customer strata using F-Commerce, but the question is how
to achieve and activate that. Much remains unclear, such as
what kind of a market will emerge and how much sales
pressure can be built up in a communication channel.
Companies will have to think about what is possible within the
scope of their own possibilities, and what suits them best.”
PLAYER 2: USERS

34
The majority of those asked view F-Commerce positively:
55% of those asked expressed an interest in the subject;
yet it is still very much in its early stages. Only 8% of those
asked have ever shopped in an F-Store. Twice as many, 16%,
have browsed in an F-Store but not bought anything. One in
three people did not know that such a thing exists but were
interested. This is where companies need to educate people
and give them a positive taste of F-Commerce.
Sceptics are also many: 45% of those asked are not at
all interested in F-Commerce. This dismissal is in part
fundamental; users wish to keep Facebook a non-commercial
place for friends. But some of it is also due to a lack of
experience and imagination on the part of users. Once people
experience F-Commerce for themselves, or once their friends
experience it, the number of sceptics will drop.
PLAYER 2: USERS
34

35
I have already bought
something in a store
directly on Facebook
31%
16%
8%
45%
I didn’t know it was
possible but I find the
idea interesting
I have never bought
anything from a store
directly on Facebook,
nor do I intend to
Basis: 504 people polled between 20 and 39 years of age; Facebook users who are friends with brands and who shop online regularly.
PLAYER 2: USERS
I have browsed in a
store on Facebook
before, but I have never
bought anything
To what extent have
you already shopped
on Facebook?

36
The benefits of F-Commerce are not yet clear: Convenience is currently the
clinching argument for shopping on Facebook. 36% of users consider it practical
and time-saving not to have to leave Facebook to shop. 32% like to receive great
offers and discounts as direct News Feeds. 30% of those asked view Facebook
as a channel for exclusive products. One in four people expect to receive better
offers than they do at normal online stores.
The social aspect of F-Commerce is far less important by comparison: 19% like
it that others can see and comment on what they have bought, but only one
in ten is motivated to shop together with friends. These relatively low approval
figures point once again at a lack of experience and to users’ security concerns
about F-Commerce (see chapter “Player 1: Facebook”).
It’s practical and it saves time because I am on Facebook anyway
It saves time looking, Great offers and discounts are sent to
me direct by News Feed
Brands’ and companies’ Facebook Stores give me products
that are only available for a limited period
I’m not interested in shopping via Facebook sites
When I shop at brands’ and companies’ Facebook Stores,
I get better offers than I do at their online stores
Brands’ and companies’ Facebook Stores let me buy products
that I can’t get anywhere else
My friends comment on and respond to my purchases
I shop where I can meet like-minded people associated with
brands or companies
It’s more fun shopping via Facebook
I can go shopping together with my friends
36%
32%
30%
29%
26%
22%
19%
12%
12%
9%
WHAT MOTIVATES OR EXCITES YOU ABOUT SHOPPING AT BRANDS’
AND COMPANIES’ FACEBOOK SITES?
Basis: 504 people polled between 20 and 39 years of age; Facebook users who are friends with brands
and who shop online regularly.
PLAYER 2: USERS

38
Intangible goods have the greatest potential: Although the social aspect is less commonly named
as a benefit of F-Commerce, immaterial goods are currently among the most popular. These
are things that can be given easily to others or shared. Providers like Ticketmaster generate an
additional 5.30 US dollars of turnover for every ticket they sell via Facebook. Starbucks allows its
customers to manage their customer cards on Facebook, by topping up their bonus cards and
iPhone payment cards in the company’s F-Store. When users were asked which areas they can
imagine shopping in using Facebook , the top two answers were tickets for events and travel (64%),
and vouchers of all kinds (62%). Further down the list come media such as books, magazines, films
and music (57%), and fashion (46%). In view of this, the deals being pushed by Facebook (online
discount coupons) have a good prospect of success, since everything seems to indicate that
trading on Facebook using coupons will work.
All kinds of vouchers
Tickets for events and travel
Books, magazines, films and music
Clothes, shoes and fashion accessories
Electronic equipment and accessories
Travel and hotel accommodation
Games and virtual goods (e.g. for FarmVille, Mafia Wars)
Cosmetics and bodycare products
Sports equipment and products
Furniture and household accessories
Food and drink
Medicines and medical products
DIY products and accessories
Cars, motorcycles and accessories
72%
71%
65%
55%
45%
42%
44%
38%
32%
28%
25%
22%
20%
18%
62%
64%
57%
46%
38%
39%
36%
32%
27%
24%
21%
18%
17%
15%
10%
7%
8%
9%
7%
3%
8%
6%
5%
4%
4%
4%
3%
3%
Basis: 504 people polled between 20 and 39 years of age; Facebook users who
are friends with brands and who shop online regularly.
Total Already
purchased
Can imagine
purchasing
YOU CAN NOW SHOP ON FACEBOOK AS WELL. WHAT HAVE YOU BOUGHT SO FAR AT
FACEBOOK STORES BELONGING TO BRANDS AND COMPANIES, OR IN WHICH AREAS
CAN YOU IMAGINE DOING SO?
Spontaneous buying dominates F-Commerce: User behaviour still varies widely between the
fields of e-commerce and F-Commerce. Users browse Facebook initially without any particular
intention to buy. The shopping process tends to begin coincidentally when they receive Trusted
Discoveries via News Feed. Users tend to skip searching, researching and comparing sellers
PLAYER 2: USERS

39
PLAYER 2: USERS
“Exclusive offerings on Facebook, such as the Joop pop-up store,
attract attention and therefore alert consumers to F-Stores in
general. Sooner or later people will go to Facebook just to look for
an F-Store, in the knowledge that they can obtain better offers
there. This will change what people expect from Facebook.”
Users are optimistic about the future of F-Commerce: Even though 45% of users cannot yet
imagine shopping on Facebook, the majority of them do believe that shopping will become a
permanent feature of the Facebook experience in the future. 70% of those asked state that
shopping on F-Stores will at some point become normality.
In a few years, shopping on Facebook or using Facebook to shop
online will become normality
I would be more likely to shop in Facebook Stores belonging to
smaller businesses that I know well than I would in those belon-
ging to brands and big companies
I would be more likely to shop in Facebook Stores belonging to
stars, celebrities, musicians, sports clubs and so on than I would in
those belonging to brands and companies
I would be more likely to shop in Facebook games (e.g. FarmVille)
than I would in Facebook Stores belonging to brands and companies
No response
70%
41%
21%
21%
18%
AGREEMENT WITH STATEMENTS
(Top two answers: agree completely / basically agree)
if they receive a recommendation from within their personal networks. They see something, like
it – and grab it. Products that do not require detailed research and which offer immediate rewards
will sell more easily on Facebook than products that require a lot of information. Traditional
e-commerce channels are more suited to intensive research, price comparisons and so on. But
with the growing number of commercial offerings, Facebook users will gradually change modes:
they will visit F-Stores specifically to look for exclusive products and special offers.

40
PM40110178
C A N A D I A N E D I T IO N / M O N T H O O, 20 07
PM40110178
M AY 31 , 2010
w w w.t im e.c om
Elections:
IstheParty
over?
Arts:
Ourbestpicks
forsummer
Justice:
Howtoprove
innocence
Withnearly500millionusers,Facebook
isconnectingusinnew(andscary)ways
BY DAN FLETCHER
...and how it’s
redeﬁning privacy
TIME writer
Dan Fletcher
One of the
1,295 people on
this cover picked
from our Facebook
group “I Want
to Be in TIME”
Facebook CEO
Mark Zuckerberg

41
Lessons for Companies
Offer special benefits: Users expect a special shopping experience on Facebook. As fans
they want to enjoy exclusive offers, unique products and generous discounts. Shopping on
Facebook should offer immediate rewards that motivate users to talk about their purchases.
This includes, for instance, dynamic group shopping experiences. Companies can also use
group purchases to reach new consumer strata.
Sell by communicating: Commerce must adapt to Facebook’s communicative mode of use.
Communication and networking will continue to play a major role. Selling must be perceived
as an enrichment and not a disturbance. Products whose purchase does not require a lot of
research are especially suitable.
Generate positive experiences: For Facebook to establish itself as a sales channel, it is
crucial that users get a positive taste of F-Commerce. This includes products being depicted
in the right way, and a good overall user experience. The products themselves should also
generate enthusiasm and should be unique.
Gain entry using intangible products: Immaterial things such as vouchers, discount codes and
coupons are especially suitable for gaining entry into F-Commerce; they are particularly easy to
buy. Giving them away generates word-of-mouth propaganda. This way companies can acquire
experience in F-Commerce, and try out products to see which ones create a lot of buzz.
PLAYER 2: USERS
Summary: drivers and obstacles from the point of view of USERS
DRIVERS
OBSTACLES
Decisive benefit now: time-saving and practicality
Decisive benefit tomorrow: shopping as a shared experience
Special, exclusive or personalised offers
A special shopping experience that is fun and entertaining
Trustworthy product recommendations provide orientation
Share expertise and build up a profile through recommendations
Concern about personal data
Fear of spam
Benefits over online stores not yet clear

42
PLAYER 3: COMPANIES
PLAYER 3:
COMPANIES

43
PLAYER 3: COMPANIES
Selling by
Communicating
What was previously a communication channel is becoming a sales channel. To
companies this means new ways of capitalising on their customer relationships. Unique
communication and sales concepts are appearing which are only feasible on Facebook.
Companies already active in the field of F-Commerce can profit from their head start and
from the profiles they have built up.
Facebook site vs. brand website: Facebook is gradually evolving into a mini-Internet all
of its own, with all the possibilities and features which the World Wide Web has to offer.
Brands’ and companies’ Facebook sites are competing for attention with their own
websites. Half of the people asked in this study visit brand and company Facebook sites
more often than their official websites, although a slight majority (54%) still spends more
time on the latter. Some companies have even gone as far as replacing their brand or
company websites with Facebook pages. Despite this it does seem that websites and
Facebook sites each have their own raisons d’être. Seven out of ten of those asked
believe that Facebook sites aim especially at fans (70%), while websites are intended for
anyone who is interested (75%). Facebook sites are considered more up to date than
websites (71%), and 57% of those polled consider it more fun to follow the activities of
brands and companies on Facebook than it is to visit their regular sites.
News Feed vs. Facebook site: As a fan of a brand or company there are two ways of
receiving information within Facebook: via News Feed or on the brand’s Facebook site.
Since the News Feed is the heart of Facebook usage, activities publicised that way
attract a lot more attention than a Facebook site on its own. Not only can you
communicate by News Feed, you can also sell. For example, flower delivery company
1-800-Flowers offers selling options directly by News Feed. But there are also good
reasons to visit the site itself: one in two (50%) people visit Facebook sites to look for
information. One in three (34%) post their questions directly on the Wall in order to
obtain information. These different access methods must all be taken into consideration
by any company planning an F-Store.

44
PLAYER 3: COMPANIES
Comparing the websites of brands and companies with their Facebook
pages, to what extent would you agree with the following statements?
Top two answers: agree completely / basically agree
I visit the Facebook sites of brands and companies more often than their websites
I spend more time on the Facebook sites of brands and companies than on their websites
It is more fun to follow the Facebook activities of brands and companies than it is to visit their websites
The Facebook sites of brands and companies are aimed directly at fans
The websites of brands and companies are directed at anyone who is interested in them
The Facebook sites of brands and companies are more up to date than their websites
I post questions directly on brands’ Walls in order to find things out
I use the Facebook pages of brands and companies to look for information
53%
46%
57%
70%
75%
71%
34%
50%
44

45
Designing a dedicated F-Store: F-Stores can be categorised
according to three aspects: their level of implementation, the
duration of what is offered and the type of things that are offered.
These three dimensions can be combined with one another in very
different ways.
Low level of implementation: storefronts. These are product
presentations with a link to an external store. Brands like P&G,
Nivea and Mexx use their F-Stores for presenting products. The
shopping itself takes place either in the brand’s own e-store
(Nivea) or in e-stores belonging to retailers (P&G). In this way,
companies investigate whether Facebook users are interested in
their products within the social network. Storefronts represent the
second stage of F-Commerce, and we can assume that they will
gradually be replaced by fully integrated shop solutions.
High level of implementation: fully integrated shops. The entire
shopping procedure including payment takes place on Facebook.
British clothing mail order company ASOS, porcelain manufacturer
Kahla and Fahrrad.de offer fully integrated solutions of this kind
on Facebook.
Permanent stores: The F-Store is built up and established long-
term as a sales channel. The F-Store becomes a rival to the e-store.
PLAYER 3: COMPANIES

46
“The entertainment factor is very important
in F-Commerce at the moment. In the
long term it will also be possible to accommodate
whole ranges of products inside Facebook,
while the advantage is that you can show users
only those products that really interest them.
The Open Graph gathers demographic and
psychographic data which enables this kind of
personalised preselection.”
Stefan Wolk, Smatch
Standard tools vs. customised F-Stores: When implementing
their F-Stores, companies have the choice between
prefabricated tools (shop applications) and customised solutions
(canvas pages).
Shop applications: Shop pages can be integrated directly into
Facebook in the form of prefabricated solutions. Users do not
have to leave Facebook in order to visit an F-Store. Images,
however, are limited to a size of 520 pixels.
PLAYER 3: COMPANIES
Pop-up stores: This version offers its fans limited-duration sales.
For instance, in June 2011 Joop offered exclusive, limited-edition
products for a period of ten days on its pop-up store. Campaigns
of this kind are suitable for drawing attention to special offers
and activities, and for generating interest. They can be used for
discounts, product launches and exclusive products.
Standard range: Users can buy products in the F-Store which
are also available elsewhere. ASOS, for example, offers all of
its 150,000 products for sale on Facebook just as it does on
its regular online store. In this approach the F-Store competes
directly with the e-store.
Exclusive offers: The F-Store is used to offer products just for
fans. These products are available only on the F-Store. This
approach serves to deepen relationships with fans. Pantene
(P&G) was one of the first brands to enable its fans to buy new
products which were not yet available in the shops.

47
Canvas pages: These individually designed sites are implemented in external applications.
A canvas page can be designed in a company’s corporate design, but it does not have as
many features as a shop application. Another drawback is that to get to a canvas page you
have to leave Facebook.
Using Facebook to personalise stores and websites: Facebook uses its Open Graph to
collect a lot of personal information from users and provide it to companies. Levi’s and Etsy
(a marketplace for handmade products), are well-known examples of companies who use
Facebook’s data pool to personalise their websites. People who use these websites receive
personalised product recommendations and gift ideas. However, the Levi’s Friends Store
is a case in point of how the Open Graph protocol does not yet reflect reality. Despite Levi’s
2.9 million fans, no more than 500 people have clicked on Like for its 501 Stonewashed
Jeans. Users are accustomed to clicking Like for brands, but not yet for products.
Brands as retailers: F-Commerce offers companies the possibility of setting up their own
branded F-Stores. P&G has set up channels for buying seven of its brands (including Tide,
Gillette and Febreze) via a number of retailers. Users decide whether they would prefer to
buy the selected products from Amazon or from Wal-Mart. Nivea, on the other hand, directs
users to its own online brand shop. A new era is approaching for pure retailers: they will
have to come up with good marketing concepts to counter stiffer competition.
“Facebook is made not for companies but for users. That’s why
F-Commerce will suit companies who are able to adjust to
Facebook. The only approach which promises to succeed in
F-Commerce is that of conventional market orientation: you
adjust your range to the target group who are on Facebook
or who are following you on Facebook.”
Jochen Krisch , Exciting Commerce
Companies experiment with communication strategies: F-Commerce is a testing ground for
varying communication and marketing approaches. In place of microsites, more and more
companies are utilising Facebook applications for promotions and product launches. Three
types of F-Commerce offerings have so far emerged.
Promotions: Fans expect special treatment and exclusive access to offers and information.
There are various ways in which companies can reward their fans. As part of a fan-first
campaign, Heinz Ketchup sold a new product to its fans before the official launch. Fans-
only offers are directed at fans and nobody else. Coca-Cola successfully sells merchandise
products in its F-Store.
PLAYER 3: COMPANIES

48
Deals and group purchases: Depending on the number of fans a company has,
vouchers and group discounts can be offered in a dedicated channel or on an external
platform. Wal-Mart, for example, has its own Crowd Savers scheme. ShopShare offers
a Deals feature on its Facebook page. This allows offerings from smaller suppliers to
be scattered over various channels and therefore reach more prospective customers.
Gamification: Facebook has already proven itself as a platform for social games.
Retailers are now attempting to combine gaming mechanisms with their trade. On
the Facebook page of fashion brand Wet Seal, users can put together outfits from
the F-Store and compete against one another, which the retailer hopes will attract
attention and generate extra sales.
“Retailers will have to master all things social. You have to
know how to handle recommendation mechanisms and how
to build up relationships. The challenge is customer loyalty –
continually binding people to the things you have to offer.”
Dialogue and interaction required: F-Commerce is fundamentally changing the role of
social media. Its aim is to convert Likes into Buys. Clicking on Like to indicate brand
preference is something which precedes actual sales, which is why dialogue with fans
is at the heart of F-Commerce. Purely sales-based or advertising approaches will not
succeed in a social network.
PLAYER 3: COMPANIES
Jury still out on efficiency: The effectiveness of F-Commerce remains low in
comparison with other channels. Click-through rates fluctuate between 1% (source:
Forrester Research, April 2011) and 6.5% (source: Fluid, April 2010). Only 2% of these
become actual sales. By comparison, email campaigns generate a click-through rate
of 11% and a purchase conversion rate of 4%. In the early stages of F-Commerce it
will be up to companies to establish their own soft and hard success criteria and set
benchmarks. Referrals, Comments,
48

49
PLAYER 3: COMPANIES
“Interactivity is the primary
precondition for F-Commerce,
and to succeed in it, retailers
will have to think up a good
mix, preferably of news,
competitions, and feedback
campaigns. Product can also be
presented, but not too many
or too often. Presenting products
every day like clockwork does
not work. The exception is
a dedicated page for products
at which users who become
fans expect frequent, purely
product-related information.”
Stefan Wolk, Smatch

50
PLAYER 3: COMPANIES
Likes and Shares
are parameters
which are just as
important as the
actual sales
themselves. New
statistics such as
“sales per Like” and
“sales per Share”
are emerging.
50

51
“Facebook is a marketing tool and not a sales channel. This of course
has implications for the F-Store and the things presented there for sale.
These sites therefore need adapting accordingly. That begins with the
choice of shops and ends at the products sold there. Especially suitable
for selling on Facebook are products that are new, particularly suited to
fans, and liable to bring fans benefits.”
Battle for channels: So far Facebook has been used as a platform for building up brands
and communicating brand personalities. Social media activities fall within the remit of
marketing and communication departments, whereas e-commerce is normally the precinct
of sales. The rise of F-Commerce will fuel the fundamental conflict between marketing
and communication on the one hand and sales on the other, and the question of whom
Facebook belongs to as a channel – and whom the fans belong to – will have to be
renegotiated. While marketing and communication organisations build up relationships
with fans and are measured in terms of their satisfaction, it is the logic of selling which
dominates sales departments. This will demand some new thinking.
Security is a hygiene factor: In terms of security, retailing companies must apply the
same security standards to their F-Stores as they do to their e-stores. Security seals from
Trusted Shops and McAfee Secure guarantee the same high standards as they do in online
shops. There are however black sheep in the field of F-Commerce whose behaviour could
discredit F-Commerce and slow its growth.
PLAYER 3: COMPANIES
“F-Stores must comply with German law. Sadly there are
providers, some of them well-known companies, who have
ignored this and who are risking disciplinary action.
This threatens the general acceptance of F-Stores. Collaboration
with companies like Trusted Shops guarantees that an F-Store
fulfils all of the legal criteria.”
Monetary benefits for companies remain low: Companies are still viewing F-Commerce
as an investment. Although some F-Stores are attracting a lot of customers, large-scale
monetary success is still a rarity. According to ShopShare, its customers generate with
their F-Stores approximately 2 to 5% of what they sell on their e-stores. At its current
stage, F-Commerce functions more as a marketing tool than a sales channel. The focus
is primarily on customer loyalty and customer involvement. The number of customers
is as low as their willingness to spend money. More lucrative market opportunities will
open up as F-Commerce continues to establish itself.

52
Lessons for Companies
Define your own benchmarks: You can’t apply the same quantifying criteria to all channels.
The rate of conversion from visitors to buyers is lower on Facebook because people do not
visit Facebook intending to buy things – at least not yet. Companies will have to look behind
the figures and establish their own benchmarks. “Sales per Like” and “sales per Share”
define the quality of customer relationships on Facebook. The number of repeat buyers and
recommendations expresses the satisfaction of fans.
Do not replicate e-stores: Instead of producing carbon copies of their e-stores, companies
should attract attention and create relevance by means of new concepts. Facebook is highly
suited to experimenting with unique communication approaches. Time- and volume-linked
offers, as well as fan-first and fan-only products, increase desirability and promote word-of-
mouth propaganda.
Observe user behaviour: Facebook Insights offers a series of standard criteria which companies
can track, such as the growth of fan numbers, interactions between fans and migration rates.
Evaluating these figures allows you to determine whether your Facebook site is delivering
relevant content. Companies can also use these figures to learn which incentives are
successfully converting fans into customers.
Wall as shop window: Facebook is still not a platform for searching for products. Users are
more likely to happen upon recommendations from their friends, or receive information about
interesting products as a News Feed. Companies’ own Walls and News Feeds function as a
kind of shop window that offers inspiration and ideas. Companies should try to design their Walls
like shop windows that carry attractive offers.

53
Fulfil new expectations: On Facebook, users are learning that their status as fans gives them
access to exclusive information and offers and that they do not receive this special treatment
anywhere else. Companies should always take this reward aspect into account in order to
encourage further recommendations and word-of-mouth publicity.
Utilise personalisation: Access to Facebook’s data pool gives companies the opportunity
to personalise their offerings by doing things like providing users with personal product
recommendations. Facebook also offers a series of social components. Companies can set
up wish lists in their F-Stores, which are then activated for friends (e.g. Bulgari).
PLAYER 3: COMPANIES
Summary: drivers and obstacles from the point of view of companies
F-Commerce offers an additional channel
Platform for unique communication concepts
High virality allows new customer strata to be opened up
Free to use data pool
DRIVERS
OBSTACLES
Additional investments
Effectiveness not yet proven
Lack of benchmarks
Potential for dependency on Facebook and its data pool
User anxieties about data privacy and security

54
There is nothing more
social than going shopping
Interview with Christoph Strassburger,
Director of Social Media and Web TV at HORNBACH Baumarkt AG
It seems as if for companies, Facebook is transforming from a communication channel into a
sales channel. How do you view that?
I do think there is a certain danger of people leaving Facebook if commercialisation goes too far,
especially heavy users. But the big benefit of Facebook as a platform for exchange is that more
and more aspects of life are taking place there, and that includes shopping.
There is nothing more social than going shopping. To us as a company, F-Commerce means an
opportunity to place our products precisely where dialogue is taking place with our target group.
How much involvement has HORNBACH had so far with F-Commerce?
None yet. But what we have learned is that simply plonking products from our e-store onto our
Facebook page does not elicit good feedback. If, however, we package the items appropriately,
such as incorporating them into a story or combining them with a survey, then this kind of link-
scattering functions well. We have not yet sold anything via Facebook itself, but sooner or later
we are bound to try it out.
Companies are often advised not to place their whole product range on Facebook, but instead
to think up deals and special offers. Do you agree with that advice?
We too believe that you shouldn’t replicate your e-store on Facebook. You have to offer users
something else of benefit aside from what e-stores offer, over and above the fact that you don’t
have to leave the platform to buy on Facebook. Other benefits might include exclusivity and
individually tailored products or packages (e.g. for students). Full product ranges are already
working in the USA, but over here it will be a couple of years or so before we get to that.
US experts are the ones who are forecasting that F-Commerce could be bigger than Amazon or
eBay. Do you share that view?
Facebook could potentially outdo them all, yes. The biggest advantage of Facebook is that it
doesn’t originate in commerce. Facebook offers a large spectrum of features and possibilities;
you can do on Facebook all the things you do in real life. At the moment there is no other
platform that offers that. Maybe one day we will differentiate between the World Wide Web and
Facebook because a parallel world will have established itself there.
But commercialisation could cause users to leave…
Facebook mustn’t switch over immediately, it should introduce users gradually to the concept.
It should be a flowing transition. If users always order their books from Amazon, then one day
they might well try out Amazon’s F-Store. Once that has happened, retailers that are not so
deeply involved in the online world (like DIY markets) will begin to try out F-Commerce. Just as
Amazon and OTTO paved the way for us into e-commerce, so they will also be the pioneers of
F-Commerce. If it is done cleverly and not too pushily, then users will accept F-Commerce and
will tend to see the benefits rather than the drawbacks.

56
PLAYER 4: SERVICE PROVIDERS
PLAYER 4:
SERVICE
PROVIDERS

57
“The providers with the greatest potential are those
who specialise in F-Commerce and who can
combine the functions and features of Facebook with
other successful e-commerce elements.”
New Players
Emerge
F-Commerce means combining communication with trade. This will require different
fields of expertise to be brought together and new approaches to be tested.
Intermediaries will fill in the gaps in expertise that emerge. New business models are
arising in the fields of shop software and F-Commerce consulting.
Demand for new services: The rapid growth of F-Commerce is thanks not least to its
openness to external developers. New applications are enriching what is on offer but
they are also making things complex. The myriad possibilities which the new sales
channel is unveiling bring with them new challenges for companies: how do you sell
things in social media? Which shop solution suits our brand and our products best? How
much selling pressure can we build up? The combining of communication and trade on
Facebook is resulting in new fields of business.

58
Selling by communicating: In F-Commerce, the products have to find their way to the buyer
and not the other way around. That is why it is not enough simply to place your products on
your Facebook page. High-profile campaigns should not only reach potential customers, but
they should also stimulate interaction between users and the brand, and between the users
themselves. The phases before and after purchase in which the product is shared and
recommended are just as important as the sales transaction itself. A seamless transition
from interaction to transaction will be the future aim of marketing campaigns on Facebook.
The new challenge facing social media specialists will be to combine storytelling with
product selling.
Finding a shop solution: There are various ways in which companies can incorporate their
products into Facebook, ranging from pure product presentations all the way to purchase
transactions. The different manifestations of the F-Store are listed in the “Companies”
chapter. The main factor which will determine the choice of service provider – aside from
the level of implementation of a company’s products – is the technical implementation
itself. Companies can choose between prefabricated and customised shop solutions.
Automation: An automatically produced storefront offers the quickest way to enter
F-Commerce. This storefront is often linked to products in a company’s own e-store or
their Amazon or eBay shop, and then integrated into the Facebook page as a shop
application. The shopping platform Tradoria and shop supplier ShopShare are currently
busy implementing a feature which, at the click of a button, will create storefronts for the
platform’s 4,000 shop customers and integrate these in Facebook. Payvment is one of the
best-known providers of shop solutions alongside ShopShare. It offers a special application
which enables customers to place products into a central shopping basket, and take them
with them to other fan pages that support Payvment Shops, where they can then add
more products.
Customisation: Companies that opt for a customised solution enjoy more ways of designing
their store visually and giving it different features. The “Companies” chapter provides an
overview of this. Service providers like ShopShare and Adgregate can assist with the relatively
complex conceptual and technical implementation processes.
Reaching potential customers: Getting people to find you and your products on Facebook
is one of the biggest challenges facing retailers. One solution is offered by marketplaces
which aggregate products, thus simplifying search and comparison processes. Examples
of these are:
Payvment Shopping Mall enables cross-shop buying inside Facebook. The platform
encompasses approximately 1.2 million products. (Source: Facebookbiz, February 2011).
Smatch is a centralised platform enabling comprehensive product searches and
comparisons inside Facebook. Users will find around 2.5 million products
offered by 700 partner shops.

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60

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Soap is a Facebook application from Amazon. This marketplace for drugstore products
offers complete purchase transactions.
Facebook is evolving into a central location for products enriched with social information. In
the future users will look to Facebook for presents for their friends, or to find out what their
friends are recommending before purchasing. This means that the actual benefit of these
marketplaces is not just the aggregation of products but also the intelligent incorporation of
user data from the Open Graph.
Creating a special shopping experience: Aside from shop solutions, a series of standardised
applications and features is emerging that can be incorporated into companies’ marketing
concepts. The foremost of these include Deals, in-feed sales and commerce widgets.
Deals: group purchases have a big future on Facebook. Established suppliers like Groupon
are harnessing the viral nature of Facebook by publicising deals using referrals. Numerous
other platforms and concepts are springing up as well. ShopShare offers a deals feature
which, unlike Groupon and others, is especially suited to offerings that are fixed in location.
Group purchases are scattered across different platforms in order to reach as many potential
customers as possible.
In-feed sales: Sales that take place directly inside News Feeds are especially suitable for
impulse buying. This kind of selling has already been tested for the sale of virtual goods in
social games. Flower delivery company 1-800-Flowers has also used it successfully.
(Source: Internet Retailer, February 2010). 8thBridge is another company offering this
feature.
Commerce widgets: Widgets are mini-shops that can be placed anywhere where the target
group spends time. They are able to present products and also support a payment system.
Commerce widgets can be integrated into a Facebook page and also scattered in the Web,
e.g. on Facebook, Twitter and blogs. Sellaround and Moontoast offer this feature.
Innovation is slowing at Facebook: Facebook is now so large that it takes a lot of time to roll
out new features and functions. It took many months before Facebook email came onto the
market, for example. This means there is an opportunity for smaller, more agile companies
to occupy new areas of business with innovative concepts, ranging from entertaining,
group-dynamic concepts like deals and social games all the way to applications enabling
personalised product ranges and highly individualised marketing, such as in-feed sales.

62
“The first one or two years of
growth in F-Commerce will
be initiated above all by
campaign and deal providers
because it is they who lean
most heavily on the buzz and
communication aspect. After
that, F-Commerce will
establish itself more broadly.
We should however assume
that it will tend to be newer
companies who conquer this
territory for themselves.”
62

63
Lessons for
Companies
Gather empirical data: F-Commerce is
not yet a sales channel. Turnover generated
by an F-Store is currently only around
2–5% of that of an e-store. Exaggerated
sales forecasts should therefore be eyed
with suspicion. Serious consultants can
offer benchmarks and supply dependable
empirical data.
Consider certification: F-Stores must
comply with the law. When you choose
a shop software supplier, remember that
security seals from Trusted Shops or McAfee
Secure guarantee that this is the case.
Fill in gaps in expertise: F-Commerce
demands an interdisciplinary approach.
In order to develop high-profile
campaigns, companies will be turning to
intermediaries who can offer combined
skills such as digital brand management,
marketing (CRM), data analysis, software
development and game development.
Summary: drivers and obstacles from
the point of view of service providers
DRIVERS
OBSTACLES
Open interfaces facilitate free Facebook
integration
Trial-and-error phase: companies experiment
with different features and approaches
Need for information: service pro-viders can
give themselves a profile with benchmarks
and empirical
values, thus attracting attention to their
products and services
Facebook is driving the commercial-isation
of its platform with its own features (Deals)
and its own currency (Credits)
Profits still relatively low
The majority of companies still tend to look
down on F-Commerce
Basing your business model on Facebook could
be risky because F-Commerce may flop, and
Facebook may begin to charge money

64
Buzz
Buzz refers to the viral propagation of
information – in other words, fast
communication from one person to another.
Many of the Facebook platform’s features
are viral in nature because they are
designed to introduce information quickly
into a user’s network.
Click-through rate
The click-through rate is a statistic which
measures the efficiency of online
campaigns. In the case of Facebook
Commerce it refers to the ratio between the
number of people who visit a Facebook
page containing products and the number
of people who then go on to visit the
retailer’s online shop.
Commerce widget
This is a small application that can be
integrated into websites, blogs and social
networks in order to present products for
sale. Within Facebook, presenting products
using a commerce widget provides more
possibilities than presenting them in the
conventional way within the supplier’s News
Feed.
Comments
The Comments function is a social plugin
which can be integrated into websites
outside of Facebook by means of a
comments box. If somebody comments on
the content of a page, then this comment
appears on the user’s Wall, and therefore
automatically in the News Feed supplied to
his or her friends.
Facebook apps
Facebook apps are small applications that
can be integrated within the platform on
users’ profile pages or on companies’
pages. Aside from the applications which
Facebook has developed itself, many others
are provided by external suppliers.
Facebook apps can take the form of games
or communication applications of many
different kinds.
Facebook storefront
A Facebook storefront refers to the way a
supplier presents its products on its
Facebook page. If a user wants to buy a
product on the page, then he or she is
diverted to an external online shop in order
to make the purchase.
Fan-first/fan-only items
These are products supplied by a
manufacturer or retailer which either appear
earlier than in regular shops or online stores,
or which are sold exclusively to the fans of a
particular page on Facebook.
HTML5
HTML is a text-based markup language
used to define the structure and look of
Glossary

65
content such as text, images and hyperlinks
in Internet documents. Its latest version,
HTML5, offers extended functionalities for
doing things such as incorporating audio and
video elements.
HTTPS
HTTPS is a network protocol used to encrypt
and authenticate communication between
web servers and browsers in the World Wide
Web. This protocol can be used to protect
data from being spied on by third parties.
In-feed sales
In-feed sales refers to presenting and
selling products within the News Feed of
a Facebook user.
Like button
The Like button is a Facebook social plugin
which can be integrated into external
websites. Clicking on the Like button
publishes the content of an external website
on the user’s own Wall in the form of a link
referral, and thus places it in the News Feed
going out to their friends. It also creates an
entry on the user’s profile under “Activities
and Interests”.
McAfee Secure
McAfee Secure is a service which examines
online shops daily for gaps in their security,
and can even rectify them in some cases.
This reduces the danger of hacker attacks,
and of unauthorised access to the site, and
therefore makes the online shop more secure.
Mobile apps
Mobile apps are applications for smart
phones and tablet PCs which are usually
purchased via a sales portal integrated into
the operating system, allowing them to be
installed directly.
News Feed
The News Feed is integrated into the
homepage of every Facebook user. It is here
that all of the news and interactions issuing
from that user’s friends or from pages which
he or she “Likes” are fed in by means of an
algorithm in the form of news.
Open Graph
The Open Graph protocol is one of the core
functions of the Facebook platform. This
interface offers developers the possibility of
accessing data associated with the users of
the Facebook platform. The various social
plugins such as Likes and the login and
Comments functions enable the content of
external websites to be integrated into the
social graph of any given user – which means
his or her friends, interests and activities.
Conversely, the content of Facebook can be
integrated into external websites, and the
way those websites display, thus customising
these websites for particular users.

66
Opt-out principle
The opt-out principle assumes by
default that every user agrees with
processes requiring consent. To decline
something you have to opt out actively.
For example, changes to the Facebook
platform are adopted automatically for
every user profile. Users can only
prevent this from happening by changing
their settings so that the change does
not take effect.
Pop-up store
Pop-up stores are Facebook shops which
appear on a user’s homepage at particular
times if the user is a fan of the shop
provider. Pop-up stores are suitable for
targeted campaigns such as the launch of
a new product.
Share function
The Share function is a social plugin
which can be integrated into websites
outside Facebook using the Share
button. When you click on the Share
button, content from the external
website is posted on your own Wall in
the form of link referral, or in the News
Feeds sent to a friend, including
commentary. Facebook itself no longer
communicates the Share button, since
its function is now fulfilled by the Like
and Send buttons.
Social commerce
Social commerce refers to a specific
version of e-commerce in which the active
participation of customers, and
communication between them, supports
the buying process. Familiar elements of
social commerce are product
recommendations and customer reviews.
Social games
Social games are gaming applications,
usually free, that are offered on social
network platforms. Users can play with
or against their online friends, and
measure themselves against each other.
The best known social game at present
is Zynga’s FarmVille development game.
Social plugins
Social plugins are elements that are
integrated into external websites, thus
enabling their content to be passed on
or shared on social media platforms. The
most familiar social plugin is Facebook’s
Like button.
Trusted Shops
Trusted Shops is a company which
certifies online shops. Its seal of quality
certifies that the online shop fulfils
certain criteria relating to security,
seriousness and data privacy and can
thus be considered trustworthy by
customers.
Trusted Discovery
This refers to products discovered in the
News Feed of a Facebook user and
recommended or forwarded by friends.
User backlash
User backlash is when members of a
social media platform reject and protest
about measures implemented by the
platform’s operator.

67
Sources
Status quo
Inside Facebook Gold: “Audience growth on Facebook“, June 2011, http://bit.ly/fvt3j7
AdAge/Ipsos survey: “What consumers want from brands online“, February 2011, http://bit.ly/fqCGGT
Fast Company: “The business of Facebook“, April 2011, http://bit.ly/dO5vrr
Facebookbiz: “Facebook, Social Gaming & $24 Mio. für Wooga“, May 2011, http://bit.ly/lsU6xO
Exacttarget: “Facebook x-factors report #5“, August 2010, http://scr.bi/czvlYJ
Facebook: “Statistics“, April 2011, http://on.fb.me/bsoxWp
Player 1: Facebook
eMarketer: “Facebook passes Yahoo! in display advertising“, June 2011, http://bit.ly/itR9YB
TechCrunch: “Prediction: Facebook will surpass Google in advertising revenues“,
June 2011, http://tcrn.ch/kXybmO
Player 2: Users
ShareThis: “Study: Where, why and how people do share content“, June 2011, http://bit.ly/lKnAEs
Pew Research Center: “Social networking sites and our lives“, June 2011, http://bit.ly/iOFR7n
Player 3: Companies
Forrester Research: “Will Facebook ever drive E-Commerce?“, April 2011, http://bit.ly/fbI1M1
Fluid: “Brands and Facebook: Will “like” make it love?“, April 2010, http://bit.ly/cwm7xQ
Player 4: Service Providers
Facebookbiz: “Social Commerce: Payvment startet Einkaufszentrum auf Facebook“,
February 2011, http://bit.ly/gwWOVJ
Internet-Retailer: “1-800-Flowers.com shifts its Facebook store strategy“, February 2010,
http://bit.ly/gQk2G4
Contact:
Michael Schipper
COO, BBDO Germany
+49 (0)40 27852-4102
michael.schipper@bbdo.de
Authors:
Christian Kohlhase
Enrico Poege
Jörg Jelden
Katharina Michalski
Mechthild Broens
Tim Keller
Project management:
Jessica Merkle
Concept and design:
Lars Borker
Publication details

68
WWW.BBDO.COM
WWW.PROXIMITYWORLD.COM
WWW.DIGITALLABBLOG.COM
WRITTEN BY
HRISTIAN KOHLHASE
ENRICO POEGE
JÖRG JELDEN
KATHARINA MICHALSKI
MECHTHILD BROENS
TIM KELLER

Facebook Commerce

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