I’ve been reading F-Commerce articles (one | another) the last couple of days (f-commerce is Facebook commerce), some with interesting perspectives that may change the way we shop and others with lots of opinion but little perspective of what has worked or miserably failed online.
Most people probably aren’t old enough or haven’t been on the internet long enough to even remember iMall or some of the other “major” online internet malls that were around in the mid-1990s. They all had the bright idea of centralizing the shopping experience in one location, just like our physical malls and assumed people would flock to them spending millions and billions. Where are they now? Non-existent.
Who has succeeded? Those who centralized everything, like a big-box store, reduced prices and (this is a huge one) provided FREE shipping to compete with retail.
Other retailers have done well because they found their existing retail audience and have converted them to online. Many have generated a new audience online, that they may have never seen otherwise, most of these are successful because they have a unique product, service or customer service model that attracts a crowd or they have a product that is not available in other geographic locations.
I know I’m generalizing here but look at the most successful online retailers and what ultimately makes them successful…DEALS! Remember that everyone online is looking for a deal, no matter how wealthy, poor or frugal you are, you don’t get online because you want to spend the most on a product. You get online because you saw those True Religion, Seven or whatever jeans that you want and there has to be someone online who sells them for $0.17. That’s what the internet is, like it or not. The music and software industry losses hundreds of millions, if not billions every year due to piracy, not because people online don’t have money (don’t we average like $75+K/yr.?), because we’re all cheap bastards.
Fast forward to the Facebook generation…we’re all cheap as WTF, not because we need to be but because the internet has made us this way. We all spend a large percentage of our day either connected to, waiting on or actually logged in, F(B)ing around. 600 million people and growing are on the site, stalking, chatting, connecting and advising each other about anything from family, to clothes, to sex, drugs & rock and roll. It is a digital high school or college experience all over again but this time without inhibition, boundaries or rules…other than “your mom (children, grandchildren, great-grandchildren or future children) might see what you put on Facebook.”
So what does all this have to do with F-commerce? Not much, other than every retailer seeing that the malls are less full than they use to be. Where have those people gone, to Facebook? Obviously, since one and one is two, we can deduce that because large amounts of people have aggregated to Facebook they must also all want to shop on Facebook! SO, let’s build a mall, it will succeed.
Again, I oversimplify but my oversimplification is only to bring up one simply thing, people are online for a deal. If Facebook is going to play mall cop (or landlord) then they better have some killer deals for retailers because the only way that mall succeeds is if I can’t do a Google search and find a better deal. I don’t care if all of my friends are sold, talk about it, “Like” it, love it, endorse it, comment on it or marry it, I’m not buying it if newegg.com, frys.com, ebay or amazon.com have it for $0.25 less and free shipping, it’s that simple. The ‘experience’ can be spectacular, the cart can be immaculate, the customer service can surpass even Nordstrom‘s expectations but I’m still doing a Google search before I confirm my order to see if there is a better deal. Not because I’m a jerk, unfaithful customer, uncommitted brand advocate or because I’m cheap…because I AM AN INTERNET USER!
Example: This week I got an email “early notice” from Groupon about the Old Navy deal $20 for $10. Considering $20 at Old Navy buys you like everything in the store, that’s a killer deal. Within 4 hours of getting the email I saw no less than 10 people posting about it on FB. Tens, or hundreds of people were getting access to this deal even though they had nothing to do with Groupon. Therein is the power of Facebook; exclusive products, prices and offers can go viral in a matter of minutes, potentially faster than any other method. Success and whether the store needs to be within Facebook or not is only for the future and new ideas/innovation to tell.
I have personally programmed or managed the development of over 45 e-commerce websites for small to Fortune 500 companies (several) and the one thing I have learned is that the biggest game is in the numbers (deals). Many online companies survive and can have moderate growth through marketing and advertising, don’t get me wrong, you CAN succeed without deals. BUT, companies see unbelievable numbers when they run that deal that you can’t get anywhere else and those companies that diligently work their suppliers to maintain a steady flow of deals, have a consistent, strong and investment-worthy growth rate. Sustainable is another question and concern…for another post.