Wall Street Journal
By Dana Mattioli
Retailers are trying to get customers to spend more than just time on Facebook Inc.
In the past six months, such companies as Starwood Hotels & Resorts Worldwide Inc., J.C. Penney Co. and GNC Holdings have invited customers to spend money by shopping on company fan pages without ever leaving Facebook.
The move to attract sales through social-networking sites comes as people are spending more time online and less time at the mall. E-commerce has been one of the biggest drivers of retail sales in recent quarters, with online sales rising 28% in the first quarter, compared with an increase of 4% for bricks-and-mortar stores, according tosurveys by the National Retail Federation.
J.C. Penney launched a Facebook shop in December, allowing its 1.6 million fans to shop directly from the social-media site. The Facebook store offers the same products as Penney's mobile store, a company spokeswoman said. But the Penney Facebook shop lets fans "share" items they like with friends with a simple click.
Fans are able to browse categories in J.C. Penney's Facebook store such as women, shoes and baby, and then narrow down each department by the types of product they are seeking.
"We need to go where our customers are," says Jeff Hennion, chief branding officer at vitamin-retailer GNC, which has been directing fans to the Facebook shop it launched in February through emails and its Twitter feed. The company recently sent an email blast that said, "Why leave the social scene to shop? Get what you need right on Facebook!" and then prompted recipients to "like" its page.
Revenue from the GNC Facebook store is slim, but Mr. Hennion believes it could become a "significant" source of online revenue in the future. "We have a very young demographic that is multitasking, and this gives them the comfort that they aren't leaving Facebook behind," he says.
While the portion of overall retail transactions coming from Facebook remains small—Forrester Research estimates Facebook accounts for less than 1% of overall e-commerce—companies like GNC believe so-called "social commerce" could become an important sales driver in the future. Americans spent 22 minutes and 10 seconds on Facebook in April, more than twice the amount of time they spent on the Web's top 500 retail sites combined.
Yet most analysts remain skeptical that consumers will want to spend money while they are socializing online. Forrester Research issued a report earlier this year that said there is little evidence that social commerce is a profitable growth strategy.
Without "measurable success" for large brands over the course of the next year, Forrester said, companies that herald Facebook as the next big thing in e-commerce have "the credence of a cultist who insists that the world will end next year."
Sucharita Mulpuru, the Forrester retail analyst who led the report, says people often don't revisit fan pages after initially "liking" them, though she suggests that consumers might be lured back by offers of exclusive merchandise or special sales.
Mark Beccue, a senior analyst at ABI Research Inc., says that consumers buying goods online are very purposeful, and they typically rely on search engines or go directly to a company's website.
"People are just starting to engage with this concept and are testing it," concedes David Godsman, vice president of global Web services at Starwood, which added a shopping tab for its Westin brand in January after fans wrote on the company's Facebook wall suggesting the idea.
Mr. Godsman says only a handful of the hotel's branded "Heavenly Beds," which sell for $1,100 to $1,700, have been purchased through Facebook, but he says that smaller-ticket items like its $36 candles are gaining traction.
The Westin Facebook shop is identical to its online shop, but it doesn't have the same advanced search capabilities, Mr. Godsman says.
Visitors to Facebook fan pages can find shopping tabs on the left-hand side of the page, typically under the photo. Clicking the tab directs consumers to a shopping site built on the Facebook platform, which is often similar to a company's main e-commerce site.
Facebook doesn't charge retailers a fee to add the shopping function, nor does it take a cut of transactions that occur on its site. However, companies typically outsource the project to developers that charge at least $10,000 to add the feature.
"Rather than simply bringing their existing Web experiences to Facebook, we believe retailers who provide deeply social shopping experiences will see the most success," said a Facebook spokeswoman in an email.
Facebook also makes it easy for customers to trumpet their purchases by sharing them with friends in their personal news feeds. Most customers are given the option to post purchases to their news feeds automatically.
For retailers, selling on Facebook is also compelling as a market-research tool. Facebook offers retailers detailed information on customers, including "demographic information like age, sex, how popular people are and how much they share and 'like,' " says Jason Taylor, vice president of platform strategy for Usablenet, which develops Facebook shopping tabs for retailers.
