Future Shop: The Ins and Outs of Facebook Commerce

The emerging category of Facebook commerce lets merchants place “buy” buttons beside those noncommittal “likes.” Will the upstart sales platform take the jewelry industry by storm?

In early July, David Rotenberg, owner of David Craig ­Jewelers, Newtown, Pa., posed a question to fans of his store’s Facebook page: “If we opened a Facebook store whereby you could securely purchase our jewelry online without ever leaving the Facebook platform, would that appeal to you?”

Rotenberg, whose business is 40 years old, was responding to the growing buzz about Facebook—or simply “F”—commerce. The technology debuted in July 2009 when 1-800-Flowers opened the first-ever “F Shop,” allowing consumers to purchase items from its Facebook page without leaving the confines of the social networking site.

Jeffrey Post opened an F Shop for his high-end Jeffrey Daniels Unique Designs collection in 2010.

Of course, F-commerce as a sales venue is still new, but with each passing month, more merchants are creating F Shops, helping to persuade the site’s 750-million-­member (and growing) base that the site is more than just a place to socialize; it’s also a place to buy products—conveniently paid for by credit card, PayPal, or even Facebook credits. In short, Facebook’s quest for Web domination is well into its next phase.

The hype is hard to dismiss. According to a 2011 report from Booz & Co., goods sold through social media could total $30 billion by 2015; nearly half of those sales are expected to come from the United States. Research from the 2011 Social Commerce Study released by Shop.org, the online retail division of the National Retail Federation, reveals that 58 percent of consumers follow brands to find discounts, 49 percent to learn about products, and 30 percent to share information with other customers (ergo, Facebook pages help influence consumers’ purchasing decisions).

“Companies with products that people are passionate about—coffee, autos, jewelry—do well,” says Max Ciccotosto, CEO of Venpop, an F Shop developer with offices in Chicago, Seattle, and Treviso, Italy. “Party-planning supplies, which are commodities—not so much.”

Forrester Research reports that Facebook currently accounts for less than 1 percent of overall e-commerce. And according to e-commerce software provider Ability Commerce, just 12 percent of the top 500 retailers with a Facebook page actually have a Facebook application or widget that enables consumers to shop. But Web 2.0 pioneers are optimistic about the union between social networking and shopping given the degree to which the former has penetrated our lives: Social networking is now the No. 1 online activity, according to a white paper from the Syzygy Group, an interactive marketing agency based in Hamburg, Germany.

“For a small business, there is huge potential for spreading brand awareness,” says Zo Bjorgvinsson, co-founder of Dotbox, a New York City maker of F Shops for merchants.

Lika Behar one-of-a-kind oxidized silver bracelet with 24k gold-wrapped moonstone; $895; Greenwich Jewelers; New York City; facebook.com/ GreenwichJewelers

F-commerce can keep clients engaged, reinforce your business’ desire to interact more with shoppers, and serve as a way to test a new line before committing case space to it.

“Facebook commerce will not replace e-commerce,” says Bjorgvinsson. “But more and more merchants will soon be discovering that it can have a very positive ROI.”

Jewelry, however, is a different animal, and it remains to be seen how many consumers are willing to buy items of value through a site more commonly associated with status updates and photo albums. At David Craig Jewelers, the reaction to Rotenberg’s F-commerce proposal was decidedly mixed.

Lika Behar green amethyst ring wrapped in 24k gold in an oxidized sterling silver band; $625; Greenwich Jewelers

“I wouldn’t recommend doing it on Facebook,” posted one person. “Half the folks I know won’t open a link in Facebook for fear it will infect their computers. I’d buy from you on an eBay store if you accepted PayPal.” Another told Rotenberg: “I buy online quite a bit. However…I don’t like to buy on eBay because you are required to use PayPal. I would prefer not to open an account with them.” Overall consensus was lukewarm: “Give it a shot and see how it works out,” replied another.

Considering the anecdotal research, Rotenberg suspects that it might not be a good fit—particularly in light of the fact that even his store’s website doesn’t have e-commerce.

Not to mention creating an F Shop takes time and money. In a recent Wall Street Journal article, some developers said they might charge $10,000 to add the feature. At a starting range of $90 per month, upkeep fees are considerably lower, says Ciccotosto, who urges those considering F-commerce to manage their expectations. “Don’t expect to make $1 million once you open a store,” he says.

Lika Behar sterling silver droplet earrings with blue topaz; $175; Greenwich Jewelers

Few jewelers understand that point better than Jeffrey Post, director of Manhattan-based Gem Platinum and Jeffrey Daniels Unique Designs. Post opened his F Shop in February 2010 (long before most in the industry) with the intention of creating another sales and marketing channel for the high-end jewels in the Jeffrey Daniels line—those retailing for $20,000 and up. He currently sells 36 one-of-a-kind pieces, from an $18,100 pink sapphire and diamond ring to a yellow and colorless diamond 18k gold bib necklace for $300,000.

“I just try to get as much product out in front of people as possible,” Post says. Even though nothing has sold, Post knows the F Shop has at least helped to drive some traffic to his booth at trade shows. “People come to me and say, ‘I have seen you on the Internet, so now I’m here to take a look.’?”

For Jennifer Gandia, co-owner of Greenwich Jewelers in New York City, whose F Shop opened for business in late June, the decision to launch the feature was inspired by what she saw happening on the pages of brands such as Banana Republic and Coach, which provides a link to its own ­e-commerce website on its fan page.

New York City’s Greenwich Jewelers unveiled its F Shop in late June; the starting inventory included a number of “summery” jewels by Lika Behar.

“I felt like it was an easy price range that most wouldn’t think about too much,” she says, describing the initial inventory of 11 products retailing for $95–$475 as “summery” and “beachy,” such as a Dana Kellin manmade pink crystal pendant on a gold-filled chain and a pair of Lika Behar silver and London blue topaz earrings. (Her F Shop now boasts some 800 pieces from designers including Alexis Bittar, Gurhan, and Todd Reed, and features high-end pieces like a $17,100 Greenwich Collection 10 ct. diamond tennis necklace.)

“It was a natural evolution for us to sell product where we are connecting with clients most,” she explains. “Greenwich Jewelers is posting on Facebook multiple times a day, so it makes sense for us to show some product there, to see if there is potential for conversion from a ‘like’ to a ‘buy.’?”

Gandia’s shop was set up by Dotbox, the same firm that maintains her store’s website, and fans who “like” her store’s Facebook page can search merchandise by designer, category, price, and sale price. “The whole purchasing cycle can be completed right within Facebook,” she says. And once a purchase is made, others can see it on buyers’ personal pages.

At press time, sales to her 7,807 store fans had not yet materialized, but Gandia was already well into planning phase two of the launch—flash sales, daily deals, and a calendar of new products to keep inventory fresh. Her first deal will be for a pair of rose gold vermeil Arc hoop earrings from Gorjana, a Laguna Beach–based manufacturer. The retail price is $55, but on her F Shop they’ll be $40.

“The deal will run for a week—or until they run out—beginning August 8,” explained Gandia. While she struggles to assess the exact amount of traffic and sales resulting from  her Facebook efforts, she’s confident that she is an early adopter of a powerful new selling tool. “I believe this is the next way that people will shop—socially—and I believe this will become the norm.”

F-Commerce Developers

USABLENET, New York City; 212-965-5388; usablenet.com
VENPOP, Seattle; 888-763-3169; venpop.com
DOTBOX, New York City; 212-937-4177; dotbox.com

More Internet-related features for your store on JCKonline.com:
+ Technology & Tools: Mobile Force
+ JCK5: Jeweler Facebook Pages We “Like”
+ Technology & Tools: It’s Hip to Be on Foursquare

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