Facebook is becoming prime real estate for small retailers rather than the mega-mall that the big chains had hoped it would be.
Second-quarter profits from Facebook stores were up 38% from the first quarter for the 180,000 small to midsize retailers, and have been going strong ever since, says e-commerce company Ecwid. Based on Facebook's monthly active users stats, Ecwid makes the most widely used Facebook store-building software to work across social-media platforms and websites.
Businesses that sell on Facebook using Ecwid's app and on their own websites make 22% of their sales on Facebook, Ecwid says. Social-commerce gurus say small retailers have the edge over big names, because they behave more like friends on Facebook.
"This is where small business can really hit it out of the park," says Paul Chaney, author of The F-Commerce Handbook. "I connect with the guy or lady who runs the business, and that's the person who's posting."
Facebook commerce can be great for businesses such as the Apricot Lane franchise Jena Green runs with her mother, Renee Dixon, in Peoria, Ill. The boutique makes up to half of its overall sales of women's clothing, shoes and accessories on Facebook, Green says. She engages the more than 19,000 customers who have "Liked" her store by posting pictures of new arrivals, promotions and answers to customer inquiries throughout the day.
She says customers favor Facebook shopping because they're already checking the page for pictures of the new items anyway. If they see something they want, "It's just easier for them to click 'shop,'" Green says.
Many large retailers have not been able to break into Facebook commerce like Green and Dixon did. Nordstrom offered a few items for sale on its Facebook page for a limited time as part of a test last year, but "the customer didn't seem to respond," spokesman Colin Johnson says. J.C. Penney, GameStop, Banana Republic, The Gap and Old Navy all closed their Facebook storefronts, Bloomberg reported. But J.C. Penney hasn't given up on Facebook.
"Our first attempt may not have been the right approach, but we're continuing to explore new ways to turn our 2.7 million followers into repeat customers," J.C. Penney spokeswoman Daphne Avila says.
Just don't put all your eggs in one online shopping basket, warns Skip Shean, CEO of 16wells, an online marketing consultant. Facebook is notorious for springing drastic changes on users unannounced. "It's a bad idea to rely on a platform you don't have any control over," he says. "You need a plan B."
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