Venpop Makes a Case Against Adding Shopping Carts on Facebook
Retailers have flocked to Facebook, looking to create a community of users who “like” their brand. But now the big question is how do you drive additional sales?
Many companies have decided it means selling products directly on Facebook. For example, just today, Gilt Groupe launched the ability to buy products directly on its Facebook page that aren’t available on their regular site.
The concept has spawned a whole new term: F-Commerce.
Max Ciccotosto, the founder and CEO of Venpop, which is a division of Seattle-based WishPot, says forget about it. ”A cart on Facebook is boring. … We are skeptical about F-Commerce. We are about social merchandising.”
WishPot launched back in 2006 as a social registry, where friends and family members can see a list of the items you want for a wedding or a birthday across a number of retailers. But as the company evolved and struggled through the recession, Ciccotosto said, “We needed revenues. They were growing but they were not sustainable, so we shifted from social shopping to a social commerce platform.”
Since then, Venpop has built a number of tools that allow retailers to roll out social features to their Facebook page and to their Web site. At the end of 2009, its first customers went live, and now the 12-employee company is cash-flow positive.
He said the trick to “social merchandising” is in automating the experience, so that retailers can send notificiations to Twitter and their Facebook page to highlight price changes, new product arrivals or other popular catalog items.
Often times, instead of using software, companies hire social media employees to sift through hundreds — if not millions — of items to find something to highlight, but he said Venpop’s software can quickly and easily spot marked-down items — a new line of clothing, for instance, or a special product that happens to be selling well.
From there, the deal can be posted to Twitter or Facebook. He said when retailers list specific products on their Facebook feed, they get three times more clicks and also more comments.
More recently, Venpop rolled out a new flash sales tool that allows retailers to offer “a deal of the day,” or a Groupon-like special to their most loyal fans on Facebook.
A retailer pays a commission to Venpop based on the number of products it has and the number of fans it has on Facebook. It doesn’t give Venpop half of the revenues, like a Groupon or LivingSocial company might demand, if they offer a deal of the day. Plus, offering such deals to a company’s Facebook fans focuses on rewarding its most loyal customers rather than soliciting new customers who may never return.
He said while Venpop has the ability to also integrate shopping cart technology on a company’s Facebook page, only three out of its 3,000 customers actually wanted a cart. ”I know companies that have paid $20,000 to implement a shopping cart on Facebook that generated $0 in six months,” he said. “That’s disconcerting to me that they will see no return on investment and then say Facebook doesn’t work.”
So far, Venpop has signed up a handful of its customers to offer the daily deals, including Amanda Pearl, a jewelry and handbag accessories provider; Karma Kiss, a gift provider; and Green Feet, an eco-friendly retailer.
Other companies are scrambling to define social commerce with plans that are all over the map.
Adgregate Markets, Milyoni and Payvment all believe in setting up commerce on Facebook, which may ultimately become the mall of the future. Others, such as eBay, believe that integrating Facebook into their site could help make product recommendations to consumers. And Copious hopes to create a platform that leans on social networks, so there’s more transparency between people who are selling items to one another.