Tuesday, February 28, 2012

JC Penny Failed in F-Commerce

JC Penny Failed in F-Commerce

We all know that JC Penny used E-Commerce to turn its sale around.[1] With Facebook ‘s penetration growing bigger and bigger, E-Commerce consultants were predicting social media storefronts would be selling $30 billion worth of products by 2015, with Facebook driving the majority of this business. There was talk in some circles that Facebook might even have the legs to threaten Amazon’s domination as an online retailer. This expected explosion in Facebook driven e-commerce even spawned its own term: F-commerce.[2]

This lead us to late 2010, when JC Penny tried get ahead of the social Networking / ecommerce game by announcing that its full catalog will be now available on Facebook. It sounded like a good idea, Facebook shoppers would have a full range of shopping options with the new service, including the ability add and/or remove items from a shopping cart, as well as checkout, pay with credit cards, and tailor their shipping addresses and information. [3]

Fast forward to a year later, Business Week is reporting that F-commerce appears to have failed. Retailers GameStop, J.C. Penney, Gap Inc. and Nordstrom have all shuttered their Facebook stores.

Why did F-Commerce fail? As it turns out, Facebook is a place where people hang out online with their friends. They may peruse ads and take advantage of deals, but they don’t log onto Facebook to go shopping. When retailers already have their own retail websites, there’s little incentive for customers to shop on Facebook instead. For the retailers, building and maintaining the second online storefront on Facebook meant additional costs with no apparent gain in customers. As Forrester Research analyst Sucharita Mulpru points out in a Bloomberg interview, “it was like trying to sell stuff to people while they’re hanging out with their friends at the bar.”

For retailers, the lesson seems to be that social media sites, including Facebook, remain valuable advertising and promotional tools. But Facebook is not at the stage of being a virtual mall. As its IPO approaches and potential investors wonder how Mark Zuckerberg plans to monetize his customers to help justify a potential $100 billion valuation, strike F-commerce off the revenue list. At least for now.[1]

As F-Commerce has failed, I couldn’t help but wonder, what would be their next step in winning in the e-commerce game?


[1] "When Big Retailers Don Like Facebook." InvestorPlace. Web. 28 Feb. 2012. .

[2] "JCPenney Turns Its Sales Around through E-Commerce." - MarketingVOX. Web. 28 Feb. 2012. .

[3] "E-commerce News." E-commerce News. Web. 28 Feb. 2012. .

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