Facebook: Your Store of the Future?

Facebook wants to be your everything destination. If the social network has its way, it’ll be the ultimate place to shop, communicate with friends, entertain yourself and read the news. In “The Future of Search,” we pointed out that over 1 Billion people are using Facebook on their mobile phones daily. Another 1 Billion are using it on the desktop. This is just the core Facebook application alone, and does not include the other key properties on the Facebook network, Whatsapp and Instagram who have 900 Million and 400 Million users respectively. As of 2014, the social network tracks even more user identities than Google.

While we’ve been preoccupied sharing, liking and demanding a dislike button, Facebook has been hard at work putting in place the capabilities that will take them well beyond the social network that we have come to know. We believe Facebook is well placed to become a key player in the future of shopping.

Facebook Bluetooth Beacons

Facebook has recently started to roll out a new technology called Facebook Bluetooth® beacons. For those who need a primer on beacon technology, read our 5 Minute Introduction to iBeacons. What’s special about this launch is that the beacons will be offered for free to local businesses that request them

The new beacons will communicate to visitors via the Place Tips for Businesses feature. Place tips allow businesses to broadcast customized messages to visitors in a “welcome note”. This could be used to educate customers, announce a new promotion and even indicate influencers that have also liked certain products.

Facebook Retail Stack

This might remind you of the “Find Us On Yelp” stickers of years past. Remember those? The promise was that within 10-12 weeks you can get a sticker reminding you to go review the company on Yelp. The sticker would sit in your storefront window and passively remind customers to go online and review you. That model is now obsolete.

The new beacons promise to instantly connect you to your customers that enter your store, who are already carrying smartphones with Facebook loaded. Now imagine that sticker being replaced by a push notification to leave a review as the shopper leaves the store. This has the potential to majorly enhance the customer satisfaction experience. That said, the flip side is that it will expose the poor experiences much more quickly.

Still don’t see the big deal? Consider the layered capabilities that Facebook is setting up.

Earlier this year, Facebook debuted the Messenger Platform at its F8 conference. What is notable about this is that Facebook promises to offer the plumbing for the entire customer support conversation between brands and consumers. From the standpoint of a small business, this is a major uplift in customer service capability. One that allows them to go head to head with large brands on service rather than technology.

When a critical mass of brands adopt Messenger for Business, it could serve as the dominant way for customers to communicate in real time with any business.

Shopping Feed: Bringing Social Commerce to Facebook

The latest in a series of innovations from Facebook is the Shopping Feed pilot. The feed is designed to help shoppers find and buy products seamlessly, all in one place.

The feed moves beyond the much talked about ‘Buy’ button to facilitating the discovery of products within the Facebook app. In the rendering below you’ll notice a search bar. This shifts Facebook from a place where users stumble across products they might like (shared by friends, brands they follow etc), to a place where users actively search for items they want to buy. Combine this with Facebook’s rich data on preferences from across both Facebook and Instagram, and the brand could be heading toward the most personalized product search available.

Facebook Retail Stack

And of course, there is Facebook M, the new digital personal assistant. This new technology brings human supervised machine learning voice queries to Facebook M. These queries can be as simple as addresses or store hours. In the future, who is to say that these can’t include answering a customer’s question about whether an item is in stock?

One More Layer: Retail Use Cases for Oculus Rift

Virtual Reality has the potential to add yet another rich layer to the shopping experience. It’s not hard to imagine a future where the virtual reality headset plays a key role both in physical stores and in the home. Not sure whether those jeans will match the shoes you have in the closet? Use Oculus to activate your digital wardrobe and view them together. Furnishing a new apartment? Imagine using the VR headset to drag and drop new items into the room, in real time to see them all together in context (and change the colors if you need). The very nature of virtual reality brings context to the shopping experience and could serve as a powerful, visual means to overcoming barriers in the path to purchase.

Facebook isn’t the only tech giant vying to up their VR game. Google, Sony and Samsung have all joined the race in the hope of capturing the hearts and minds of the early adopters. In October 2014, Google led a $542 million investment in emerging VR firmMagic Leap.

Where is this all heading?

Facebook already has one of the best value propositions for brands large and small doing online advertising. It also has become the place where the majority of our friends and family “hang out” and share their experiences. It’s now a full-fledged retail marketplace that will connect you to the brands and products of your choice. They are making aggressive moves to ‘surround’ the shopping experience; from guiding you around brick and mortar spaces to being your go to source for browsing and buying online. Note that we are not calling it a retailer; It is making itself the essential utility for retailers. And by retailers, we mean anyone who sells to consumers, including travel, financial products and more.

The Facebook Retail Stack

It is our opinion that Facebook’s features are becoming a virtual “Retail Stack” that can be leveraged by brands, both large and small. This will become a critical gateway to doing business in the physical world. It will also change the nature of what brands are and how they operate.

Facebook Retail Stack

The underlying glue for the stack is the Facebook advertising network, which now spans Facebook, Instagram, and (presumably soon) Whatsapp. With the ability to track identity and movement across the web, paired with physical locations based on devices, retailers are assured a much higher probability of engagement, personalization and conversion than ever before.

What does the future look like?

In the near term, we are going to see an explosion of advertising services roll-out across this new stack. Some of the clearest included remarketing to people who have left a store and potentially remarketing between stores in a shopping center.

Medium term, it means big changes for what brands invest in on their websites. Do brands no longer build product catalogs? Why should they? They will just build rich product feeds going forward, and allow Facebook and Pinterest do the presentation for them. Pinterest also recently rolled out a buy side interface, and it already has a deep connection to many retailers like Nordstrom that feed it with rich product data.

Facebook Retail Stack

Let’s not forget that Amazon and Google both have large scale advantages in the market already as places people go to find what they want to buy.

Physical Stores are Essential!

In fact, they’re the new black. Pure Play retailers from Birchbox to Bonobos to Casper are rushing to open physical stores to bolster their brand presence. Brands that remain purely in the digital realm are experiencing some challenges as shoppers refuse to pay high shipping costs and are often deterred by the necessity of being home to receive packages and the hassle of returning items.

Recent turmoil, particularly with Walmart, might suggest that physical stores are somehow on the decline. Not so true. The reality for these retailers with huge footprints is that their spaces need to change. What worked 10 years ago is becoming outdated as customers start to fall in love with click and collect, subscription services and digitally enhanced, smaller format stores. Heritage retailers must fundamentally rethink the stores’ function and purpose.

With Facebook/Google/Pinterest/Whatsapp becoming centers for communications, payments, and promotion with customers, the stores start to play a new critical role. For one, they become showcase galleries to fall in love with products in all of their assortments. They also have the added benefit of presenting convenient pick-up locations for those who choose to “click and collect”. The big brands will continue to have physical stores to stay competitive.

It has been said that shipping and transportation costs are already starting to chip away at Amazon’s dominance of the retail supply chain. This presents an opportunity for independent delivery contractors (like Uber) to play a new role. We may also see a rise in the integration of independent employees into big brand retail sales. In recent years, brands like Chloe and Isabel, Stella and Dot and Ellie Kai have built compelling retail engines by layering a personal stylist approach onto a network-marketing model. Stylists are very often mothers who would like to stay home with children while maintaining an income; these companies provide platforms for female-owned businesses to thrive. Perhaps not surprisingly, the one thing that stylists from these different brands have in common is that their primary storefront is a Facebook page.

The Path Forward

The new Facebook retail stack has the potential to be disruptive, but it also will take a great deal of experimentation for retailers to get right. We have seen a fair amount of success with the innovation lab approach for validating new ideas in store; this technology seems like a prime candidate for vetting in that environment. That said, our recent research findings suggest that these initiatives really need to be tied back to the core business objectives to be successful, rather than just focusing on the technology gimmick.


This post comes from Adam Monago & Daniel Pallozzi of ThoughtWorks– a leading consultancy in retail technology. 

Artist Credit: Urbanimal

 

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