Will F-Commerce Really Fly?

All your friends are there, and it seems the perfect place to shop. But at least some retailers, including GameStop, J.C. Penney, and Gap have shuttered their Facebook stores, indicating that their websites already serve the e-commerce purpose.

Bloomberg, which points to multiple retailers that have closed their Facebook storefronts in a story today, received a "no comment" from social-network representatives about the status of so-called F-commerce. The retailers are still maintaining a Facebook presence, but have removed e-commerce capabilities within their page.

According to Sucharita Mulpuru, an analyst at Forrester Research in Cambridge, Massachusetts, this is because social network isn’t driving commerce the way some had hoped.

“There was a lot of anticipation that Facebook would turn into a new destination, a store, a place where people would shop,” Mulpuru said in a telephone interview with Bloomberg. “But it was like trying to sell stuff to people while they’re hanging out with their friends at the bar.”

This love-hate relationship is nothing new: Retailers have long felt compelled to be on Facebook and Twitter, but simultaneously have wondered where the return on investment is for all those tweets and posts.

Just the same, numerous startups—from those that create Facebook promotions for retailers to those who run mobile applications—have set up businesses around F-commerce with high hopes.

And they haven’t been dashed yet for entrepreneurs such as Henry Kim, who cofounded sneakpeeq, and said the San Francisco-based startup, which encourages Facebook friends to interact with one another on the site as they shop, is “seeing explosive growth here and is creating real sales channels for businesses on Facebook.”

The site currently has more than 800 brand partners and saw its sales double between December and January 2012. It also measures its success by the number of engagements per month, which includes the sum total of peaks or “peeqs" as the site calls them, which refers to friends looking at the pricetags of what their friends were interested in, plus the number of "loves" and "shares." After it launched in May 2012, it had 78,745 such engagements. In January 2012, it had 600,641.

“You can't just throw up a shop tab or shopping cart on Facebook, call it social shopping and hope it will succeed,” Kim says. “We are approaching social commerce from the ground up."

Besides using social tools through its integration with Facebook’s Open Graph, as one of Facebook's partners, Sneakpeeq encourages consumers to discover brands through story telling on the site, he said.

Similarly, investors such as Deborah Farrington, a managing partner of StarVest Partners and one of just two women included on the 2011 Forbes Midas List of top venture capitalists, remain keyed up about the space. Why? Because they look at a company like Zynga, which went public in less than five years thanks to its ties with Facebook, and see dollar signs.

“Zynga generated over 90 percent of its revenues from Facebook’s platform last year. It’s now a company with an $8.8 billion market cap,” Farrington said via an email exchange with Portfolio.com. “The market opportunity for building on Facebook’s platform has been validated.”

She also points to statistics that say nearly 15 percent of all of our time is spent online and 16 percent of page views belong to Facebook. It’s an opportunity that most brands and retailers don’t want to see pass them by, yet the market hasn’t matured to the point where it can define the metrics of social-media campaigns now that they have migrated from the quest for likes and fans that they pursued in the beginning to monetization and user engagement.

What investors like StarVest are seeing now are not more Zyngas, but different variations of companies that are focused on Facebook commerce in different ways. One example is Milyoni, which distributes entertainment and broadcasts live events on the platform.

One reason she suggests that Facebook commerce hasn't taken off is that consumers just haven't tried it yet.

“When people recognize the benefits of shopping on Facebook’s platform, whether it’s because they can rent movies with extra Facebook credits they bought for online games or because they can learn about deals from friends and engage in a seamless shopping experience, that’s when I think more people will continue to shop on Facebook,” Farrington said.

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Teresa Novellino writes for Portfolio.com