Launched in February 2004, Facebook is a social networking service founded by Mark Zuckerberg with his college roommates and fellow students Eduardo Saverin, Andrew McCollum, Dustin Moskovitz and Chris Hughes. Early investors include Microsoft and Hong Kong tycoon Li Ka- shing, through his namesake charitable foundation. Facebook’s US$16 billion initial public offering in May 2012 generated huge investor interest although the shares subsequently slumped in price.
Small retailers show big-name stores how to use social media to sell
While mainstream retailers struggle with social media, small start-ups are using places like Facebook to sell successfully to thousands
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Brandi Temple, a 39-year-old mother of four, transformed a living-room hobby into a retailing business that ships 30,000 items of children's clothing a month, using online social tools that giant competitors have failed to master.
Lolly Wolly Doodle, the retailer founded by Temple in 2010, makes most of its sales through Facebook, using the social network to set prices, take orders, forecast production and even market and design clothes.
"I just snapped a picture and put it on Facebook," said Temple, chief executive of Lolly Wolly Doodle, which is based in North Carolina in the United States. "I said, 'I have these 25 dresses, here's how much I want for them.' Within 30 seconds, they sold out."
Clothes retailers, from Gap to Saks and Macy's, have been seeking ways to profit through sites such as Facebook and Pinterest , which offer access to more than a billion consumers. While many big companies have brand pages and let users "like" items, few sell directly through social networks. That threatens to keep the clothing industry from profiting from the annual US$30 billion of goods that the consulting firm Booz & Co predicts will be sold through social media by 2015.
Lolly Wolly Doodle is pioneering the use of social media, generating 80 per cent of sales through Facebook. To place an order, users "like" the retailer's page and comment on an item, expressing an intent to buy. The company then e-mails an invoice and ships the product. Two weeks of sales via Facebook brought in as much as two months on eBay, Temple said.
"On eBay, sometimes you'll get feedback and questions, but you don't have that immediate reaction that says, 'Maybe you can make this in zebra,'" Temple said. "You're able to see what sells, why it sells, hear directly from them and engage with them. We don't plan two seasons ahead."
For bigger retailers, social networks have remained a place where products are discussed, and often more than on merchants' own sites, yet are not directly for sale. While Macy's, Saks and Gap have popular Facebook pages, they mostly use photos of products and coupons to entice users to visit their websites to browse and buy. There is little personal interaction, which would be difficult to manage because of their larger scale.
Saks provides Web links to individual product pages, offers coupons and lists phone numbers users can call to buy a shoe or ring. Gap's Facebook page connects to product pages for new styles and merchandise. While company postings can garner thousands of likes, turning that interaction into a sale ultimately depends on the user clicking through to the company's website or visiting a store.
Clark Fredricksen, vice-president at the researcher Emarketer, said Facebook has been "working very hard to show that people who like Gap's page are people who like to buy something from Gap, which is something that hasn't always been clear."
On Pinterest, an online photo-sharing site that is estimated to have more than 40 million users, only 11 per cent of items mention brand names, according to Curalate, which helps 325 brands track trending merchandise, and about half of brands' top 10 most-discussed products on Pinterest's site are out of stock or no longer sold.
Curalate's chief executive, Apu Gupta, said: "The consumer is let down when they get to a company's site. If brands know someone is looking at a blue sweater, they may be able to suggest one that's in stock when someone actually gets to the site."
For example, a pair of pink flats sold by H&M was briefly one of the company's most-shared items on Pinterest. The photo that more than 50,000 consumers were sharing featured the shoes from the top down, while H&M's website pictured the footwear in a different colour, yellow, and from the side, Gupta said.
That is the moment a store should aim to clinch more sales by featuring the shoes prominently on its home page, changing the camera angle or sending out an e-mail to customers that showed the product, he said. For comparison, the photo of the yellow version of the shoe was shared just 3,000 times.