Should luxury brands explore Facebook as a retail channel?

Many retailers, both high-end and mass market, have taken note of Facebook's 500 million potential customers, although few have yet acted to implement a sales strategy on the platform. HauteLook became the first flash sale provider to tap the channel with the launch of  HauteLook Events, its shoppable Facebook store.

“Developing Facebook-based commerce is a way for us to help brands build social media engagement and excitement among their fans while also providing a new, fun way for members to shop, right from Facebook,”said David Sobie, vice president of business development for HauteLook, Los Angeles.

HauteLook remembership is free and open to anyone. The online retailer offers discounts at up to 75 percent off on products by luxury brands such as Chanel, Diane von Furstenberg and Swarovski. It claims more than 3.5 million members.

The HauteLook example
The retailer rolls out as one of the first luxury retailers to offer consumers in-stream shopping direct from their Facebook News Feed. The online retailer partnered with Alvenda to create the social commerce channel.

By “liking” HauteLook events on Facebook at http://www.Facebook.com/HauteLook, consumers can view sale events on the retailers dedicated “Shop” tab. They may also view sales via HautLook posts within their News Feeds or by accessing the participating brand’s Facebook.

“Social media has always been a very important marketing channel for us, and we’re excited to be the first private sale site to offer Facebook commerce,” Mr. Sobie said.

“Developing HauteLook events for Facebook allows us to go where our members are spending their time, rather than making them come to us,” he said.

"Our members get to enjoy the best brands at the best prices at their convenience and also to easily share their purchases with their friends.”

Consumers can stay within Facebook to complete transactions and are given the option to share purchases with friends once an order is placed.

HauteLook Facebook events will be offered weekly with each event lasting 48 hours. It will partner with Diane von Furstenberg on Dec. 7 and BCBG on Dec. 14.

Both fashion brands partnered with HauteLook on the initiative as a way to build and excite their own social communities.

“The viral nature of the technology means almost limitless exposure for the brand and their sale event,” Mr. Sobie said.

“We will continue to build out our services and experiences category in early 2011.”

HauteLook's Facebook commerce platform

A burgeoning opportunity?
Luxury brands looking to extend their retail strategy onto Facebook need to carefully consider their approach to the channel and make sure to use it to fullest effect.

Demographics are important. Not all retailers will find Facebook to be the right fit.

The largest demographic on Facebook is young adults ages 18-25, a fact that could discourage some brands from making the investment in the platform as that age group does not tend to include the major constituents of luxury brands.

However, the fastest growing user demographic is women ages 35-50, much more consistent with the luxury consumer profile.

The social tools on the network let retailers increase shopper interaction by integrating the store into consumers’ lives through the brand page, news feeds and individuals’ walls.

For example, Adgregate Markets recently launched its ShopFans commerce platform, which the company boasts  directly ties into all of the social features of Facebook to let retailers promote their products through wishlists, the “Like” button, gift registries, private and exclusive sales, as well as other features.

ShopFans also claims to be the only such platform secured by McAfee and TRUSTe to guarantee security.

A growing number of developers are releasing platforms meant to exploit Facebook’s functionality to create a strong ecommerce experience within the network.

In the future, the channel will become increasingly integrated with other media involved in all-encompassing digital strategies, so that online, social and mobile are all tied together, according to Henry Wong, CEO of Adgregate, Sausalito, CA.

However, for the time being, it is most important that retailers learn how to operate in the environment and develop best practices for driving sales through a Facebook commerce platform.

“Like any new channel, consumers have to get comfortable buying products in the new channel,” Mr. Wong said. “Placing shopping in context with buzz around products and brands makes a lot of sense, but marketers need to continue to develop the channel by promoting exclusive offers to its fans.

“When ecommerce stores started popping up in the late nineties, it took significant marketing investment from retailers to turn it into the $200 billion industry today,” he said. “Marketers need to continue to be creative and drive traffic to their Facebook channel, and a ‘build it and they will come’ mentality will not be successful.”

Peter Finocchiaro reported for this story.