|Sun May 18 2014 20:38:05|
Facebook Co-ops: Opportunity or Threat for Online Sellers?
By: Kenneth Corbin
In Monday's NewsFlash, I report on the emergence of Facebook co-ops, secretive groups on the social network where shoppers sign up in the hopes of scoring bargains.
The groups are invitation-only, each run by a host who reviews and accepts applications on a case-by-case basis. In theory, they operate by leveraging the buying power of the group, so enterprising hosts arrange wholesale-type deals with suppliers, and then offer the merchandise for sale through their Facebook group at steep discounts.
But what happens when the manufacturer isn't in on the arrangement?
We started looking into this story after hearing from a handbag maker who said she has been struggling to keep her products out of the co-ops. There, she says, her bags are being sold without her permission and at prices that undercut what she and her channel partners offer to the retail consumer.
Facebook co-ops are a relatively new phenomenon, a very loosely governed frontier in the ecommerce world. Caveat emptor is the law of the land. So one of the challenges in reporting this story was getting a sense of how big the co-op segment actually is.
One Facebook group where co-op hosts post deals and buyers make inquiries - i.e. "Anyone running wooden jigsaw puzzles?" - counts nearly 12,000 members. In the context of the overall retail market, that's barely a rounding error.
But they're growing. The administrator of the Co-op Deals and Reviews Facebook group has acknowledged the proliferation of new co-ops, and has been implementing new policies in an effort to bring some oversight to the sector, including a requirement that groups register with something called the Better Co-Op Bureau.
Fred Felman, chief marketing officer at the brand-protection firm MarkMonitor, noted that Facebook co-ops are just one facet of the larger phenomenon of social commerce, a channel that has been growing rapidly and shows no signs of slowing down.
"I think it's super clear that social media is a venue where goods are being promoted and sold and the level of influence that social media has over online sales is increasing dramatically. And we expect that trend to continue, and to that end, it's no great surprise that people are trying to capitalize on that in creative new ways," Felman said in an interview.
But Felman doesn't see much upside in the co-ops for brands, nor does the manufacturer we spoke with.
Are they right? Or do the Facebook co-ops, if managed properly, offer sellers a new channel to expand their presence and reach new customers?
We'd also like to hear from co-op hosts and shoppers. Are the concerns that the manufacturer shared with us valid? What policies or procedures are in place to keep unauthorized merchandise out of your groups?
Let us know in the comments section!
About the Author:
Kenneth Corbin is a freelance writer based in Washington, D.C. He has written on politics, technology and other subjects since 2007, most recently as the Washington correspondent for InternetNews.com, covering Congress, the White House, the FCC and other regulatory affairs. He can be found on LinkedIn here.