In January, Booz & Company produced a report suggesting that stores on Facebook were set for explosive growth—a 56% CAGR over the next five years, which some commentators have hyped as 600% growth. In 2015, the report says, the market for products sold on social network sites will be worth $30bn, of which $14bn will be in the U.S.
According to some commentators, this is a ‘massive opportunity’ that ecommerce companies should jump on and get the ‘first mover advantage.’
Hmm. Many of the ecommerce heads who I’ve talked to that have Facebook stores are somewhat more cautious, referring to their stores as ‘an interesting experiment’ or ‘we’ve learned a lot and so has our Facebook shopping cart vendor.’ When asked about sales volumes, they typically report low single-digit sales.
All of this says to me that these are very early days, and while early adopters may want to plunge onto the bleeding edge, it’s frankly not right for most ecommerce companies. In fact, I’ll go further and suggest staying away for 2011, with a few exceptions.
A $14bn U.S. market may sound really big, but I wanted to see how big it is relative to forecast growth for traditional ecommerce.
By combining the data from Booz with the U.S. Commerce Dept. and mobile commerce forecasts from CODA, for the first time we can see where commerce on social networks sits relative to overall online sales.
As a percentage, in 2015, after that 600% growth, commerce on social networks will represent only 4% of all online commerce.
Mobile commerce is forecast to be three times bigger by 2015.
Here’s the data, published for the first time:
Of course, all forecasts are wrong: They’re either too high or too low. But for mainstream ecommerce it just doesn’t make a whole ton of sense right now to duplicate the ecommerce site, particularly when sales using the Facebook channel are miniscule. (…)