Will Facebook and e-commerce ever go together?

Elizabeth Tan

Ever since Facebook launched its IPO in May last year, it has rolled out many new features such as paying to promote posts and most recently, Facebook Graphs. While people are still digesting that, Facebook is already testing out its beta launch of another product – Facebook Gifts – in America.

With Facebook gifts, users are able to buy, give and ship real gift items to a friend directly on Facebook in just a few minutes. When a friend’s birthday is coming up, an option will also be available to send them a gift alongside the usual birthday message. The receiver will receive a push notification to allow the gift, and even decide the size, flavour or colour of the gift. After two months in testing with tens of millions of people in America, Facebook also launched a wine category, and added in more charity donations options.

What does this mean for Facebook?

Although Facebook has yet to release plans of expanding Facebook Gift internationally, no one should rule out that possibility. However, this might be a huge difficulty considering the shipping and localization problems that come along with globalizing this service. Nonetheless, an article from Techcrunch has already estimated that Facebook could make between $127.5 million and $1.02 billion on Gifts per year assuming that the revenue share between Facebook and Gift manufacturers are between 10-20%.

Other than squeezing money from advertising, this new product could also further satisfy investors by obtaining more user information in the process: credit-card numbers. Not forgetting, user shopping behaviours will also create very valuable and expensive data which will increase Facebook’s revenue opportunities.

What does this mean for Brands?

Since gifts are automatically shared on the receiver’s wall (unless privatized), brands are able to open up a scope of discovery for their products when it goes to the front and center of the news feed.

Although Facebook has already signed up 100 merchants including Starbucks, Hulu Plus, Pandora and some other well-known brands, other big names such as JC Penney, Gamestop and GAP are among some of the companies who shut down their stores on Facebook during the early periods in 2012.  This was because they simply found that they were not generating enough revenue to justify the time and money invested into managing the Facebook store.

Therefore this time around, Facebook needs to be able to convince merchants that they can change consumer habits and make them spend convincingly on the social network.  Instead of turning social activities into retail opportunities, I believe that Facebook could take a lesson from Clozette , and learn how to make true social experiences for its users.

How Facebook gift works
How Facebook gift works

What does this mean for Users?

Facebook can be a scarily powerful platform that can change user behaviours and even cultures. We have already seen how people transcend the boundaries of physical space and time, and also given up familiar anchors and cues provided in our face-to-face interactions. (Is this good or bad?)

For Facebook Gifts, the gesture of gift giving could become by default a public rather than a public activity. As people can now fluidly, visibly and easily give their friends presents, gift giving could become less genuine and increasingly ostentatious.

This could also signal an impending culture whereby broadcasting our behaviours - whether it is Facebook giving or any other digital activities – becomes the norm rather than the exception. As social media continues to shape people’s behaviours on the Internet, digital social visibility becomes increasing transparent and reflective of our lives offline. One day, our private lives may even cease to exist.

Till then, I’m definitely crossing my fingers on that, making sure I’m doing my part to make sure that day never comes.

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