Are Facebook Gifts a Change in Direction or Another Advertising Play?

by Michael Misasi 0

In preparation for the holiday shoppingseason, Facebook announced a service called Facebook Gifts. Inshort, the service enables members of the social network topurchase digital (physical) goods from Facebook and send them tothe email (shipping address) of fellow Facebook users.

Many analysts and reporters have incorrectly interpreted the Giftsplatform as Facebook’s entrance into the e-commerce market, a movethat would put them in competition with companies like Amazon andeBay. Facebook participates in the e-commerce market in that theyaccept orders for goods via the Internet; but unlike eBay andAmazon, Facebook probably doesn’t aspire to become a one-stopshopping destination. It would be very difficult for Facebook tocompete with the long tail of eBay’s catalogue or Amazon’sfulfillment expertise. Rather, Gifts will more aptly serve as anextension of the social network’s marketing and advertisingcapabilities.

Looking into the future, it doesn’t make sense for Facebook tolimit their online shopping platform to gifts. Why not promote thepurchase of products for personal use? This could happen asFacebook expands its network of retail partnerships and would pairwell with their Offers program, which enables merchants to issuecoupons via Facebook pages. Some companies have questioned thevalue of advertising on Facebook, citing an inability to prove theads generate sales. Accepting payments may help solve this problemby enabling consumers to act on an ad (i.e. make a purchase)without leaving the site.