This holiday season, the Official Merchant Services Blog brings you the latest on Facebook’s newest venture, Facebook Gifts. On Tuesday, the company announced that any U.S. member can now send Facebook friends tangible gifts, which includes wine, digital gift cards and even charitable donations.
The Facebook Gifts program, previously available only to some users of the social media site, began as the ‘Facebook Wish List’ program we covered a few months ago. Since Facebook takes a percentage of every transaction, this program could also be the “gift” that gives significant profits to the company. The social network hasn’t revealed how much it has made from the service, but Facebook’s 170 million users in the U.S. could generate an estimated billion-dollar revenue stream for the now-public company.
In addition to the advertisements that run on Facebook, the company has been selling virtual goods. Since the line is blurring between socializing and shopping online, this move builds on the companies existing strengths.
From Virtual to Real Goods
Billy Pidgeon, senior analyst at Inside Network told the E-Commerce Times, “Google is stepping up in e-commerce, and we’re seeing that Pinterist has a laser focus on retail. At the same time, we’re seeing that online retailers such as Amazon and eBay are looking to get more social. This is really just the next step in greater convergence of the two.” Social media sites looking to enter the e-commerce market, and online retailers looking to enter the social media market continue to point to expanding e-commerce trends as the reasoning for branching out.
“This is a major opportunity for Facebook and could generate hundreds of millions of dollars in revenue,” said Greg Sterling of Sterling Market Research. “However, user experience, privacy and security considerations are critically important here. In addition, the selection of products that are available is also important.”
After the disappointment of Facebook’s May IPO, this could be the holiday miracle that Facebook and its investors hoped would deliver the goods. At the very least, it could help the company end the year on an upbeat note.
Facing Facebook Facts
The different types of products available will most likely determine whether this will be the gift that keeps on giving or whether the company will face a negative reaction that could turn off some users. The integration of gifts could make the Facebook experience a more organic one, and in turn the project could reap more success. However there will always be some people who are wary of giving Facebook their credit card numbers and purchase histories.
In order for end-users to feel comfortable using their credit cards and making purchases on the site, Facebook needs to change the culture of the user experience and provide sufficient security assurances, there enlies the challenge.