With Facebook Gift-Giving Service, Is More E-commerce To Come?

Forbes

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Facebook has launched a new service that enables people to send gifts to friends through Facebook, signalling the company's larger opportunities in e-commerce.

In May, Facebook acquired Karma, a social gift giving service. The new Facebook Gifts service builds on that acquisition.

With Facebook Gifts, people can send a variety of birthday, holiday and other gifts--just to be clear these are "real life" gifts, not virtual goods. People can choose a gift such as a Starbucks gift card, a Gund teddy bear or chocolate, and select a friend to send it to, and add a card. A message can also be sent to the recipient's Facebook Timeline or as a private message. The recipient of the gift enters his or her address, so the giver doesn't have to worry about that. The recipient can also choose things size or color of a gift.

Facebook is tightly integrating the gift service through the site's existing birthday reminders that show up on the side of the Facebook News Feed. Underneath a birthday notification for a person is the link to "Give her a gift."

This is a natural move for Facebook, particularly after buying Karma. But the larger opportunity for Facebook is in e-commerce more generally. As Karma cofounder Lee Linden told me when I interviewed him at South By Southwest last year, Karma had built the back-end infrastructure for e-commerce operations. That technology is now a part of Facebook and has been scaled to the company's millions of users.

But if you can send real-life gifts to people that you purchase on Facebook,why couldn't you purchase them for yourself? For now Facebook will likely focus on e-commerce for gifts, not wanting to take on the entire e-commerce challenge and all the logistics that go along with it. But it would make sense for Facebook to expand to more general e-commerce. Perhaps it could be focused in the near term on other specific uses of e-commerce for functions that already exist in Facebook, such as Facebook Groups. For example, maybe a group wants to buy a present for the leader of a group, and split the costs? It could be done through Facebook. Or maybe Facebook could arrange other purchases that come as part of special events such as birthday parties, or holiday parties, or even weddings. Since it has an events tool that is popular that could be another fit. Or it could develop a Christmas gift list application or wedding gift-giving registry.

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Overall, Facebook has so much data on its users and their interests and preferences as well as social data that there are many possibilities. Facebook has up until now focused on e-commerce and payments through virtual goods, with social games being the large part of that. But if the company wants to focus less on games and have more general uses for people in many situations, which I think it does want, then e-commerce makes natural sense. And as a plus, e-commerce is a clear source of revenue that investors understand--unlike newfangled social or mobile ads, which investors may have trouble understanding.

 

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