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Facebook Gifts: Shifting the Future of E-commerce?

The world's biggest social network is dipping its toe into retail, aiming to boost its revenue per user significantly. Here's how it will work, and why it's a big deal.
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Facebook is officialy moving into e-commerce with Facebook Gifts. And, no, this isn't virtual images of cupcakes or puppies in Santa hats, like back in 2007.

Today, social giving is getting real. 

Making use of its recent acquisition of the social gift-giving app, Karma, Facebook will now let users find and purchase actual things for friends directly on their site. Although the storefront is only open to select users right now, word is that everyone will have access soon.

The set-up process appears pretty seamless. Users will be able to log onto an online storefront within Facebook, browse various shops, find a gift, and designate it for one of their Facebook friends. That friend is notified of the gift, can accept, and may enter their preferred shipping address. What’s more, recipients can adjust the specifications of their gift, such as clothing size or candy flavor.

Facebook has teamed up with more than 100 partners for the gifts, including start-ups such as Warby Parker glasses and Uber taxi services. Facebook hasn't disclosed how it will split the revenue, but has noted that it will differ by partner and product, according to TechCrunch.

If the storefront takes off, Facebook could see a considerable jump in its revenue per user. TechCrunch reported that Facebook made an average of $9.51 per U.S. user in 2011. But if Facebook took just 10 percent on two $15 gifts per year, the site says, it would see individual user revenue rise by 30 percent. This could alleviate some of revenue strain placed on Facebook's advertising and gaming businesses. It could also shift considerable e-commerce power away from Google and Amazon.

Previously, the only real commerce on Facebook were unofficial "storefronts" made by small businesses. Although they were technically unsanctioned by Facebook itself, they were commonly used by business owners to display images of products on their page, customized with apps that let shoppers digitally purchase the product, according to The New York Times. The trend became so popular that it even inspired its own term, "F-commerce," and a start-up geared towards building Facebook storefronts, Payvment.

While it's too early to tell if these F-Commerce pages will try jumping to the official gift store, the announcement will no doubt change how business is done on Facebook. And on the Internet in general. Watch out, Web retail: This could change everything.

As for fans of the now-re-branded Karma, they need not worry that the Facebook platform will dilute the Karma experience. Lee Linden, Karma's former head and the current product manager for Facebook Gifts, told the Associated Press that the site retains "the heart and soul of the Karma experience."

 

Last updated: Sep 28, 2012




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