A select bunch of promising e-commerce start-ups, supported by the tech world’s pedigreed financiers, are putting their bets on the fact that Facebook can well emerge as a major e-commerce hub to rival eBay and Amazon. As the fast-expanding social site moves toward an ambitious initial public offering (IPO), it is expected to face more pressure and greater scrutiny in terms of monetization by finding newer as well as consistent sources for profit growth.
Analysts are keeping a close watch on the network’s ability to cut down reduce its dependence on advertising that accounted for almost 85% of its revenue in 2011. In this context, some investors and entrepreneurs increasingly believe e-commerce on Facebook (f-commerce’) is the most logical and practical answer. They are confident that e-commerce is bound to be a huge category with strong tailwinds – also a natural move or progression.
Prompting users to shop on the popular social site
Start-ups like Yardsellr, Oodle, Fab.com and BeachMint are coming up with innovative ways and means to persuade users of the world’s most popular social network to not just engage with friends on it, but to purchase aggressively as well. Propelled by literally tens of millions of dollars from noted VC firms such as Andreessen Horowitz and Accel Partners, plus other big investors including Goldman Sachs, an array of start-ups are vigorously pushing out shopping apps, unveiling new shopping based concepts, testing interesting business models, and organizing online garage sales on Facebook.
It is a big MUST for Facebook to gauge the importance and relevance of having in place a solid e-commerce strategy. David Fisch, a Harvard MBA who oversees the company’s e-commerce efforts and also working with a host of retailers to generate social commerce businesses ideas on the platform, points out people have always loved to shop with their friends; and now they naturally would expect it online. Online entities who think innovatively, differently and unconventionally about social will be successful.
Will the new e-commerce wave on Facebook take off?
In spite of a huge base (boasting a strong 845 million monthly active user base at the 2011 end), Facebook primarily remains more an avenue for connecting with friends and colleagues, and less as any online shopper’s preferred destination. Big retailers like J.C. Penney, Nordstrom and Gap set up stores on it, only to shut them after failing to generate enough sales. However, the experience has in no way stopped VC firms from pouring money into companies they feel have managed to crack the code.
Nevertheless, if the new e-commerce wave on Facebook really takes off, many marketing experts expect it to find a secured way of making money. According to Beetailer’s Laura Valverde, running over 3,000 stores on Facebook, when one builds on top of a popular platform such as this, there’s always the possibility that the platform provider might decide to alter the rules as seen in case of Facebook Credits & games. So, if and when social commerce takes off, it will try to leverage it one way or another.
