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September 28, 2012

Facebook Doubles Down on E-Commerce with New Gifts Feature

By Steve Anderson, Contributing TMCnet Writer

Facebook's (News - Alert) recent acquisition frenzy brought a lot of new sites, and new services, into its fold. But back in May, Facebook took a big turn into E-commerce with the acquisition of Karma, a gift buying service for which Facebook spent $80 million, and turned it into Facebook's newest feature, Gifts, which reportedly began today on some platforms.

Gifts allows users to buy just that--gifts--for their friends. The variety of items available to ship out to users' friends is a wide one, ranging from a pair of glasses clear up through a bottle of champagne, and Facebook takes a cut of all sales made through the service. The service is only available on certain platforms and in certain places--iOS will, oddly enough, be one of the platforms that gets this service later, while Android (News - Alert) devices and Facebook's site get first crack--and can take the form of either gift cards sent to the user or actual physical property.

Image via Shutterstock 

Since gift cards are an industry representing about $100 billion in traffic annually, it's easy to see why Facebook wanted in on this. Though Facebook will face serious competition from established online vendors like Amazon and eBay (News - Alert), as well as from the wide variety of physical stores actually selling gift cards, Facebook will have something of an advantage in the form of its massive user base.

Users are already on Facebook, describes Lee Linden, Karma's co-founder, so why not use Facebook as a platform from which to send treats? Someone having an anniversary? Chances are they announced it on Facebook. New baby? Same deal. So the idea of clicking on a link to send the anniversary couple a bottle of champagne, or send the new baby a crib, certainly isn't far-fetched.

Facebook seems out to take advantage of immediacy, and catch people who are in a mind to send gifts for special occasions by providing the means to do so right when they receive the announcement. The lag between announcement and actually shopping for a gift has left some opportunities to fall by the wayside, but with Facebook Gifts, some of that low-hanging fruit will be scooped up.

Facebook has been in need of money-makers since a disastrous IPO, as well as recent reversals on the advertising front. Bringing more features to the user base, as well as more ways for them to spend money while on the site, is a move that should make investors happy and keep Facebook's bottom line from venting more red ink. While the exact value of Facebook Gifts, especially in a down economy, may not be quite as much as expected, or hoped for, it certainly can't hurt to have the platform in place, especially for when consumer confidence looks to perk up.

Want to learn more about today’s powerful mobile Internet ecosystem? Don't miss the Mobility Tech Conference & Expo, collocated with ITEXPO Austin 2012 taking place Oct. 2-5 2012, in Austin, TX.  Stay in touch with everything happening at Mobility Tech Conference & Expo. Follow us on Twitter.

Edited by Brooke Neuman
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