Monday, October 8, 2012

Believe It Or Not, Facebook Inc (NASDAQ:FB) Really Is A Retailer

After all the hype over IPO and host of other incidents, Facebook Inc(NASDAQ:FB) is finally started realizing what it wants to be when it grows older. With the declaration of Facebook gifts, the firm is officially starting to sell non-virtual goods. It’s a maiden step in the right direction for a firm still struggling to define itself.

Facebook is not a search engine, a billboard or a club. It is a retailer. The firm does not seem to have realized that yet, although with its move, it is getting closer to realize the truth.

Facebook has shallow information on what they think are 900 million monthly users. That information will always be of restricted value to advertisers for two reasons. Firstly, the more advertisements Facebook allows, the lower with the engagement level among users. Secondly, Facebook only knows the person one pretends to be when communicating with the ones he knew 20 years back. Facebook is often used as a platform for an identity that seems ideal. Google knows the ‘real’ in people including non-socially acceptable details. Hence, Facebook cannot compete on that level.

It is not just about sending cupcakes to a friend. Given an option to buy an album someone likes to a book that person enjoys. Even an application that does not involve farm animals will do the trick. Facebook can start this store on its own or by partnering with Apple, Amazon or some other provider.

The catch is to keep the stuff that Facebook sells to minimal and within the ecosystem of Facebook. It may not seem a very nice option and margins may be small but the revenues will be huge in the long run. If Facebook does this right, the firm could stand to be the first real online merchant to emerge in a decade. 

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