Facebook Inc(NASDAQ:FB), The social-networking site is looking for other revenue sources apart from advertising, and has launched, as a part of the alternative revenue generation plan, an application called ‘Gifts’ on the site. This is Facebook’s foray into the world of e-commerce, where it will be competing with the likes of Amazon, and e-Bay.
The new application will be made public to Facebook users from Thursday onwards. Through ‘Gifts’, the users will be able to send and receive gifts from one another. These gifts will be provided by a hundred odd “Facebook Gifts” vendors. From chocolates, socks, and cupcakes to socks or a cup of coffee, there are various gifts which people will be able to send to one another through this new application. Vendors include Starbucks, New York’s famous Magnolia Bakery, and flower shops, amongst others. The shipping process too, will be uncomplicated, as the recipient will simply have to fill in his/her shipping details, and the person can also choose the kind of gifts they want, such as the flavor of coffee, or the kind of chocolates. They can even exchange their gifts for something else.
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This may be a good source of revenue for the site, especially due to problems occurring from the advertisement sector, which is Facebook’s main source of revenue. The site has been relying on display advertisements, but after the May IPO, they have decided to diversify into other methods of revenue generation. About 80% of its income comes from advertisements, and 15% from the game-makers, Zynga. Through the ‘Gifts’ sales, Facebook will be getting a cut of what the vendors will be earning through the sales, and Facebook is hoping that they will, because people wish each other over Facebook all the time. Adding gifts to birthday or Christmas greetings, or sending one another chocolates on Valentine’s Day is a natural progression from wishing one another.
The prices start from $5, but will go up to hundreds of dollars. The application was made available to a small bunch of people in America when it was first released, but come Thursday, it will be available to everybody.
Shares of FB have risen about 8% in the past two trading sessions since Friday and up another 1% in the pre-market session on Tuesday.