Wednesday, October 10, 2012

Facebook Inc (NASDAQ:FB)’s Gifts And Collections Likely To Incite E-Commerce Growth

Facebook Inc (NASDAQ:FB) has been prioritizing e-commerce with its latest initiatives. The firm has launched its new feature ‘Gifts’ late previous month, leveraging its attainment of mobile commerce startup, Karma. This feature lest users to buy and send gifts to each other easily based on suggestions while Facebook keeps a tab on the purchases made. Additionally, the firm has recently started testing a feature called ‘Collections’ targeted at promoting e-commerce on Facebook. With the help of this feature, users on the social networking site can add items of their interest from specific retailer to their wishlist for purchasing in future.

Facebook’s shares have fallen exceptionally since its IPO among concerns associated with the ability of the company to monetize its growing user base as effectively as was expected. It is believed that in order to address such concerns, Facebook will try to influence its user base to make its way to e-commerce.

As of now, Facebook is not likely to take revenue cut if its user eventually purchases items using the ‘Collection’ feature. However, it is possible to use this feature to direct adverts that are based on user interest and in the process, charge a higher amount for such targeted ads.

It is estimated that the text and the display advert business accounts for nearly 70% of Facebook’s worth. Hence, it is crucial that the firm is able to increase ad monetization of its pages. However, as Facebook develops into a solid e-commerce platform with time, it will definitely want to have a share of the product sales through this particular feature. This will help its social commerce revenues.

Over the recent few years, Facebook has become the favored choice for retailers and brands to endorse their brands and products by getting users to ‘Like’ their pages and share them with their friends. 

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