Facebook Launches Marketplace in E-commerce Push

Marketplace available only in the U.S., the U.K., Australia, and New Zealand

f1Social media giant Facebook Inc. (NASDAQ: FB) is giving its 1.71 billion users yet another reason to spend more time on its platform with the launch of its Marketplace tool in its latest e-commerce push, according to a company release on October 3rd, 2016. More than 450 million people already visit Facebook groups that have items to buy and sell each month, the company said. With Marketplace, Facebook is now giving users a more formal process to conduct these exchanges. The Marketplace icon will now appear at the bottom of the screen on the Facebook mobile app on iOS and Android in four countries: the U.S., the U.K., Australia, and New Zealand. Marketplace is also being tested in Chile. In the future months, Facebook may also invite businesses to join Marketplace, by which time Facebook is also making available the tool on the desktop version.

Facebook’s Marketplace tool, which allows users to browse for things, is aimed at keeping people hooked on the company’s mobile app, and in turn driving advertising revenues. Around 84% of Facebook’s overall revenue is generated from smartphone users, and as of July 2016, Facebook had more than 1 billion daily active users (DAUs) on mobile devices.

Source: Facebook
Source: Facebook

Facebook is banking on the fact that U.S. consumers are more likely to turn to separate apps for social media and shopping, unlike Asian people who routinely combine shopping and social media on mobile devices. Tapping on this insight, Facebook has explored ways to get users to shop from their mobile devices on its platform. Earlier in July 2014, Facebook tested a “Buy” button on browsers and mobile devices that lets users make purchases through advertisements and allows merchants to sell their wares from their Facebook pages. Facebook is also testing a mobile shopping marketplace and shopping from mobile ads.

Facebook’s second coming for e-commerce

Facebook’s e-commerce push makes sense because it has already established connections between users and brands through its other options such as advertising and a customer service infrastructure through Messenger. In 2015, Facebook said it was testing several ad features that allow users to shop directly through its app, an effort to move further into e-commerce. Other social platforms such as Twitter Inc. (NYSE: TWTR) have also tested the waters for e-commerce. In 2014, Twitter acquired San Francisco-based CardSpring Inc., a service that lets users redeem deals and discounts through merchants’ tweets.

Marketplace is Facebook’s second coming for commerce. In 2007, it introduced a feature, also called Marketplace, which never took off. In late 2014, the company launched For Sale Groups. Marketplace is a much evolved version of For Sale Groups, which does not charge listing or transaction fees and does not process payment or handle delivery, giving it an edge over competing services such as eBay.com Inc. (NASDAQ: EBAY), Craigslist, and Amazon.com Inc. (NASDAQ: AMZN).

How Marketplace works

f3The icon for Marketplace will soon replace the Messenger icon in the center of the bottom row on Facebook’s mobile app. Tapping the icon will take users to an algorithmically generated home page of items that the user might be interested in. That information is initially based on the kinds of pages that a user has liked, but will eventually use people’s activity within Marketplace. Users can search Marketplace and filter results by category, price or location or can browse what’s available in a specific category, for example, household or electronic goods.

When a user finds something that he/she likes, users can tap on the image to seek more details from the seller, including a product description, the name and profile photo of the seller and that person’s general location. Marketplace also allows users to save the item to find it later. If a user is ready to buy, then one can send the seller a direct message from Marketplace and make an offer. After that, it is up to the buyer and seller to work out the logistics and other details. To sell an item, users will have to simply upload a photo, set a name, description, and price, and location.

Safety and privacy concerns

Facebook, which has earlier faced major safety and privacy issues, does not condone transactions of illegal items like drugs or explosives on Marketplace. It also bans the sale of firearms, animals, and alcohol, among other things, on its platform. However, Facebook does not have the same kinds of protections or guarantees as eBay, since sales are handled offline and by users themselves.

To ease fears, Facebook is leaning on its anti-anonymity stance by mandating that users will have to divulge some additional information for selling items. Potential buyers will hence be able to view the sellers’ location and how long the user has been on Facebook.

Facebook to launch Wi-Fi service in India

Facebook is testing an affordable Wi-Fi service called Express Wi-Fi in rural India, allowing users to buy data packages from local internet service providers (ISPs) to access the internet via local hotspots, as reported by The Times of India on August 8th, 2016.

Facebook’s earlier plans to launch its free internet plan in India did not take off as the Government of India said that the Company was flouting net neutrality principles. Facebook is currently in the early stages of testing Express Wi-Fi with multiple local ISP partners and has completed a pilot roll out of 125 rural public Wi-Fi hotspots in a tie-up with the state-run internet provider.

f4In the same vein, technology giant Alphabet Inc.’s (NASDAQ: GOOG) Google, as part of its India-focused strategy, launched products like Google Station and YouTube Go to make it easier for Indians to get connected to the internet faster and better, on September 27th, 2016. Google announced the launch of a public Wireless Fidelity (Wi-Fi) platform called Google Station. Under Google Station, a service that aims to offer free and secure Wi-Fi in public places across the country, Google is looking to establish free Wi-Fi hot spots at public places. In association with RailTel, Google currently offers free Wi-Fi access at 52 railway stations across India, which it plans to scale it up to 100 stations by early 2017.

Stock Performance

f5Facebook’s stock stood at $128.47, gaining 0.22%, at the close on Wednesday, October 5th, 2016, having vacillated between an intraday high of $128.80 and a low of $127.83 during the session. The stock’s trading volume was at 12,353,880 for the day. The Company’s market cap was at $368.40 billion as of Wednesday’s close.

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