Facebook: The e-commerce future or wasteland?
A new report from Reuters claims a host of companies are betting big on e-commerce for the world's largest social network, and they think it could be huge.
The talk of e-commerce coming to Facebook has been discussed for years. But so far, it hasn't become a hot area. Still, some companies think that will change.
Reuters today published interviews with a host of startups, including BeachMint, Fab.com, and others, that believe Facebook is the next great e-commerce platform. The companies reason that with Facebook's more than 845 million active users -- dwarfing popular e-commerce sites, like Amazon and eBay -- they can take advantage and generate boatloads of cash.
It's something that Facebook's investors seem excited about. Millennium Technology Value Partners, which has a stake in the social network and BeachMint, told Reuters that e-commerce is "a natural move for Facebook." Accel Partners, another Facebook investor, said to Reuters that e-commerce is a "big imperative" for the social network.
What those companies might not realize, though, is that e-commerce has been a hot topic on Facebook for years. In 2008, for example, a service called GiveReal launched, allowing Facebook users to engage in "social e-commerce," by gifting virtual goods that could then be translated to real-world purchases. The service never took off.
Since then, several prominent retailers have tried to double down on e-commerce through Facebook. And yet, nearly all of those efforts failed. Just last month, game retailer GameStop announced that it had closed its Facebook storefront due to slow sales. Gap, J.C. Penney, and a few other retailers' marketplaces were drawn to the same fate.
In an investigation last month into failed Facebook-based stores, Bloomberg sat down with Forrester Research analyst Sucharita Mulpuru, who said that the social network is still widely viewed by its users as a place to look at photos and interact -- not shop.
"There was a lot of anticipation that Facebook would turn into a new destination, a store, a place where people would shop," Mulpuru told Bloomberg. "But it was like trying to sell stuff to people while they're hanging out with their friends at the bar."
Still, if Facebook could get it to work, e-commerce could be a cash cow for the company. The social network currently relies nearly entirely on advertising, but with investors looking to acquire shares after its IPO, Facebook must come up with other ways to expand its operation. E-commerce might just be the way to do it.