Media News - Friday, September 28, 2012

Real gifts sold on Facebook as site taps commerce potential

Facebook is taking a small step toward becoming an e-commerce platform by launching a feature for users to buy and send real gifts worth as much as hundreds of dollars. As of Thursday, users can purchase and ship products from more than a hundred "Facebook Gifts" vendors with a few clicks on the company's website. The products include eyeglasses by Warby Parker, Starbucks coffee, and pastries from New York-based Magnolia Bakery. Coming four months after Facebook's troubled initial public offering, the feature marks the company's attempt to unlock a potentially significant new revenue stream. Although it has sought to diversify its income sources, Facebook still relies heavily on display advertising. During the second quarter, more than 80 percent of its revenue of USD 1.18bn came from ads while roughly 15 percent came from game-maker Zynga Inc. Facebook, which can store credit card data for users, will make money by taking a cut of each gift transaction. The amount varies based on the individual deals it has struck with vendor partners, the company said without disclosing specifics. The world's No. 1 social network, boasting nearly 1 billion user accounts, has long viewed commercial transactions as a massive opportunity for the platform. But marketing researchers have found that consumers have been slow to make purchases on the website because many treat it as a place to chat and post messages rather than go shopping. Facebook hopes to change that by getting users used to the idea of giving small gifts as part of their social routine. (Reuters)

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