E-Commerce Could Show Facebook the Money

In the movie “The Social Network,” the Zuckerberg character keeps insisting to his marketing director that selling advertising on the site would make Facebook uncool. Six years later, we’ve grown accustomed to advertising on Facebook. Now, Zuckerberg’s team is ready to take the commercialization of Facebook a step further, opening the doors for full e-commerce.

When you have half a billion friends, you’re cool no matter what you do.

Preparing for Facebook E-Commerce

Last month, Facebook set up a commerce partnership group that is collaborating with retailers to develop tools that will let online shoppers solicit advice and product reviews from Facebook friends in real- time, Facebook development director David Fisch revealed in a BusinessWeek interview.

Facebook also reportedly is working on analytics tools that will let retailers learn more about which users are drawn to which products.

Meanwhile, third-party companies such as Payvment are working with retailers to help them include e-commerce tools on their Facebook sites. Payvment reportedly plans to add hundreds of retailers and thousands of products to Facebook every day.

Last week, JC Penney expanded its e-commerce site on Facebook to help its 1.3 million fans buy products there, as well as discuss products with friends during the shopping process.

Delta Airlines started to sell airline tickets from its Facebook site last August, and 1-800 Flowers has been selling flowers from its Facebook page all year.

Facebook did not respond to the E-Commerce Times’ request for comment by press time.

Testing, Testing, Now Sell

So far, the e-commerce on Facebook has been sporadic.

“Over the last year, a growing number of retailers have been adding transaction capabilities to their Facebook pages, and the efforts have been R&D for the most part,” Sally McKenzie, an independent e-commerce consultant, told the E-Commerce Times.

“JC Penney’s launch of its Facebook store last week makes it the first large mainstream retailer to sell all of its online product through Facebook,” she noted. “We can expect more to follow.”

As retailers add shopping opportunities, users may eventually see Facebook as an online mall.

“While most Facebook users don’t come to the site with shopping in mind, as more and more retailers add the capability, and as Facebook provides more tools and applications to make shopping and sharing easier, it’s only a matter of time before the site plays a more meaningful role in e-commerce,” McKenzie observed.

“I haven’t heard of Facebook taking a commission on the sales yet,” she said, “though certainly that’s on their radar as a significant monetization opportunity.”

A Good Thing?

While commercialization might not have been the point of Facebook years ago, the company now needs to generate cash to hold its preeminent social networking position.

“This makes perfect sense. Facebook needs as much guaranteed monetization as possible to continue to innovate,” technology project manager and Geek 2.0 blogger Steven Savage told the E-Commerce Times. “Very little that Facebook does is original. Anyone can imitate Facebook, so they need to keep innovating and developing.”

The retail relationships can also help Facebook edge out its competitors. Facebook may be discovering that commercialization is actually cool.

“Facebook can forge strong relationships with vendor companies. This gives them strong allies to work with to build financial ties as well as allies for technical development,” said Savage. “Facebook could even lock out rivals by forming exclusive relationships.”

Still, there are dangers lurking in a fully commercialized Facebook.

“Facebook is going to be taking on everyone from eBay to Google as they commercialize. They’re going to make more enemies,” said Savage. “Plus, for all its success, Facebook has had issues with image and security. People teaming up with them for these ventures will need to keep that in mind, and that a scandal or incident could harm them.”