Facebook’s platform boss Ben Ling was speaking at ChannelAdvisor Catalyst last week and had some interesting stuff to say about the social network’s e-commerce strategy.

One thing that stood out was that it has seemingly not given up on the 'Beacon' ads for online retailers that caused such a furore last year.

The system, which would have broadcast details of members’ purchases from third party sites through their Facebook ‘news feeds’, was cut back dramatically after consumer protests.

But Ling said it was still looking to pitch it to retailers:

“We have a programme that is essentially a social action publisher. It enables publishers to be able to feed actions back into Facebook.

“We are starting on content sites where things are ‘inherently social’, and then we are going to continue up the chain where things like purchases can be incorporated as well.”

On paper, the scheme seems like a no brainer for retailers. Stats show Facebook is growing as a source of traffic to retail websites and is keen to position itself as a huge viral marketing engine where shops can generate targeted traffic through user referrals.

Facebook originally planned to offer the service for free, in return gaining behavioural data and enhancing awareness. One also imagines it will be more careful about how it is communicated to users, and the levels of user control that would be introduced, meaning that - theoretically - there would be less of a brand risk.

Ling said the system would depend on user authorisation and admitted it had to tread "a fine line" with privacy. But the question is how many consumers will want to share that information if Facebook truly puts them in control? Maybe it will depend, ultimately, on how useful it is.

Payment wars
On a wider level, Ling also had some more details on Facebook’s upcoming e-commerce plans, seemingly a vital part of the site’s efforts to start making money out of its 70m+ membership.

He said the social network’s long-rumoured transaction processing system was “coming shortly” and would offer third party application developers the chance to take direct payments from users.

He added that the system is being provided by a partner, rather than developed in-house:

“The basic idea is we will be building native support for applications and merchants to take credit card payments. It will be a seamless one-click experience and the same experience for all users. It will enable new types of monetisation for developers and retailers.”

So who is the partner? Google (Ling’s former employers), Paypal, Microsoft or even Amazon, which is coming out with a new payment system and is already looking to exploit the social network’s merchandising potential? Or perhaps a new entrant?

Whoever it is, we think Facebook's ultimate aim is to become a serious player in payment processing on and off its site, using referrals to drive sales and retailer partnerships.

Many retailers are sceptical about Facebook's potential as an e-commerce channel, saying that as with webmail, users aren't there 'in buying mode'. But according to Ling, the site already has “tens of millions” of credit card details on file, thanks to sales of its $1 ‘virtual gifts’ (icons, smilies and so on). 

If that's accurate, well, that's quite a headstart. It's going to be really interesting to watch this unfold, and to see whether Facebook's users embrace this in their droves.

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Published 8 April, 2008 by Richard Maven

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Comments (2)

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Ian Hendry

Facebook has much to do to prove it is a $15bn company once the media euphoria wears off -- making money is pivotal to that, so their strategy has to work.

Ultimately though, what I read above shows that Facebook is going to be a commission only rep (providing intros to retailers) or a retailer itself (of developer apps) at best. There still seems to be no compelling reason why people would want to spend money WITH Facebook, rather than just ON it.

The problem with this is that there isn't much stickiness to Facebook if users don't see the value in the service itself, other than it having volume. If the users stop coming -- which could happen, as fickle as they are -- then the whole thing collapses.

I am definitely in the sceptics camp!

Ian Hendry
www.wecando.biz

about 10 years ago

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Rhett McNulty

In regards to 'Beacon' I believe that just as you see kids wearing branded clothing (like nike) or slapping logos of brands on their cars (like Apple) you will see them adopt a user authorized version of 'beacon.' Brands and products are a reflection of an individuals personality or even better their egos and Facebook is just presenting a platform for them to further express that identity with their friends.

As far as the payment exchange platforms go all the big boys should watch out. People make the mistake of saying that social networks are for sharing music and pictures - only. If users had a way to effectively and seamlessly purchase the things they like in the places they like hanging out, without being forced to leave, they would. Facebook will be managing a huge float and generating a fair amount of revenue. Another good indicator of commerce in Social Networks is both MySpace and Facebook's recent push in digital content and sales.

Facebook is creating opportunity that others are not taking adavantage of.

about 10 years ago

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