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You don't need to look any further than Facebook's massive usage to realize that social networking is a mainstream phenomenon that is here to stay. And you don't have to look any further than the rapid rise of group buying websites like Groupon to realize that group commerce is going to be something a lot of entrepreneurs and companies focus in on over the coming years.
Web giant eBay hopes that it can put its own spin on both to rekindle growth in its core market.
It thinks its GroupGifts service, which launches today, will be "huge." Taking advantage of social networks like Facebook, GroupGifts is designed to make "it easier for friends and relatives to chip in for gifts because it eliminates the headache of collecting contributions":
Anything on eBay that's available immediately, rather than up for bid, can be purchased this way starting today at eBay.com/GroupGifts. If members of an extended family wanted to buy a gift for one member, one person would choose a gift — or have one recommended by eBay — and invite family members to chip in using Facebook or e-mail. Those who wanted to join in would choose an amount to contribute (or agree to pay a requested amount) and pay using either PayPal or a credit card. They could also add a personal note.
If enough people don't chip in, the organizer can ask people to contribute more or choose a less expensive gift.
In some respects, GroupGifts is like Groupon for gift giving on a personal level, except there are no hefty discounts and those wanting to band together with friends and family will have to use email and social networks to solicit contributions.
That, not surprisingly, is cause for skepticism. Sucharita Mulpuru of Forrester Research told USA Today that "To make this work, you need to really promote it, and you need to change consumer habits around how they may be doing group-gifting. I'm not convinced the market is so huge that it will change anyone's habits." To that, eBay vice president Christopher Payne responds, "EBay Group Gifts lets you do in three minutes what is otherwise a time-consuming and painful process that can take weeks to complete."
Who is right? In the immediate term, it's hard to disagree with Mulpuru. There is a lot of interest in social commerce, and brands are increasingly experimenting with commerce on Facebook, but the market is still nascent.
According to one Accenture survey, 88% of respondents indicated that they won't be making a holiday purchase this year via a social network or mobile device. Privacy concerns and a lack of perceived benefit to using these channels were commonly-cited barriers.
But from a long-term perspective, eBay probably is wise to be looking at ways to take advantage of social networking and group purchasing. GroupGifts has plenty of flaws.
For instance, it's questionable how much incentive GroupGifts alone gives individuals to contribute when invited, and it appears that eBay's could use Facebook far more creatively than just as a platform for sending contribution requests. But if eBay is willing to experiment, and it doesn't kill off GroupGifts simply because it doesn't produce amazing results in its original form, it might stumble onto something with potential.