The Pros and Cons of Facebook Marketplace & Shops (Update)

Facebook launches Marketplace and enters previously uncharted territory of local e-commerce. We’ve made a closer look to find some hints for those who are building social media apps.

  1. What is a Marketplace on Facebook?
  2. Craigslist and eBay-like app
  3. Facebook e-commerce opportunity
  4. Masking the monopoly
  5. Facebook Rolled Out a New E-commerce Feature: Shops.

What is a Marketplace on Facebook?

In essence, Marketplace is a new independent catalog of all items for sale + tools for placement and buying.

There are two things that Facebook developers hope set marketplace as a unique product:

  • Local listing that allows users to find offers “near me”.
  • Seamless experience that allows people to buy and sell items without leaving the platforms or installing an additional app.

Unlike competitors, Facebook will not facilitate any payments and shipping. That’s up to you to decide.

Notice: You have to be 18+ to buy and sell on Facebook Marketplace.

Of course, there is a list of products that are prohibited to place on the platform:

  1. Animals.
  2. Illegal, prescription, or recreational drugs.
  3. Tobacco products and related paraphernalia & Alcohol.
  4. Unsafe supplements.
  5. Weapons, ammunition or explosives.
  6. Healthcare products services.
  7. Real money gambling services.
  8. Fraudulent, misleading, deceptive or offensive products.
  9. Adult products or services.
  10. Products with overtly sexualized positioning.
  11. Real, virtual or fake currency.
  12. No commercial intent.
  13. Third-party infringement.
  14. Subscriptions, downloads, or digital products / content.
  15. Digital products and electronic devices that facilitate streaming of unauthorized content.

Facebook also made a preemptive step to divide the informational and commercial side of its platform.

Placements with no commercial intent are prohibited on Facebook Marketplace:

  • News and awareness posts.
  • Jokes and memes.
  • Lost and found posts.

Hint #1: Facebook plans to monetize on the separation of commercial and non-commercial content. E.g. Pay, if you want to show your commercial offer in the news feed. And vice versa.

Why Does Facebook Launch a Marketplace?

Obviously, Facebook, like any other for-profit company, is looking for new ways to make money. The marketplace is a new way to capitalize on the most precious resource Facebook has – the audience.

Facebook lists such numbers on its official Newsroom:

  • 1.66 billion daily active users on average for December 2019,
  • 2.50 billion monthly active users as of December 31, 2019.

Considering this figures alone, you can see that Facebook has a huge market opportunity. But there are a bunch of ways to take advantage of it.

Craigslist and eBay-like app

give-me-money

If you take a look at statistics on SimilarWeb, Craiglist has 560 million monthly users and the number is falling. While Facebook’s Marketplace claims to have 700 million active users.

eBay is struggling to increase sales too. The platform stuck on the mark of 171 million active users and can’t get any further. This is mostly because eBay faces harsh competition outside of the U.S., where local platforms dominate.

 

Hint #2: Facebook Marketplace can reach users worldwide, partly because it has no shipping and payment processing obligations.

It unclear now, but Facebook hardly wants to become one of those websites that sell items online for free. Otherwise, how would you monetize such marketplace? No one would pay to promote items that are given away for free.

On the other hand, free stuff is a good way to attract real money. Once the platform will get to the critical mass it may start selling better-targeted ads to the local e-commerce websites. In addition, Facebook can enable paid placement and promotions.

Facebook e-commerce opportunity

Social media Camping cartoon

There is also another opportunity. The recent polls show that population in some countries hardly distinguish Facebook and the Internet.

There are countries like Indonesia (261 million population), Philippines (103 million), Thailand (68 million), Nigeria (186 million), where Facebook users who don’t know they’re on the internet. They just tap on Facebook icon on their smartphones and rarely use browsers.

This mostly happens in “mobile-first” countries in Africa and Asia-Pacific where smartphones dominate over desktops. Surprisingly, these are also the countries where e-commerce is booming now.

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Want to start your own market place or online store?

Considering all aforementioned, just add two and two, and you can imagine the size of market opportunity we’re talking about. Enormous user base + literally no competition across the Internet.

Hint #3: Find product category that supplements to the core value of your social media, like we did in Drophook.

Masking the monopoly

Elephant-in-the-rooom

Recent Zuckerberg hearings in Congress and E.U. Parlament, put a heavy question on the platform: Is Facebook a monopoly?

It must be acknowledged that from the social media perspective Facebook is a giant, none of other platforms can compete with. The company already have tried and failed to get out from this tight grid, pretending to be one of the tech companies doing tech stuff like VR and autonomous cars. But those are technologies of the future.

By getting into e-commerce industry Facebook may try to blur its position as a social media company. E-commerce market has many competitors, here Facebook can hide its enormous revenues.

Big Challenges of a Big Platform

While Facebook has a high engagement rate and very efficient in the delivery of digital content (posts, news, memes, massages), there are concerns whether it can crack the user habits and make a pivot to the marketplace.

Behavioral pattern. Recently researchers have found that all Facebook users can be easily categorized into four broad types:

  1. Relationship builders – Use the platforms as an extension of offline communication with friend & family. Those people are usually heavy posters and viewers of pictures and videos. They comment and engage with posts of people they know frequently.  
  2. Window shoppers – They just look, examine profiles of people they are interested in, but not sharing any of their own information, nor does they comment or like anything. Shoppers use Facebook as the window into the modern world.
  3. Town criers – These are usually professional that use Facebook as a channel for communication: journalists, activists, and event organizers who see Facebook primarily as a tool. They may look for people, ask their community for help, or stay on top of all memes and news. Their real life usually very different from those perceived in Facebook.
  4. Selfies – Posting pictures, videos, and status updates is a well-known way of selfies. This cohort of users call attention to themselves or play with their own ego. Although the selfies were found to be least concerned about the accuracy of the self they presented online.

As you may notice, none of these groups are interested in marketplace functionality, or fall under the category of people who are ready to sell stuff. Their behavior patterns seem to be surprisingly comfortable with the functionality Facebook already provide to them.

Hint #4: Check your user behavior patterns. Find out whether new function aligns with current patterns.     

Local over Global. It must be acknowledged that building a local culture is hard while having on board 2.2 billion users. Facebook, just like Google, is trying to catch up with localization trend and serve local news over its global feed.

Although, the platform is still perceived as a global mediator, that helps to reach millions around the world. In a recent effort, Facebook has tested a new area of its app called Today In, but it doesn’t seem to be a radical move.

Facebook Rolled Out a New E-commerce Feature: Shops.

The Shops are available on Facebook and Instagram this is the greatest event that recently happened in E-commerce. The social-networking giant announced from now on business can list their goods on shop fronts and use other e-commerce features across its apps. The new options changed the perception of Facebook and shifted to competition with such mastodons of online shopping like Amazon, eBay, and Etsy.

Facebook’s vice president of ads and business platform, claimed that the company wanted to support businesses that might be in trouble because of the pandemic and associated economic crisis so it had accelerated its work on its shopping tool. 

Now the sellers have an opportunity to create digital storefronts in Facebook Shops where they can place an inventory of their wares and will either link out to places to buy the products or allow users to purchase them directly on Facebook.

The option will be available on both social networks Facebook and Instagram and maybe such functionality will be added to the messaging apps WhatsApp and Messenger. Instagram is also creating a dedicated shopping destination where users can find products to buy — and in a sign of the emphasis the company is now placing on e-commerce, Instagram Shop will be made a permanent button on users’ navigation bars on the app home screen later this year.

Also, brands that use its live-streaming tools will be allowed to tag products in their videos, allowing for the possibility of QVC-style shopping channels on Facebook and Instagram. The company is looking for options for users to link loyalty programs they have with businesses to their Facebook profiles.

Facebook has been investing in the potential of e-commerce as an area of growth for the business, with additional features like checkout and options to tag products in posts on Instagram for brands.

We’re seeing a lot of small businesses that never had online presences get online for the first time. For a lot of small businesses in this period, this is the difference between staying afloat and going under

CEO Mark Zuckerberg

In this way, Facebook diversifies an incredibly advertising-revenue-reliant business model through e-commerce. The crisis affected all economy sectors including advertisement. Facebook achieved a much better result than some advertisement services, its revenues in April were almost the same as in 2019. With e-commerce, we will see new growth of Facebook.

  Bottom Line

We’ve used to perceive Facebook as a place to communicate with friends and look for news. Is it possible for the platform to get beyond this framework? Is it worth it? Time will tell. We’ll look closely at this matter and find new hints to use in our app development routine.  

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