What’s Next for Facebook?
One strong contender for the January 15 event could be an enhanced e-commerce platform, although it would have to be a huge jump from Facebook Gifts to warrant all of the buzz. Amazon (NASDAQ:AMZN) has already responded to Facebook’s foray into the world of e-commerce with a step in the social direction, launching its “Friends and Family Gifting” option. The premise behind both is similar. Social web allows you to stay in touch with the people you care about; e-commerce allows you to effortlessly send gifts through the mail. With their powers combined, they are social commerce, and the potential for profit is tremendous.
It will be interesting to see what angle wins a larger piece of the social-gifting pie. Facebook will obviously leverage its strength as the world’s largest social network and attempt to catalyze sales through things like birthday and anniversary reminders. There’s a curious social phenomenon behind the visibility of gifting, and how publicly buying your pals a gift card can either encourage or discourage spending. The denizens of Facebook could react either way to the commercialization of their social sphere.
On the other hand, Amazon is hands down the king of online commerce and pretty much runs on the slimmest margins feasible — and some would argue that its margins are too thin (the company has a trailing-twelve-months operating margin of just 0.93 percent). The value of its warehouse and distribution network is hard to overstate, and frankly a lot of people don’t want to paste their spending behavior all over the social sphere. Many consumers would prefer their shopping and social experiences to be separate, and only cross paths when necessary — i.e. Friends and Family Gifting.