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Facebook’s Marketplace App Expands Its E-Commerce Footprint — And Opportunities

Facebook’s recent introduction of a Marketplace feature on its mobile app represents a major step forward in its e-commerce efforts. The new functionality allows members to buy and sell items from and to each other in a centralized place on the social media platform. Although the Marketplace doesn’t generate revenue for Facebook (yet), it should further solidify Facebook’s status as the leading social portal, expand its e-commerce footprint, and provide significant money-making opportunities in the future.

In the past three years, U.S. mobile commerce traffic and sales have taken off, and Facebook has seen double-digit quarterly growth rates in mobile-only users.  By July 2016, it had 1.57 billion monthly active mobile users.  Just as importantly, 450 million Facebook users now visit “buy and sell” groups every month.  Facebook also knows that even industry leaders need to keep innovating to stay relevant to customers, particularly when it comes to mobile apps, which are the latest frontier in brand reputation.

Facebook therefore started testing the Marketplace feature on its app this spring.  The results were so promising that Facebook rolled out the feature in the U.S., the U.K., Australia, and New Zealand — and replaced the popular Messenger shortcut on its app with the Marketplace’s shopping-bag icon.  Clicking that button opens a home page that displays a personalized array of items available for sale in the user’s local area.  (Facebook chooses the items that are shown on each member’s home page, based on that person’s previous and ongoing actions and demonstrated interests on the overall platform.)  From there, a user can:

*Click a product image to see its description, its price, and the seller’s profile and location;
*Search for products by category, price, and item;
*Check out items sold outside the local area;
*Bookmark and track specific products via the “Your Items” tab; and
*Send an offer or other message to the seller.

However, users can’t place orders on the Marketplace at present; there are no checkout pages, so payment and delivery details are worked out between each buyer and seller.  A side benefit of that, though, is that the Marketplace doesn’t charge any fees.  That perk, combined with Facebook’s huge audience of potential buyers, will likely peel at least some sellers away from eBay, Etsy, Craigslist, and other peer-to-peer e-commerce sites.

That would certainly serve Facebook’s goal to increase user traffic to and time spent on its platform.  Another enduring company goal, of course, is to drive more online conversations than Twitter, Pinterest, Instagram, Google+, YouTube, and other social outlets.  Facebook members already perform 2 billion searches every day on Facebook, and the Marketplace will surely boost that number significantly.

While Facebook has no immediate plans to directly monetize any of these new activities, the Marketplace will obviously generate substantially more user data.  Facebook can then use that information to optimize its members’ individual and collective experiences and enhance Facebook’s customization tools for advertisers — which will help its own bottom line.  Down the road, Facebook can also use the Marketplace to build new revenue streams.  For example, it might:

*Charge retailers for posting ads on the feature;
*Sell space on the home pages and/or in the search results of targeted demographic groups;
*Offer fee-based payment and other checkout services; and/or
*Contract with a shipping company to facilitate Marketplace deliveries while charging users a service fee.

Retailers of all sizes will naturally keep an eye out for new opportunities to reach Facebook’s vast user base.  As noted earlier, Facebook seems content for now to use the Marketplace simply to drive more visits from and greater engagement with its members.  Even so, the feature competes with established peer-to-peer sites, which should prod them to find new ways to attract buyers and sellers — and soon.  Facebook plans to offer Marketplace in more countries and launch a desktop version fairly quickly, thereby upping the ante in its bid to become a destination e-commerce site.

Tom Caporaso is CEO of Clarus Commerce, a provider of e-commerce and subscription commerce solutions that also owns and operates