Wednesday, August 05, 2009

Financial Times: Facebook could be a hit with shoppers

Facebook could be a hit with shoppers
By David Gelles in San Francisco
Published: August 5 2009 03:00 Last updated: August 5 2009 03:00

A new wave of sophisticated e-commerce applications is appearing on Facebook, a sign that the world's largest social network could rapidly emerge as a big destination for online shopping.
1-800-Flowers, the US floral gift retailer and distributor, last week opened its "Facebook storefront", an application running on Facebook's fast-growing platform where users can purchase and send flowers.
At least 20 more such storefronts will appear on Facebook in the next two months, according to Wade Gerten, chief executive of Alvenda, the software developer that built the 1-800-Flowers storefront. "You'll see a lot more coming out in the next couple of months," he said.
Mr Gerten said he had contracts to develop eight storefronts, but that since the 1-800-Flowers application launched, he had secured 12 more. He said the applications would be for "very large general merchandise retailers, and very large electronics retailers".
The storefronts represent the beginning of a transformation that could turn Facebook into a retail destination, said Sucharita Mulpuru, an e-commerce analyst for Forrester Research. "It's an enormous platform," she said. "That means the ability to reach more consumers and make money."
Facebook has more than 250m users and is growing fast. However, it has no current plans to organise the storefronts into an online mall, or to make money from them by either taxing the transactions that take place on its site, or by offering its own virtual currency.
At least two other companies already have limited e-commerce functionality in their Facebook applications. Sears, the department store, and Threadless, the T-shirt seller, both let users add items to their shopping cart on Facebook. But to complete the transaction users must go to the company's own website. Allowing users to remain on Facebook while they complete their transactions is important in increasing the site's "stickiness". More than 120m people log on to Facebook each day, spending a combined 5bn minutes a day on the site.
Companies are turning to social media sites such as Twitter and Facebook to help them boost business. Many big retailers have a fan page on Facebook, while retailers large and small are offering exclusive deals to their Twitter followers.
But neither site has been able to make money from the increased business activity. Instead, Facebook is focusing on attracting advertisers, and is expected to bring in at least $500m in revenue this year.

Copyright The Financial Times Limited 2009

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