Facebook already helps hundreds of millions of people keep track of their friends' birthdays. Now, the social network is parlaying those special reminders into a money-making business with a new initiative called Facebook Gifts. On Thursday, the company announced that users will be able to buy and send real, tangible presents to their Facebook friends, including Starbucks gift cards, flowers, stuffed animals, cupcakes, and more. A notification will be sent to the recipient either privately or via their Timeline, and the gift itself will show up on their doorstep a few days later. The new feature is built on the backbone of Karma, a gift-giving service Facebook acquired shortly after it announced its initial public offering back in May. The social network has desperately been looking to add new revenue streams to supplement its existing ad model. Will Gifts be the jumpstart Facebook needs?
Investors may be happy about Gifts: Finally, "Facebook is sticking its toe in the water of competitive online business," which is currently dominated by the likes of Amazon and eBay, says Jessica Guynn at the Los Angeles Times. Of course, Facebook has a lot to prove if it wants to win back investors after its "eye-popping valuation" dwindled to "nearly half its market value, dragged down by concerns about slowing growth in its advertising business." But Gifts could be a big, lucrative hit. As one Bay Area businessman puts it, "physical gifts are absolutely something that Facebook could make money on."
"Facebook gift service may be present for firm, investors"
But it's not a game changer: This idea is "pretty good," says Robert Hof at Forbes, but it's "not yet an e-commerce game changer." Among the shortcomings: Prominent gifts like teddy bears and flowers are "pretty vanilla"; you have no idea where most of the gifts are coming from; and it's not yet clear how reliable outside merchants are with deliveries. For now, "I'm sticking with Amazon and all the specialty stores I already frequent."
"Facebooks new gift service: Nice, but not yet an e-commerce game changer"
At least this will help Facebook go mobile: While e-commerce competition "is obviously important," Facebook's "really tough nut to crack is still mobile," says Mike Isaac at All Things D. More consumers are checking updates on their handsets, but Zuckerberg and Co. are still figuring out how to effectively deliver mobile ads. The new Gift system, which is accessible on all smartphones, "is another massive stab at the mobile platform," and could help Facebook "invest in revenue streams outside of its core advertising business."
"Say hello to Gifts, Facebook's new mobile revenue stream"