Blog / Marketing / ecommerce

6-7 minutes

The Prospects and Challenges of Facebook Marketplace

Facebook Marketplace

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

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 – audience.

Facebook lists such numbers on its official Newsroom:

  • 1.45 billion daily active users on average for March 2018
  • 2.20 billion monthly active users as of March 31, 2018

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.

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.

On top of that, selling goods to neighbors is sort of an awkward experience. From this point of view, Facebook will need to find a happy middle between neighbors and strangers. That brings us all sort of new question: how to set up geofencing, whether to show a friends list, whether to tag people you may know?

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.  

Want to turn your app idea into reality? We can help!

Tony Sol is the business development manager of GBKSOFT, overseeing the production of all writings for both internal blog and external platforms. He is technical-driven person always looking for new benefits of merging business and software.


Leave a comment
Close

Leave a Reply


Similar Blog Articles

Mobile App UX best practices of 2017

UI and Design

Mobile App UX best practices of 2019

It must be acknowledged that User Experience design best practices and principles undergo relatively little change year over year. And 2019 has pretty much the same UI/UX mobile design practices. This is primarily because the goal of user experience design stays the same – make users happy when using your product and get a desirable...

Rating — 5 (13 voices)
Groupon like app

Business

,

StartUp App Ideas

How to Create a Groupon Like App: Read Before you Start

Discounts, last-minute deals, limited time offers, coupons, and sales. Those are the most popular and cherished sales promotion tools in e-commerce and offline retail sector. Most people adore them and customers are eager to max out the saving through such promotion channels. Surprisingly, cutoffs in prices are beneficial for both sides: consumers and sellers. But...

Rating — 5 (4 voices)
Minimum Viable Product (MVP) definition

Business

,

Marketing

MVP Definition: Minimum Viable Product and Alternatives you May Consider

Building an MVP is a widely known practice that helped many entrepreneurs to save a lot of money and time on early stages of startup development. But what works for one doesn’t necessarily work for the others. And definitely without a clear understanding of MVP purpose you can lose more than win.

Rating — 5 (5 voices)

Categories

All articles Business Company News Development Marketing StartUp App Ideas UI and Design

Tell us

About your project

We’ll estimate your project and give first advice within 24 hours!

We use cookies to improve your experience with our site, including analytics and personalization. By continuing to use the service, you agree to our use of cookies as described in the Privacy Policy.

Testimonials

Tao
GBKSOFT did a good job to manage the project. They put in a good effort to communicate with us and make it easier for us to communicate with developers. Good Job
Jonathan
More good work from team GBKSOFT. All well executed. The support within GBKSOFT is excellent. Communication is good too, spoken English as well as written. Support
Andy
I think they do great work. I haven’t yet given them something that they were unable to do. Great
13
App Futura ExtractGood FirmsClutchAwwwards