Facebook (NASDAQ:FB) has struggled many times in the past to find a way to capitalize on the online shopping space and create revenue stream, but with no success.
One of those endeavors was called Facebook shopping carts. The idea might have been good and it was probably a good try, but the whole thing just never caught on. One of the problems is the Facebook platform itself. When people go to Facebook, the last thing on their minds is shopping. Facebook is all about socializing, making friends and, yes, finding that significant other. But the last thing someone wants to do is go shopping when he or she is on Facebook.
Amazon (NASDAQ:AMZN), however, is a totally different platform. When you go to Amazon, you go there for a specific reason -- to shop. You don't socialize with friends and surely you are not looking for that significant other. And not only do you go to Amazon for the sole purpose of buying something, but most of the time you know what you want to buy and simply go there to make the purchase.
Amazon to online sales is as natural as honey is to a bee. Trying to get a share of this market is not easy for any company -- especially for a company like Facebook, which has no experience in the online shopping space. However, just because Facebook does not have a piece of this market does not mean it should not make an effort to try to get a piece of it.
In an attempt to boost revenue, Facebook will soon introduce Facebook Gifts. This service will enable users to send gifts to each other, either privately or publicly. The user who receives the gift will be able to change its color and other characteristics before it is shipped. Facebook will share the revenue from this activity with partners that participate in the program.
I have to say -- this is a refreshing idea. For example, I am sure it will have an appeal to all those users who use the happy birthday apps. People send birthday presents anyway -- what's an easier way to send a gift than when one is reminded of someone's birthday on Facebook?
Plus, since gifts are about socializing anyway, Facebook is a natural. What Amazon is to shopping, Facebook is to socializing. Thus, the idea of sending a birthday present or any other type of gift via a social platform will be as natural to Facebook as buying a book is to Amazon.
Facebook might be on to something here. Yes, you can also send a gift through Amazon, but Facebook would be a much more interesting way to do that. For beginners, the fact that you can share with your friends to whom you send gifts opens up new horizons.
Think about it -- let's say you want to show off to your friends and share the fact that you just sent out 20 Christmas presents. Or let's say you want to win the heart of that very special significant other and want to share your intentions with your friends. The more I think about the possibilities, the more I like it. I believe this might give Facebook a very nice slice of the online purchasing space after all.
Whether this new idea is enough to lift the stock remains a big question. One thing is for sure -- the market will not take Facebook's word for it until and when revenue and earnings are real. However, I can imagine a situation where we might see speculative buying based on the sole premise that the idea might catch on later.
Personally, I like the idea and think that in the long run Facebook will probably become a household name for gift giving. However, It might take a while, assuming the logistics of this new service work according to plan and the company does not mess things up while getting there.
The bottom line, however, is that it's a natural for Facebook to be in this space. No matter how many hurdles it has to overcome, in the end it will probably pay off and be worth the current effort. Unless, of course, Amazon comes up with a similar concept and makes gift giving even better and easier.
But then again, the space is so natural for Facebook to be in that if this new service does take off, it will be very hard for someone else to take it away from it. That's because, by default, Facebook is the ultimate social platform.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.