TECH

Facebook Plans Plunge Into The E-Commerce Fray

12/20/2010 04:00 pm ET | Updated May 25, 2011

What if you could wish your mother a happy birthday and buy her present at the same time, on the same site?

That's what the social media giant Facebook is asking, according to a Businessweek report that says the company intends to make a big push for e-commerce in 2011. Though a few sites, such as J.C. Penney and 1-800 Flowers, have already linked up their products to a Facebook-powered electronic storefront, the company plans for extensive expansion in the new year.

Managers at Facebook have met with over 20 companies, according to David Fisch, who heads a new commerce partnerships group at the company. Facebook is working to help companies set up their shops directly on the site, and to take advantage of the interactive tools that the social network allows.

Facebook already has a site-specific system of monetary exchange, called Facebook Credits, which currently lets users buy virtual currency with real currency for use in games and apps. Fisch says, however, Credits will not be used to buy real products.

Nor does Facebook plan to make money off the retail sites they host. Instead, the move is part of the effort to keep users on the site for longer, boosting advertising revenue.

With over 500 million active users, with over 50% checking in at least once a day, Facebook's access to the social network is unparalleled. Those users spend over 700 billion minutes each month logged in.

Though Facebook is not yet the first site anyone thinks of when they think of online shopping, the social referencing mechanisms inherent to the site make the idea seem fully intuitive. A recent study found that 60% of Facebook fans of brands are more likely to recommend those brands since becoming a fan, with 51% of more likely to buy from the brands.

Even e-commerce behemoths like Amazon and E-Bay have linked their sites with Facebook's in the attempt to harness the social connectivity amassed there. And the Facebook Open Graph, which compiles a user's likes to personalize their web experience, may threaten Amazon's long-standing system of personalized recommendations. One analyst predicted that in five years, 15 percent of all consumer spending in developed countries could go through a site like Facebook.

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