WIRED reported today on the new Facebook "Buy" button, ushering in a new era for the ubiquitous social network. No longer will it just sell space for advertisers; it will sell space for retailers too.
"Last week, Mark Zuckerberg and company started testing a 'Buy' button inside the News Feed posts and ads that turn up on the world’s most popular social network, letting users instantly pay for goods and services from other merchants without leaving Facebook," writes WIRED's Marcus Wohlsen.
The Buy button ushers in a new era for Facebook: It is now officially an e-commerce site.
"The button provides an added level of convenience for those who spend so much of their time on Facebook already, and it marks the beginning of a new stage in the company’s evolution into a significant money-making machine."
This is a huge development for Facebook as it immediately becomes a e-commerce site, competing directly with the likes of Amazon, Apple (with its App Store and iTunes). Based on usage time alone (both on desktop and mobile devices), the potential seems colossal.
It's still early of course, and we should note that people enjoy going on Facebook for it's "social" benefits (i.e. to creep), not to shop. Anybody who's been annoyed with all the Candy Crush Saga invites would agree. If you want to buy something online, you typically go to e-commerce sites to do that.
People don't typically go to Facebook to shop. But because it 'knows' you better than Amazon, eventually shopping on Facebook could get better, more personalized.
Where the Facebook Buy button gets interesting, though, is when Facebook taps into its wealth of data -- which it already uses to sell advertisers targeted ads to you, based on your likes, dislikes and past activity -- to sell you impulse buy items. That's where they get you: when you least expect it.
"This progression only makes sense," Wohlsen writes. "From the point of view of a Facebook advertiser, the ads become more useful if they quickly lead from a click to a purchase. Facebook itself wins by making that path as short and self-contained as possible in light of the alternatives available to a would-be consumer: clicking over to Amazon or Google or any other retail site. And if the company can actually make purchases happen, the prices of its ads go up, potentially way up."
Wohlsen explains that, according to Nicolas Franchet (Facebook's longtime global head of retail and e-commerce), Facebook understands the distinction between shopping via search (as you would on Amazon or Google), and shopping via Facebook. The latter would be more akin to "hanging out at the mall than going to the grocery store." Browsing is driven by likes, interests and friends, rather than by price, selection and features.
Browsing on Facebook will be 'more like hanging out at the mall than going to the grocery store.'
Simply put, from a personal data standpoint, Facebook knows a lot more about you than Amazon does and because of this, it may be better able to personalize the browsing experience for you.
There's also the potential benefit of auto-pay (similar to PayPal or iTunes), where Facebook already has your credit card information and offers users the convenience of clicking and buying. It's a double-edged sword however, as Wohlsen notes. "(Users) might think again if they stopped to consider just how far Facebook's reach could extend once that credit card number becomes another data point in their data profiles."
For now, like Facebook, we'll just have to wait and see how this button works one day at a time.