Facebook Inc. is pivoting silently and only smart investors will key in before the rest of the market. One of the key drivers behind the firm’s growth is its ability embrace change, to move with the trends and to pivot at the most opportune time.
In 2012, Facebook pivoted into mobile at a time when Microsoft and Yahoo were still leading on the desktop front. Now, the whole world has gone mobile, Yahoo and Microsoft are nowhere to be found in the mobile space. Facebook is stylishly entering the ecommerce space but many people won’t have an idea of what Facebook is planning until it unveils the service.
Signs of a Facebook Pivot
About two weeks ago, news broke that Facebook was already making moves to breakout into the ecommerce market. It was reported that Facebook plans to add “Buy” buttons to its Pages in a move that will provide e-commerce capabilities to brands marketing their goods and services on Facebook. With the new buy button, buyers can have a complete shopping experience from searching to checkout without migrating out of the Facebook ecosystem.
In March, Facebook unveiled a payment system that allows people send money to their friends within Facebook Messenger. Facebook Payments which will be rolled out in the next couple of months allow people to send and receive money into a linked debit card directly right there in the Messenger app.
Facebook Needs Ecommerce Badly
A new report suggests that Facebook has a compelling reason to look for other revenue streams outside its core business of ads revenues and app installs. At the end of Q2 2014, 15% or 204M of 1.317B Facebook MAUs are in U.S. and Canada. 92M or 22.17% of Facebook users are in Europe. 410M users or 31.13% of Facebook’s users are in Asia. 411M users or 31.20% of Facebook users are in the rest of the world. In essence, Facebook’s fastest growing segment (and probably the least monetized) is the “rest of the world”.
In Q1 2015, Facebook’s average revenue per user in the “rest of the world” segment is less than a tenth of average revenue per user in North America. For instance, the firm earned $8.32 in ARPU from users in U.S. and Canada but it only earned a measly ARPU of $0.80 in the rest of the world. Facebook’ needs to find a way to monetize its “rest of the world” segment in order to augment slowing growth in the developed markets of Europe and America – ecommerce is the key.
Facebook Has The Potential to Succeed in Ecommerce
The main factor that will help Facebook succeed in the ecommerce space apart from its obvious deep pockets and large user base is its knowledge of consumerism patterns. The firm knows the brands that its users follow on Facebook and Instagram. In addition, Facebook knows what you and your friends are buying and it can use that information to push ads into your news feed. It is still a little too early to anticipate Facebook’s final move into the ecommerce space, but the handwriting on the wall suggests that the firm has ecommerce in its sights.