Facebook Shares Jump More Than 6% After Gifts Launch. (Hooray For New Revenue Streams.)
Well, Facebook shareholders sure like the sound of Gifts. — Around Wall Street's close yesterday, the company launched a much anticipated e-commerce initiative that lets Facebook users send real …
Context & Ripple Effects
Gifts is Facebook's second run at gifting: back in November 2008 it experimented with micropayments for virtual gifts, and this week's launch upgrades that idea into physical goods — users choose, pay for and mail real presents from inside the app. The rollout was previewed on September 21 with a US launch promised 'in weeks', then detailed by AllThingsD two days before the market rewarded it.
First-order effects
- Facebook gains its first meaningful non-advertising revenue line since going public, and investors priced it immediately — shares rose more than 6% around the launch.
- US users can now send real, paid physical gifts directly from Facebook, turning birthday and event notifications into purchase moments.
Second-order effects
- Social gifting startups that built businesses on Facebook's own social graph now compete against the platform itself for the same occasion-driven purchases.
- Merchants and brands that supply the Gifts catalog get a distribution channel tied to Facebook's reminder-driven intent, rather than ad-click intent.
Third-order effects
- If gifting proves out, Facebook's revenue model broadens from selling attention to taking a cut of transactions executed on its graph — a structural shift toward platform-native commerce.
- A pattern of platforms absorbing features built by startups on their APIs would push entrepreneurs to avoid building anything that depends on a social network's goodwill.
The trend: Social networks are extending beyond advertising into native commerce, converting their social graphs into transaction infrastructure.