via e27: On October 26th, Facebook announced it had entered into a host of strategic partnerships with auto dealers on its marketplace.
Facebook had, somewhat passively, become a go-to option for dealers to sell cars — and it seemed people were buying. So, the social media legitimised the relationship to both scale the platform and provide trustworthiness to the dealerships using Facebook.
The deals highlight a modern new reality: social media is not just a platform for likes, shares and marketing — people can, and do, sell goods via the platforms; some of these sales being big-ticket items like cars.
The Facebook Marketplace
While not available in Asia, it seems only a matter of time before the world’s largest social media company extends its P2P e-commerce service to this part of the world. However, even if Facebook officially launches Marketplace in the East, it will only be legitimising what has already grown into a vibrant grey economy.
In Hong Kong, there exists an infamous Facebook Group called ‘Swap it’. (The channel became famous for a place to nab good deals, but also a source of drama — and thus amusement for the people who enjoy this kind of entertainment).
It works like any other P2P service in the sense that people post goods online and other people barter until a price is agreed upon. The people then meet offline and exchange cash for goods. The only difference is it is not a company, there is no leader, no revenue stream and it is 100 per cent user driven.
Now, a P2P company called ‘SwapIt’ has emerged to take advantage of a concept that has already been proven to be popular (it’s a localised version of Carousell).
According to e27 reporting, the phenomenon of ‘Facebook commerce’ is common across the world — in Taiwan, people use Facebook Live as television infomercials. In Singapore, Facebook is the go-to place for immigrants looking for housing.
In possibly the most interesting example of informal commerce, when ride-hailing services like Uber were banned in Austin, Texas residents turned to Facebook groups to crowdsource rides around town. One driver told The Guardian he made more money via Facebook than when driving for Uber or Lyft.
Not seeing a dime of the transactions
The problem for Facebook (and any P2P e-commerce company) is getting people to pay for the goods without leaving the app or partner payment service. They are missing out on a huge opportunity to generate revenue via transaction fees or merchant discount rates.
Sure, companies like Facebook or Carousell can charge for boosting a listing, but once the transaction is agreed upon, the companies can’t take US$1 out of the US$20 sale deal that went down at the MRT station.
Facebook may be able to tolerate that it misses out on cash transactions, but the last thing it wants is to become a go-to source of directing customers to gateways like Venmo or PayPal
Facebook recognises this, and in the US is actively pursuing the in-app payment option (especially with its Messenger app). People can pay for the goods without leaving the Facebook App and it recently announced group payment options.
According to TechCrunch, the social media giant is testing out the services in Southeast Asia.
Also Read: AR has not yet arrived for e-commerce, but boy is there reason for excitement
Should Facebook successfully build a Southeast Asian marketplace and payment system, it will be a similar situation as Amazon entering Singapore.
There will be some excitement, and it will shake up the industry, but the question will become if Carousell, Shoppee and the like have the brand awareness to keep its users. They very well might, and it would be misguided to assume Facebook could simply enter Southeast Asia and dominate the market.
Third-party applications — specifically the keyboard
A new battleground for social commerce has emerged as startups and banks fight for space on our mobile keyboards
On the cutting edge of keyboard payments is the Singaporean bank OCBC. In late-August, the bank released a mobile keyboard that includes a button for people to pay one another within any app. It can be used in WhatsApp, Facebook and e-commerce apps like Carousell.
How it works is pretty nifty. The keyboard comes ‘attached’ to the OCBC banking app and if customers visit their phone’s keyboard function, they can change from the stock keyboard to the OCBC Keyboard.
It then includes a ‘pay anyone’ button on the top of the keyboard. When people click on the icon, a drop-down list of accounts is shown and with a couple of security steps, the money will be transferred to the recipient.
Now, the system isn’t perfect for social commerce — with the key issue being that the recipient also needs to be registered — but the current iteration does not feel like the final product.
Other companies building similar products include Warply and PayKey.
With the almost ubiquitous use of messaging apps like WhatsApp, LINE, Facebook Messenger and WeChat, it is fairly easy to see how this technology could be a game changer for the future of social media commerce.
The state and future of social media commerce
In reality, there really is only one company has successfully become a ‘social media commerce’ platform: Instagram. The platform has become a great place for micro-merchants to sell goods, but once again, much of the sales are generated offline and thus Instagram doesn’t generate revenue from the sales.
For example, in Malaysia, for many years the industry has been an ocean full of ‘whales and minnows’ — a few major e-commerce platforms who are surrounded by micro-merchants using Instagram to sell goods.
On the flip side, the largest social media platform in the world’s most populated country has yet become a place for online shopping. WeChat, which has 700 million users and its own payment infrastructure, is not a viable alternative to Alibaba or JD.com.
According to AdAge, there is a nascent shopping mall on the service, but it is nothing to write home about. That being said, even a small e-commerce presence is intriguing and the growth potential is exciting.
WeChat, more than Instagram, is how people should understand e-commerce on social media. it as an option for buying goods but it hasn’t really taken off and the vast majority of people don’t participate.
If we are going to get into metaphors, the industry at the moment is a seed that has just started to germinate. The little bit of green has started to peek out; but that’s about it. Social media commerce still has a long way to go before it begins to resemble a full-grown plant.
But with some watering and care, the industry feels like something that could bloom into something beautiful.