Facebook Cuts Ribbon on New Online Marketplace

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Facebook on Monday announced Marketplace, a new mobile app that facilitates buying and selling between peers.

Marketplace allows members of a community to discover, buy and sell items, noted Facebook Product Management Director Mary Ku.

The service is scheduled for rollout this week in the United States, UK, Australia and New Zealand. Users can access Marketplace by tapping a shopping icon at the bottom of the Facebook mobile app.

The opening screen displays photos of items for sale by people who live in a user-defined geographic area. Tapping an image will reveal more details about the item: product description, name and profile picture of seller, and location. Items can be saved for later reference.

If you're interested in an item, you can let a seller know by sending a direct message via Marketplace. After that, you're on your own. Facebook does not facilitate payment or delivery of Marketplace purchases.

A slick user interface makes it easy to post items for sale on Marketplace.

You take a photo of what you're selling or import an image of it from your camera roll. Add a product name, description and price. Confirm your location, pick a category for the item, and post to Marketplace.

As you post to Marketplace, you can choose to have your item posted simultaneously to a buy and sell group on Facebook.

Marketplace includes a Your Items section so you can keep tabs on items you've saved, those you've posted for sale, and communications with others on Marketplace.

Only Facebook users who are over 18 years old will be able to use Marketplace, which will be available for both iOS and Android phones. A desktop version of Marketplace will be offered in the coming months, according to Ku.

The addition of Marketplace is part of Facebook's larger marketing strategy.

"Facebook is trying to cover as much of the digital ecosystem with marketing as they can," said Michael Inouye, a principal analyst at ABI Research.

"The more people that use their service, the greater the opportunity to get eyes, which gives them ad revenues," he told the E-Commerce Times.

Increased ad revenues is just one of the benefits Marketplace can provide Facebook, noted Tom Caporaso, CEO of Clarus Commerce.

"Marketplace users will be adding extremely specific information to Facebook's database on them -- the types of items they're pondering and purchasing, the prices and offers that move them to act and more," he told the E-Commerce Times.

"While businesses can't target individual shoppers with offers based on their Marketplace behavior, Facebook can still likely find ways to use that information to enhance its services, both to users and to its advertisers, Caporaso said.

"Just as importantly, the app gives Facebook immediate access into mobile commerce, which is growing more quickly than e-commerce as a whole" Caporaso added. "Beyond that, while it's not making a penny off of sales now, Facebook can still monetize Marketplace sales in the future."

With the launch of Marketplace, Facebook is heating up competition in the consumer-to-consumer sales market where Craigslist and eBay hold dominant positions.

"I think Marketplace primarily threatens Craigslist, as the service seems creepy at times with stories of people selling sex and losing their lives after showing up for an exchange," said Patrick Moorhead, principal analyst at Moor Insights and Strategy.

"None of that may be true, but it's the perception," he told the E-Commerce Times.

While buyers and sellers on Craigslist know little about each other, Marketplace participants can gain knowledge about who they're doing business with through their Facebook pages.

What's more, sellers are likely to be more careful about their behavior in Marketplace than in other online bazaars.

"Sellers are going to feel compelled to be more honest and forthright because their activity is attached to their account," ABI's Inouye said. "You don't want your friends to see that you've been doing bad, shady things.

"There's more incentive to be an outstanding digital citizen," he added.

Craigslist's approach to mobile could both hurt and help it in competition with Marketplace, noted Charles King, principal analyst at Pund-IT.

"The fact that Marketplace is integrated into the Facebook mobile app is significantly different from Craigslist, which prefers to employ third-party app developers for mobile solutions," he told the E-Commerce Times.

"That should allow Facebook to create a more seamless, visually rich experience, but mobile users will also be subjected to Facebook ads and other intrusions. That's a significant negative, given Craigslist's long resistance to cluttering its service with ads," King noted.

"Many longtime Craigslist users also prefer the site's elegant, easy to navigate UI," he added. "In comparison, Facebook Market is likely to be as elegant as a visit to Times Square."

With its emphasis on community buying and selling, it might appear that Marketplace is more of a threat to Craigslist than to eBay, but King doesn't think so.

"I believe it's more of a threat to eBay than Craigslist -- at least in the short term," he said.

"That's because of Craigslist's ability to seamlessly support local, ephemeral or one-time sales of goods," King explained. "If you have a used car, computer or baby carriage to unload, Craigslist is a terrific option, but if you're using online sales as a second job or to create additional income, eBay -- and now Marketplace -- are probably better options."

eBay is in a better position to defend itself from Marketplace than Craigslist, suggested Clarus' Caporaso.

"eBay is an established leader in this field, with a mobile app of its own," he said, "and it's unlikely to sit idly by while Facebook poaches its audience."

Craigslist did not respond to our request to comment for this story.

John Mello is a freelance technology writer and contributor to Chief Security Officer magazine. You can connect with him on Google+.

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