Facebook Inc (NASDAQ: FB)’s New Shopping Feature

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By Jessica Schultz on July 19, 2014 Technology & Software

On Thursday, Facebook Inc (NASDAQ: FB) announced that it would be testing it’s a feature that allows users of the social networking site to shop directly from its site.

According to a blog post by Facebook, the company plans to insert ‘buy’ button on the site’s ads and page posts. This button will let users purchase the items directly from their news feeds, all without navigating away from the social networking site. This feature is currently being tested with a select group of small and mid sized businesses in the United States, with the feature optimized for mobile and desktop users.

Facebook has made prior attempts at integrating and enabling purchases into its social network. It allows users to purchase gifts for their Facebook friends and make donations to charities. In 2012, Facebook also launched Facebook Credits – a online virtual currency that allows users to make purchases within games. This venture yielded limited success, and was abandoned in 2012.

The social networking company is renewing its attempt to break into the e-commerce space. With 1.2 billion users, the testing will help Facebook determine the potential to push retail sales through its social networking platform.

Mark Zuckerberg also stated that he created this ‘buy’ feature to accommodate user privacy. Information about users’ credit cards and debit cards will not be shared with any other marketers. Facebook itself will also store and protect the card information in order to streamline purchases. A third party payment processing company will handle the transactions.

As of today, the company will not be taking a portion of the revenue from the products sold through the Facebook Buy button.

Twitter Inc (NASDAQ: TWTR), a fierce competitor of Facebook, hired Nathan Hubbard – the executive at Ticketmaster. Hubbard’s job was to discover ways to allow users to purchase goods directly from tweets on Twitter.

The San Francisco based micro blogging company also purchased CardSpring as a preliminary attempt to break into the e-commerce market. CardSpring gives users the ability to redeem discounts and deals through the tweets of merchants. Like Facebook, Twitter is latching onto the hope that by showing ads for goods and services alongside organic posts, consumers will tend to impulse buy, giving advertisers a chance to increase sales.

Twitter also struck a deal with Amazon Inc (NASDAQ: AMZN) last month, to provide a collaborative service where users can shop via hashtag. The CEO of Twitter, Dick Costolo, stated that the microblogging company hopes to provide commerce in the moment.

In order to keep up with its social networking rivals and make a name for itself in the e-commerce space, it is imperative that Facebook explore different methods to appeal to consumers.

In other news, Facebook’s stock tumbled last week when Chairwoman from the Federal Reserve, Janet Yellen, issued a statement that media stocks, such as Facebook, were stretched. Facebook shares then fell 1.08% following this statement, dropping to $67.17.

Experts in the media industry quickly retaliated, with the CEO of Omega Advisors Inc, and the chairman of Marshall Wace LLP opposing Yellen’s opinion.

Facebook’s stock then recovered by 0.49%, bouncing back to $67.66.