Facebook Gifts ditches physical goods, shifts focus to digital sales


Facebook (NASDAQ:FB) is overhauling its Gifts commerce platform, scrapping sales of real-world items to focus exclusively on virtual goods like digital gift cards, including its own reusable Facebook Card. 

"Since launching Gifts in December last year, roughly 80 percent of gifts have been gift cards. So, we're now adding more digital codes and making the Facebook Card redeemable at more merchants," a Facebook spokesperson told CNet. "As a part of this shift in focus to Facebook Card and digital codes, we're also phasing out physical gifts." The social networking giant is currently rolling out the remodeled Gifts shop to users.

Launched on Google's (NASDAQ:GOOG) Android and the desktop in Sept. 2012 and expanded to devices running Apple's (NASDAQ:AAPL) iOS six weeks later, Facebook Gifts enabled consumers to purchase and send physical goods like candy and teddy bears to their social network contacts. Built on top of Karma, the mobile gifting platform acquired by Facebook in May 2012, Gifts leveraged birthday reminders and timeline events like engagement and wedding announcements to prompt users to purchase presents from more than 100 retail partners including Starbucks, 1-800-Flowers, Gund and Magnolia Bakery. All items were recommended based on the recipient's Facebook profile and billed to a new or existing credit card saved to the sender's Facebook account.

Touted by some observers as a viable threat to digital commerce giants like Amazon (NASDAQ:AMZN), Facebook Gifts has struggled to gain traction with consumers: In tandem with the company's User Promoted Posts service, Gifts generated less than $5 million in earnings during the fourth quarter 2012 holiday season. Facebook eventually added sales of alcohol and Apple iTunes gift cards, and in January introduced the Facebook Card, a physical prepaid card enabling users to purchase gift certificates at retail partners including Target, Jamba Juice, Sephora and Olive Garden.

Facebook Gifts revenue is "definitely going up," Gifts manager Lee Linden told TechCrunch. "It's been steadily going up since the beginning of the year and I think it will keep going up with this [change]."

Facebook reported second-quarter revenue of $1.81 billion, increasing from $1.18 billion in the year-ago quarter. The company now boasts 819 million mobile active users, up 51 percent over the second quarter of 2012, while mobile daily active users now exceed 469 million. Nearly half a billion people use Facebook on their phones every day, Facebook said.

For more:
- read this CNet article
- read this TechCrunch article

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