Shares of Facebook rose a little more than 6 percent on Friday after the social network launched a new service that will let users send gifts to their friends. The process of sending a gift is quite simple. As easily as you can post a link, text message or photo to a friends page, you can now click on the gift icon and send a wide variety of gifts from coffee, to food, to hooded animal towels for kids to your friends within your network. I did not need to wait for Wall Street's reaction to form my own opinion. Facebook is slowly rolling out the service to its user base, but I could not wait that long so I was granted access on Thursday and began playing with the service.
On the day that Facebook's IPO'd, the company bought Karma, a mobile social gift-giving app that allows people to send real gifts. Karma's simple and elegant design made it easier to give people gifts from their mobile phone. The app first launched in March 2012 and had raised around $4.5 million in funding prior to its release and speedy acquisition.
It seems like social e-commerce is an obvious fit for Facebook, given its mission to make the world more connected. Many of us are using Facebook to express major life events, updating our friends and family members on milestones such as births, engagements, graduations, weddings, serious illnesses, job promotions and the end of relationships. Given Facebook's access to our social graph and interests, I could see how this service become more and more targeted to possibly become a new form of revenue for the company via product placement. If Facebook knows I am going through a life change, it could theoretically suggest gifts that match that particular life event for a person. For example, suppose I changed my status from "in a relationship" to "single," the gifting platform could suggest my friends send me ice cream, margaritas, or a movie like The Notebook via Netflix. (I realize I may be a masochistic to even suggest The Notebook after a breakup.)
Surprisingly not everyone is bullish on Facebook's new gifting platform. Chris Dixon, a successful serial investor, shows he's skeptical it'll work via this tweet:
Facebook Gifts: getting users to switch"modes" from online to offline (& vice versa) has historically yielded very low conversion rates.
— chris dixon (@cdixon) September 28, 2012
While historically this may be the case, Facebook has the user base, the data and a talented team to make the user experience of gift-giving pleasant and frictionless. Just yesterday I received a cup of Starbucks coffee via a Facebook gift from a classmate of mine from business school. I was delighted. This morning, I took my digital gift and used it to buy myself a cup of coffee. It was super easy and I felt like a rock star. I am a convert, not that I needed much convincing.
The ability to bridge the online and offline shopping experience is a major opportunity for Facebook. No one has proved this model lately better than at Postagram. I know this because my startup was originally a postcard company. I remember when I was trying to raise money for Blurtt's postcard business, skeptical investors would say, "No one sends postcards anymore!" That is true because by the time you find the right postcard, write a message, find a stamp and then a post office, you just wasted nearly an hour when you could have just as easily sent a text message. Postagram bridges online and offline by allowing someone to take a beautiful Instagram, Facebook or camera image and send as a real postcard in the mail. Sure, you do not get the instant gratification that you do when you walk into a store and buy something, but Postagram has mitigated this by sending out digital links of your postcard. If you do not have a person's physical address, you can send them a link requesting their address and a few days later, they have a physical postcard with a pop-out picture they can hang on their fridge, wall, desk or frame. With Postagram, you get a permanent memory of a moment rather than something you need to scroll Facebook's Timeline to find or search a digital photo album.
There are ways I think that Facebook can reduce friction and make gift giving easier by allowing me to add money to an account and have the account deduct funds as I give gifts. This way I do not have to keep entering my credit card. I could see myself budgeting, say, $500 a year for gifts and allocating it to friends for their birthdays or other occasions. Other opportunities I see for the social network are wedding and baby registry integration and wish lists.
What people need to bear in mind is that gift-giving is not about sending someone a $100 toaster, although I would note the gift selection on Facebook is good and I am sure will only get better. What I want people to take away is if you send someone a peppermint latte from Starbucks and said, "I was just thinking of you," the receiver of the gift will never forget the gesture. Plus peppermint lattes are like Christmas in a cup. Even if people used the Facebook gifting app to send small gifts, it gets people comfortable with transacting on a social network and then the sky is the limit (or Mars, or the moon).
Facebook needs to make money and is exploring new ways to do so but I am going to go soft here and say I believe that the gift-giving platform goes beyond making money or giving gifts, at least for me. I do not even think about the fact that I am helping Facebook make money using their gifting platform. I think about the gift recipient, the element of surprise and excitement as they unwrap an exquisite digitally wrapped gift, and the feeling that comes along with knowing someone was thinking of you. The Facebook gifting platform makes us feel more connected and grateful that we have friends who understand that even a small gesture like a cup of coffee can really go a long way and Facebook just made it easier for you to do just that.