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Facebook Buying Into E-commerce

Hold onto you hats, virtual or otherwise. Facebook has confirmed plans to expand its Gift Shop to include items from third-party developers and physical goods.



Now, virtual goods -- which uses can presently buy using "Facebook Credits" -- are nothing to snicker at. Indeed, the virtual goods and currency market will reach an estimated $1.8 billion this year, according to a recent study by analyst firm Frank N. Magid Associates and commissioned by virtual currency provider PlaySpan. What's more, nearly 12% of Americans -- divided evenly between males and females -- report having bought a virtual item at some point over the last 12 months.



But, while in its earliest stages, Facebook's entrée into the world of physical goods has the potential to change the face of e-commerce as we know it.



Late last month, 1-800-Flowers.com launched an e-commerce store inside its Facebook Page. Presently, the online flower retailer accepts payment with all major credit cards, but it's expected that it will soon implement Facebook's upcoming proprietary payment platform, which is currently being tested with a handful of developers.



Initial developers include American Greetings Interactive, GreetBeatz, Someecards, and Real Gifts. Physical gifts -- say, a dozen roses -- might cost up to 500 Facebook Credits, or USD $50. When users select a physical gift, they'll be prompted to enter the delivery address in line, just like in a traditional shopping cart.



Based on consumers' enthusiasm for social shopping -- which could be off the charts -- Facebook's real value could emerge as an e-commerce powerhouse rather than as an advertising platform. Who knows? From its humble beginnings as a purveyor of virtual bouquets, Facebook's Gift Shop could emerge as the ultimate Amazon killer, and the answer to social network's vexing monetization troubles.

Read the whole story at Inside Facebook »

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