Facebook is taking on Craigslist and eBay directly, with a new mobile local — and probably international — classified ad feature called Marketplace. Not only will this drive one more nail into the coffin of newspaper classified, it will give Facebook some unique opportunities to further target its users with programmatic ads.
A key component of this service is that Facebook is not taking a fee for Marketplace transactions, in common with Craigslist but differing from eBay. Between eBay and PayPal, sellers give as much as 16% of their sale price to the two services. The desktop version of Marketplace is said to be coming soon, though local buy/sell groups are already active on Facebook. More than 450 million people are said to use these monthly.
I heard a report Monday — curiously enough on the American Public Media show “Marketplace” — during which the host pointed out that Facebook didn’t have to charge a fee because it would benefit from gathering more and more data on its users. That is an understatement.
How would this work? Let’s give the example of a young lady named Heather DH, selling her 2004 Toyota Sienna on my local Amelia Island Virtual Sale group on Facebook. She says she’s trading up to get a new car, as her current one is dented and whatnot. She swears by the Toyota Sienna. Think that might help Facebook target her — and anyone responding to the ad — with Toyota mini-van ads, or from used car operations? Take that over the whole country, and you have a very neat subset of people looking for Toyota Siennas or other mini-vans. Google knows when you search for mini-vans or mini-van dealers, but I am not sure I have ever mentioned what car I drive on Facebook. Now they’ll know. Especially as I am going to be selling a Honda soon.
Facebook experimented with a previous Marketplace service but shelved it. It’s reviving it now because of the awesome programmatic targeting ability it already has with its 1.71 billion monthly actives, and its awareness of increased competition, especially if, as rumored, Google buys Twitter. Another motive, we suspect, is creating a nightmare scenario for eBay. This is clever: Offer what eBay does, give it away for free, and watch them squirm. USA Today calls Facebook “the new eBay.”
Going After A National Audience?
We also suspect that Facebook will not restrict its Marketplace offering to local listings the way Craigslist does. If you buy specialty items, such as antique cars, you’re probably aware of sites like eBay Motors, Hemmings Motor News, BringATrailer.com (our favorite) and the like. When one sells specialty items, the audience is not local. It’s national.
If I have a 1938 Duesenberg to sell, for example, I am not going to put it in a local Facebook marketplace feature. There are about 12 people in America buying Duesenbergs, and they don’t all live in the same place. Likewise, specialty cars like Ferrari and Maserati don’t have that many dealerships — just three in Florida, for example. If you want a Ferrari, you’re not going to look in your local newspaper.
Likewise, smaller items like books do well internationally online at Amazon and eBay because they are eminently easy to ship. If you are looking for a rare tome, you’re not going to go on a local site. Obviously, Facebook knows all this, so I will be so bold as to assert that what Facebook is doing here is launching a full-fledged assault on eBay and Craigslist. Many eBay sellers are disgruntled about the fees they fork over to eBay and PayPal and may be looking for an alternative.
In its announcement, Facebook took care to state: “Facebook does not facilitate the payment or delivery of items in Marketplace.” That would seem to absolve them of another issue eBay has to deal with. Taxes. Unlike PayPal, which now divulges sales of a certain size to the IRS, Facebook is avoiding involvement with that scenario.
The announcement indicated that Marketplace would be offered only to those over 18. About 30% of Facebook users are in the key 18-24 demographic, and half of 18-24 year olds go on Facebook when they wake up, according to The Social Skinny. With those kind of numbers, how can it lose? Even if it doesn’t generate any revenue itself, the increase in programmatic data from Marketplace will be incalculable.
But we do have a long memory. We remember that starting in 1998, there was a free auction service run by Yahoo! Why did it die in 2007 while eBay, started in 1995, caught on? Perhaps because all eBay did was auctions and fixed-rate sales. Its full attention was on this and it soon reached a scale that made Yahoo! auctions seem irrelevant, like so many other things it dabbled in.
If Facebook wants to compete with Craigslist and eBay, it will need to focus on it with its full attention. But nobody ever accused Facebook of inattentiveness. We note that the press release announcing Marketplace had gotten more than 57,000 views when we looked at it. Find another corporate announcement that many people have read.