Facebook’s latest pivot away from commerce is only a shock if you don’t know Facebook
It used to be called F-Commerce. F’d commerce may be more like it.
Facebook has been desperately trying to make commerce work on its platform since the pre-IPO days you could buy a virtual can of “whoop-ass” for $1 to send to a friend. It continued post-IPO, with a similar strategy to Instant articles. Gap, Nordstrom, Gamestop and JC Penny all had Facebook store fronts. They shuttered them in 2012. Said Gamestop: Facebook was “not a place to sell.”
And then there was the resurrection of F-commerce around gifts later in 2012. A wave of gifting startups trembled and quaked in fear of Facebook’s seeming advantage: It’s the place where you wish people happy birthday. How much harder is it to click a few buttons and send someone an actual gift? Facebook even bought promising startup Karma to make it happen…. And then completely screwed up the launch and closed it.
It’s been going on so long, Erin Griffith (then of Pando) made the Mean Girls “stop trying to make fetch happen!” joke about F-commerce nearly five years ago.
So why then is the world stunned this morning to learn that the business model for Messenger won’t be commerce and payments as anticipated but the familiar terrain of ads? I dunno. They forgot everything we know about Facebook?
Sure, Facebook hired the President of PayPal David Marcus to build Messenger. And sure, they cited how people use messaging for commerce and Asia. And all that excitement around bots seemed to imply this was an exciting new commerce engine.
And, yet, this is Facebook. Three things seem baked into the core of Facebook: Photos are a pivotal self-expression social object connection revolves around, they’ll relentlessly copy anyone who poses a threat and doesn’t sell, and they simply can’t execute on commerce, even when they acquire or acqui-hire all the right pieces.
This is a little strange since every mattress, yoga pant, bed sheets, lipgloss startup floods your feed with targeted Facebook ads to drive customer acquisition. It’s also strange since Facebook is the hub of congratulations and birthday wishes and announcements of significant life changes.
Facebook’s logic on commerce has never been wrong. Only its execution. Time and time again. And this is a company that executes extraordinarily well. This is a company not put off by how to say, beam, the Internet down from planes or make a mainstream business out of virtual reality. Facebook is even trying to take on enterprise software…. About as far from its core as it’s strayed thus far.
And yet commerce. Commerce is Facebook kryptonite.
It’s particularly interesting given how tech titans like Alphabet, Apple, Facebook and Amazon are all increasingly getting into each others lanes. Alphabet and Amazon and Facebook are all vying for video. Alphabet and Apple are vying for music. Alphabet and Amazon are vying on everything from the cloud to on the ground logistics. Alphabet, Apple, and Amazon all want part of the self-driving car future.
And yet, in an era where these giants are all moving more aggressively into real-world atoms, Facebook is mostly happily staying in its virtual world of bits. And given the structural failure of its Aquila drone…. That may be wise.
If fact, if you worry about Silicon Valley’s track record with physics, Facebook stock may be your contrarian large-cap play.
For what it’s worth, I don’t disagree with the pivot. Facebook should stick to what it does well. It has built one of the largest companies in the world-- one of a handful in tech vying to be the first $1 trillion market cap company-- off of ads. Not only that Facebook and Google have executed so well on ads, they’ve inhaled some 85% of the total digital advertising market. These are possibly the two businesses online where ads are always the answer.
Leave messy, low margin commerce with its real world problems and it’s customer service nightmares to Amazon.