Facebook Gifts is getting a major redesign that will end sales of physical gifts. It will now focus on suggesting you buy friends digital gift codes or Facebook’s omni-Gift Card credit to spend at brands and local businesses they Like, which now get their own Gifts landing page. These two types of Gifts made up 80% of sales, cost less to ship and support, so it makes sense to invest in them in the rollout coming the next few weeks.
Facebook launched Gifts in September 2012 to fanfare that it might challenge ecommerce kingpin Amazon. Gifts fell short of those lofty expectations, though.
The product let you buy physical gifts like chocolate and stuff animals or digital gift cards to Starbucks or Uber for friends on special occasions like their birthday. Facebook later added alcohol sales and iTunes Gift Cards, plus began surfacing opportunities to buy Gifts in mobile. Still, sales were expected to be slow and Facebook reported $ 5 million in earnings between Gifts and User Promoted Posts in Q4, giving the product a low maximum impact on Facebook’s bottom line compared to ads and game payments.
Then Facebook tried something new. It launched its own Facebook Gift Card. It’s a credit-card style plastic slice you could buy for friends that Facebook would mail to them. It would come loaded with the Gift credit you bought them, and could be remotely topped-up with money to spend at different specific brick-&-mortar stores if other friends bought them Gift credits.
With time, Facebook saw that only 20% of total Gift sales were for physical products, while gift credit to Starbucks and iTunes were the biggest sellers. It turned out it was difficult to recommend specific products to buy for friends. However, Facebook’s data on your interests, location, and social graph made it easy to recommend whole brands or businesses to buy friends digital gift codes and Facebook Gift Card credit for.
So starting today, 10% of the U.S. user base will receive the redesigned version of Gifts that eliminates physical gifts. The rest of the U.S. will get it over the next few weeks.
Facebook Gifts manager (and former CEO of gifting app Karma that Facebook acquired to power Gifts) Lee Linden tells me it was worth it for Facebook to invest in product and not kill it off entirely because revenue from Gifts is “definitely going up. It’s been steadily going up since the beginning of the year and I think it will keep going up with this.”
Beyond the disappearance of physical gifts, there’s a bunch of changes to the product and buying experience that you’ll see in the Facebook website birthday’s section, on friends’ walls, and in the mobile feed.
Previously, the Gifts buying interface opened in a little overlaid window on Facebook’s website. Now it will have its own Gifts marketplace landing page, and each brand will get their own URL for their gift shop.
That means businesses can finally share a direct link to where you can buy Facebook Gifts from them. That makes it much easier for brands like Williams-Sonoma, Whole Foods, and Express to promote their store front, instead of having to tell people to sniff them out inside the cluttered Gifts window. Depending on the business you’ll be able to buy gifts codes that can be instantly redeemed on ecommerce websites or in apps like Uber, or load up a friend’s Facebook Gift card with credit they can take to the mall and spend in person.
Because it doesn’t have to recommend you specific products but just whole businesses, Facebook is going to be leaning more heavily on your friends’ personal information to suggest you where to buy them Gifts from.
To go with the greater emphasis on brick-&-mortar shopping through the Facebook Gift Cards, Facebook will now be heavily factoring in people’s check-ins and photo locations into recommendations. So if you check-in at Olive Garden (unlimited breadsticks!), Facebook might suggest your friend buy you Facebook Gift Card to the italian restaurant chain. You’ll also be able to buy gift credit in any denomination, so you could gift me $ 29 to Target for my 29th birthday.
Linden tells me “The whole point of Gifts is to learn about commerce on Facebook and build product that users wants. We’re going to improve commerce overall on Facebook in a number of ways. Gifts is a natural extension but not the end.”