Facebook shuts down Gifts as commerce focus shifts

Instead of selling goods directly, Facebook will be a third party for brands to sell through

Technology trends and news by Steven Loeb
July 30, 2014
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You know how Facebook is always asking you to buy your friends a gift for their birthday? Have you ever actually done that? Yeah, I didn't think so. Neither did anyone else and, well, now no one will be able to.

I can't say that I'm too shocked that Facebook Gifts, that thing that allows Facebook users to send each other giftcards for special occasions, most notably on their birthdays, is being shut down, according to a report from ReCode on Tuesday.

 It was a service I always had a hard time picturing anyone using (who exactly wants to give their credit card information to Facebook?) and now it is going away. The Gifts service will remain in operation until August 12th.

When it first launched in 2012, there were high hopes for Gifts. It originally allowed users to order physical presents through the social network, which it would mail to the recipient. Initial partners includes Magnolia Bakery, Gund and Starbucks, with others, like babyGap, Fab, Brookstone, Dean & Deluca, L'Occitane, Lindt, ProFlowers, Random House, NARS Cosmetics, and iTunes later joining in.

The service never seemed to really take off, though, and in August of last year Facebook announced that it would no longer be shipping any physical goods, instead only allowing users to buy and send digital gift cards. 

Getting rid of gifts does seem like it fits into Facebook's oveall strategy when it comes to payments; the company says that it sees a future in goods, but not in selling anything directly, not in processing payments. Instead it will simply be a third party for companies to sell through.

Last week, in a conference call following Facebook's second quarter earnings, COO Sheryl Sandberg made it clear that Facebook would not be a company that allowed users to buy things directly from the site. 

"Commerce is really important and is a growing, important, part of our business as all marketer segments are growing. But I don't think people should confuse with Facebook selling things directly," she said.

Zuckerberg was unequivocal in his determination Facebook will never be a payments company; instead it will be a partner to payments companies and brands.

It is obvious that Facebook does seem some future in the payments space, as it launched a buy button earlier this month, an indication that the company does see payments as a potentially bigger revenue stream going forward. 

No matter what, though, advertising will always be Facebook's bread and butter. In the second quarter of this year, advertising revenue was $2.68 billion of the total $2.91 billion. Revenue from payments and fees for the quarter was only $234 million.

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