Online giants like Amazon, eBay and Craigslist could soon see another deep-pocketed competitor in the e-commerce arena.
Facebook is expected to facilitate more online transactions in the coming years as the social network's users become more comfortable with using the site to buy and sell, said Gene Munster, a senior research analyst at Piper Jaffray, who covers companies like Google, Amazon and eBay.
The trend represents a shift for Facebook, which up until now has been used by most companies as an advertising platform, he said.
"The concept of doing transactions on Facebook today is still out of left field for most people, but I think over time it's going to become more mainstream," Munster said. "There's so much time that people already spend on Facebook that it's just a logical place for people to look for other things."
Facebook's initial foray into e-commerce, Facebook Marketplace, has struggled to gain traction since launching in May 2007.
The online classifieds market allows users to create, share and respond to product listings. Although the application was never officially pulled, Facebook announced in 2008 that third-party developer Oodle Inc. would take over Marketplace after lackluster results.
Similar to Craigslist, Marketplace is designed to facilitate usually local exchanges, but it does not offer a payment system like eBay's PayPal.
Michelle Melvin, an Allen Tate real estate agent in Raleigh, started using Marketplace about two weeks ago after one of her clients suggested it. Since then, the website hits for her listed properties have almost doubled, she said.
"We've gotten a lot of exposure through it," Melvin said. "It's just another avenue to get the word out there, just like Craigslist or other advertising."
Melvin hasn't found buyers for her properties through Marketplace, but she said will continue to use the application and would recommend it to others.
"It's only been two weeks, so we're hopeful," she said.
The competition in the e-commerce sector is stiff. Amazon, the e-retailer mammoth that also owns sites such as Zappos, Shopbop and Diapers.com, has a market cap of $98 billion and raked in $34 billion in revenue last year. And eBay's PayPal service has announced new partnerships with a number of retailers, including Target, J. Crew and Zara.
Victoria Cassady, a spokeswoman for Facebook, said she could not comment on whether the company views its transactions platform as being competitive with other sites.
Munster said Facebook's targeting ability boosts its potential as a major e-commerce player. Facebook uses the highly personal information its users post on the site to target advertisements toward them. This same information could be used to offer them products from retailers or friends on the site.
"Ideally, people would rather buy something from a friend than from a stranger," Munster said.
Chapel Hill resident Stacey Richardson used Marketplace for the first time two weeks ago to sell a bike frame. Richardson, a triathlon coach, said she expected the bike to be listed for a few weeks before it sold. Four days later, a local buyer Richardson knew agreed to purchase it for $1,000 after seeing the classified.
"Facebook Marketplace had a simplicity to it that was very appealing," she said. "It was easier to use versus Craigslist. I think it's going to be big once people catch on to it."
The large amounts of time Facebook users spend on the site could also improve the company's chances as an e-commerce player. Munster said the average person spends 33 minutes per day on the site, connecting with friends and brands they like.
Shoppers mostly use Facebook to browse merchandise or post comments about products or customer service, according to a survey of more than 1,700 consumers conducted by Shop.org, the online division of the National Retail Federation.
But this could change - one-third of shoppers said they would be willing to make a purchase directly from Facebook, research has shown.
"From an investor standpoint, it's going to impact the valuation of Amazon," Munster said. "It will impact their market share, but the opportunity for e-commerce is so big right now. There's room for a lot of people in there."
