August 20, 2009, 12:00 AM

Facebook finds a friend in e-retailers—and added revenue, one expert says

Facebook yesterday began testing selling products from outside merchants through its site. The king of social networks has opened its Facebook Gift Shop to a handful of retailers that are marketing both virtual and physical goods.

Facebook members can now do more than become fans of e-retailers on the network, they can buy from them, too.

Facebook yesterday began testing selling products from outside merchants through its site. The king of social networks has opened its Gift Shop hub to a handful of retailers that are marketing both virtual and physical goods that can be purchased without leaving Facebook.

Four merchants, or what Facebook calls developers, are part of the test: American Greetings Interactive, GreetBeatz, Someecards and Real Gifts. A spokeswoman says Facebook may open the program up to other retailers in the coming weeks.

“This is an alpha test only and is not open to other developers at this time, but we may open up to new developers at some point in the future pending the results of this test,” the spokeswoman says.

Members of the social network have for some time been able to purchase Facebook credits and use them to buy virtual goods at the Facebook Gift Shop. Users can enter payment card information and receive 10 credits for $1. For example, consumers might purchase a birthday cake icon for a friend to post on his profile page, usually for a dollar or two.

This new trial allows Facebook members to use their credits to buy goods from outside merchants, and it also marks the first time the store has offered hard goods. Retailer Real Gifts, for example, is selling flowers at the shop. When checking out, the shopper enters where they would like the order to be sent, as if they were shopping at a traditional e-retailer.

For now, the shop is focused on gifts, says a Facebook spokeswoman. “We are exploring new ways for users to share with their friends around birthdays and special occasions,” she says. Facebook is testing the new program with a small sample of Facebook members and says it will “test products as long as needed” to evaluate results.

American Greetings Interactive, a division of Amercian Greetings, No. 157 in the Internet Retailer Top 500 Guide, is selling virtual goods through the store, including video postcards and short form animated icons for $1, or 10 Facebook credits. “We see Facebook as another way to reach consumers looking for social expression content,” says a spokesman for the retailer. “We will be assessing the performance of the content and reviewing our offerings on a regular basis.”

Justin Smith, editor of the blog Inside Facebook, says the service adds another revenue stream for the social network beyond advertising. Facebook takes a percentage of each sale made at the shop, he says, and he believes many merchants would be happy to pay to reach such a broad audience. Facebook declined to comment on the fees associated with the test.

“Facebook is in a unique position, given that they have 250 million active worldwide users, and over 71 million in the U.S.,” Smith says. “Developers and merchants are fine with paying for that kind of distribution.”

Still, the vast majority of Facebook’s revenue comes from advertising, he says. And Facebook denies any notion it is moving into online retailing in a major way

“This is not an e-commerce initiative,” the spokeswoman says. “This is very simply a test in the Facebook Gift Shop that includes a few developers and small group of users.”

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