A few months ago, we wrote about the launch of Facebook Marketplace in many of the region’s markets.

It seems as of now Facebook Marketplace has not yet become a big threat to the incumbent C2C selling methods/platforms. Carousell proceeded to raise a big round – and all the chatter about Facebook Marketplace is at best… quiet.

Supply < Demand?

Well, the chatter we hear is that many sellers who are selling on Facebook Marketplace find it very easy to sell – the turnover is much faster than on other platforms.

This, while not backed up by solid data, seems to suggest that Facebook Marketplace already has more traffic than sellers.

It could be the effect of Facebook making Marketplace at the center of your app menu, or many sellers have not explored Facebook as a channel to sell.

Another possible reason, which is more threatening to its competitors, is that Facebook’s filtering mechanisms make it inherently better channel for good sellers and customers.

Let’s take a more detailed look:

Profile selection algorithm

Some users have been complaining about not seeing the Marketplace feature on their mobile app. I.e. they can’t sell on Facebook.

We do not think it is an implementation issue of Facebook’s product (it is still way better than LinkedIn’s). Rather, we think Facebook is profiling the accounts base on an algorithm and a number of metrics.

I personally know a few cases where newly created accounts have no access to Marketplace;  but after some genuine interactions with friends and connections, through Messenger chat, photo sharing etc., the Marketplace function becomes available after a certain period of time.

By selecting these profiles, FB is reducing the risk of fake/scam seller accounts and increase trust in the ecosystem.

KYC remains difficult in many parts of the world, where infrastructure is either underdeveloped (like in many parts of Southeast Asia) or easily undermined (like in many parts of Europe).

Facebook is likely to have some advantage over its competitors in such filtering – while it can’t stop fake accounts from being created, it can filter out or even eliminate those accounts through data.

Seller/Buyer profiling

In C2C market, a big concern for buyers is whether the goods they are buying are authentic and of the quality sellers claims to have.

Knowing the credibility of the seller is often a good proxy. As in many other platforms, ratings and verification are also built into Facebook – such that customers have more confidence they know who they are buying from.  

Because Facebook owns much of the social transactions/interactions, it can figure out more easily than others whether the information provided by sellers is genuine or not. It, however, has to make sure the younger generation keep their engagement through Facebook-owned platforms.

Seller profile

Geotargeting

Geotargeting listings is the way to optimize listings search in order to speed up transactions. This is especially useful in places where logistics are either underdeveloped or too expensive.  

Close proximity also makes it easier for buyers to gain more trust of or verify the sellers. Facebook seems to have a mechanism that prevents impossible transactions – therefore filtering out listings which could not result in transactions.

                                     Geotargeting authentication
Trying to message Paris buyer from Singapore.

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As many users are going into FB Marketplace it created new opportunities for marketers. More traffic is generated and advertisers can display their ads on it to get more performance.

Conversion from social to ecommerce

User retention is critical for social networks as well as ecommerce platforms. From WeChat’s mini games to Discover on Snapchat & Stories on Instagram, many attempts have been made by social platforms to keep users there (and preventing them from going somewhere else).

Despite the fact that Facebook have more than 50% market penetration of internet users, we can see that this galaxy is home to many players and the weightage can change.

We see ecommerce as not only a way for Facebook to monetize transactions or related ads, but also an attempt to offer more value to the users, such that the platform becomes more sticky.

A strategy WeChat has pretty much perfected (though not exactly monetized), for Facebook it is trickier as its users are spread across many different countries, and any moves/adjustments have to be carefully considered, implemented and calibrated.

Also it is quite challenging for Facebook to offer anything additional to pure social and content in multiple countries. Just look at the difficulty Whatsapp (a Facebook company) has been through (and is going through) trying to launch payment in India.

Similarly, we believe that Marketplace, while looking the same to users in different countries, would have more localised tactics for different countries.

Whether facebook is a threat or not is dependent on the maturity & landscape evolution of each market. The demand is there, but the supply is not yet – will the supply grow organically as social selling has been, or would there be nudges? We think this will dependent on how each market is, and how Facebook sees the market.

When sellers are seeing a great opportunity and low CAC, it might attract more and more users and become a bigger market place – and then sellers would see diminishing returns and will eventually be forced to pay for advertising.

A tactic that Alibaba is very, very familiar with.

Thanks for reading The Low Down, insight and inside knowledge from the team at Momentum Works. If you’d like to get in touch with us about any issues discussed in our blog, please drop us an email at hello@mworks.asia and let us know how we can help.

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at hello@mworks.asia.