In the current, tough economy, this story is common: Marie Mace Owens, of Little Rock, AR, wanted to buy her friend a gift on August 1, but one of her favorite store was closed.
What makes Marie’s story unique, is that her favorite store was the Facebook Gift Store, which ceased operation this month. Almost half of all businesses fail within the first four years, and it seems that the Facebook Gift shop is no exception. Facebook launched Gifts on February 8, 2007, allowing users to send virtual gifts to their friends that appeared on their friend’s profile. Each gift was priced at $1.00. In 2009, Facebook began offering ‘Facebook Credits’ as virtual currency (10 credits for a dollar) that users could spend on premium gifts.
“Closing the Gift Shop may disappoint many of the people who have given millions of gifts, but we made the decision after careful thought about where we need to focus our product development efforts,” product manager Jared Morgenstern wrote on Facebook’s official blog. “We’ll be able to focus more on improving and enhancing products and features that people use every day, such as Photos, News Feed, Inbox, games, comments, the ‘Like’ button and the Wall.”
The gifts that users have already received using the Facebook Gift Shop remain visible, and they can still view their sent and received gifts on their gifts page. However, to send new gifts on Facebook, users will have to utilize third-party Facebook applications, such as ‘Celebrations‘ that allow Facebook users to send gifts for free.
In the end, it may have become difficult for the Facebook Gift Shop to compete with free, third party gift applications. Or, the Gift Shop’s toughest competition may have been the Facebook Wall itself — which users routinely utilize to post birthday sentiment without attaching e-cards or gifts.
Nevertheless, Facebook Credits remain big business within games such as Farmville. According to Inside Social Games, the market for virtual goods generated more than one billion dollars in revenue in 2009 — and could hit 1.6 billion in 2010. About 80 percent of the virtual goods revenue on Facebook is being generated by third-party application.
Going Out of Business Sale
Unlike many other businesses that failed in the current economy, the Facebook Gift Shop doesn’t have to worry about liquidating it’s remaining inventory.
About Troy Janisch