) and taxi-summoning mobile app Uber are reportedly discussing
plans to collaborate. Although the details of the negotiations are
few, Uber is likely to be integrated within Facebook's messenger
The collaboration will benefit both Facebook and Uber in the long
run. The partnership will significantly expand Uber's customer
base. Facebook, on the other hand, will get access to a huge amount
of data related to users' payment behavior, frequency of taxi usage
and traveling information.
Based on this data, Facebook will be able to build customer
profiles, which will help advertisers to post relevant ads.
Moreover, data about users' payment behavior will help Facebook to
develop the nuances of its e-Commerce operations. The integration
with Uber will eventually help Facebook to offer payment options
through its Messenger app that will further boost its top line over
the long term.
Facebook is gearing up to expand its e-Commerce offerings. The
social network is testing a 'Buy' button that will allow users to
purchase goods from merchants without leaving the core app. The
company currently will not charge any fees on the transactions done
over the network.
Facebook is testing the new button with a selected few small and
medium-sized merchants in the United States. Once satisfied, it
will be available to both mobile and desktop users, who can use
their credit cards (registered with Facebook) to purchase goods.
Earlier, Facebook had tried several options to expand its
e-Commerce offerings without much success. The simplicity of the
current payment process will boost conversion rate, which is the
primary aim of every merchant. We believe that a higher conversion
rate will enable Facebook to charge merchants in the long run.
Per eMarketer, global business-to-consumer (B2C) e-Commerce sales
will increase 20.1% to $1.5 trillion in 2014. This is expected to
hit $2.4 trillion by 2017, which presents a significant growth
opportunity for both Facebook particularly due to its massive user
Amid growing competition from Google (
), Yahoo! (
) and Twitter (
) for attracting ad dollars, e-Commerce offerings will diversify
Facebook's revenue source over the long haul. In the recently ended
second-quarter 2014, advertising contributed approximately 92.0% of
Facebook's top line, which is a concern.
Moreover, higher investments on product and infrastructure
development will hurt profitability in the near term.
Currently, Facebook has a Zacks Rank #4 (Sell).
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