Facebook steps into the wine business
It was only a few years ago that you actually had to check a calendar to remember the birthday of a distant friend or in-law.
Then, Facebook came along and changed everything, jostling its 1 billion users to bestow birthday wishes on all of their Facebook friends, including nearly-forgotten acquaintances and classmates they last saw two decades ago.
Now, Facebook is trying to capitalize on that ubiquitous feature that so many of us rely on. It has opened a new gift store, encouraging its U.S. customers to send real, physical gifts to each other on the website so many check every day.
North Coast wineries are taking notice of the opportunity to convert their social media efforts into direct sales on the world's biggest social networking site. Several have placed their products among the dozen or so wines you can now send to a friend on Facebook.
"It's working really well, and we're excited to see where it could go," said Dwight Harrington, operations director at Blackbird Vineyards in Napa, one of the first wineries to be featured in Facebook's gifts section. "Just the potential that we could have with them, the amount of reach that they have, is tremendous — only probably a third of the world."
But whether Facebook's latest attempt to monetize its massive user base will prove profitable for wineries, or for Facebook itself, remains to be seen.
The Menlo Park company's stock has had a rocky ride since its initial public offering in May, as analysts have speculated whether it will be able to produce sustained revenue growth. Increasingly, customers are accessing Facebook from their smartphones, where there are fewer advertisements and opportunities for revenue. The gifts section is available on the Facebook app for both the iOS and Android platforms.
"There's lots of potential, but I don't think it's a near-term or 12- or 24-month material opportunity for the company, and they said so in their last earnings call," said Carlos Kirjner, an analyst at Bernstein Research in New York, who downgraded Facebook's stock last week. "It's unclear the extent to which people will buy goods and services through Facebook."
In its latest quarterly report, Facebook warned shareholders that it may not succeed in generating meaningful revenue from its gift service, and that it may not be able to recover the cost it incurred developing the product.
"This is a brand new product, a brand new behavior on Facebook that people have never done before, so we need to make sure we're making the user experience as easy as possible," said Alex Hollander, Facebook spokeswoman. "That can take some time, but we're continuing to invest a lot into making this product successful."
Facebook's gift section, which became more visible to users last week when many were prompted to send their friends a Starbuck's gift card, has been rolling out gradually since September. The company added wines to its gift store in mid-December.
Once the order is placed, the lucky recipient gets an email message or a notice on their Facebook wall. If they accept the gift and share their mailing address with Facebook, the gift arrives at their door several days later.
The company has an in-house merchandising team that curates a selection of gifts to celebrate the millions of birthdays, new homes, and other occasions announced on Facebook every day, Hollander said.