Mike Isaac

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Digital First: Facebook Kills Physical Goods Delivery in Gifting Service

Facebook’s great gifting experiment has come to an end — for physical goods, at least.

After less than a year on the market, the company plans to ramp down its physical gifting service due to an overall lack of user demand. Instead, Facebook will shift its Gifts product entirely to digital goods and gift cards, a retail category for which the company saw much higher customer preference.

More than 80 percent of gifts sent on Facebook were digital, according to the company.

“We’re really making the decision based on user feedback,” said Lee Linden, Facebook’s head of the Gifts program, in an interview. “The physical stuff is interesting for sure, but our goal is to build stuff that’s really great for the majority of people who are using it.”

The switch is also likely due in part to the extremely complicated system that a physical goods delivery operation requires, including working with many partners to keep up with inventory tracking, fulfillment and delivery, and the incredibly touchy task of providing ample customer service. It is unclear how many people inside of Facebook were devoted to maintaining the physical goods Gifts program.

“Physical gifts do require more work to maintain,” Linden said. “And if less than 20 percent of users are taking advantage of it — the purpose of this redesign is to double down on what people want.”

The pivot to offering digital only certainly makes sense in terms of cutting overhead and complication (not to mention eliminating a physical goods business which likely saw razor-thin profit margins). Users will instead be directed to a gifts center with gift card options from businesses like Starbucks, Apple’s iTunes, Target and others.

Linden also stressed the importance of the Facebook Card — a re-loadable gift card that people can choose to pay with at a number of retail partners, though I’d posit this is somewhat more complicated than it should be. Users are directed to load money into individual retailer accounts on the card — like, say, $20 for Olive Garden and $20 for Target — instead of loading money into one account on the card and spending it wherever they choose. (This is likely due to retailers wanting the customer to be “locked in” to spending money with their establishment.)

The move to strictly digital will also put Facebook in more direct competition with services like Wrapp, a purely digital gifting startup that uses the Facebook platform. Linden said Wrapp continues to be “very welcome on the platform.”

The shift will roll out to 10 percent of users Friday afternoon, and completely turn over to 100 percent of the network beginning next week.

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