Facebook woos retailers to set up shop

Facebook is ramping up efforts to entice companies such as Delta Air Lines and J.C. Penney to sell wares on its pages and convert more of its 500 million users into online shoppers.

Managers at the Palo Alto social network have met in the past month with more than 20 companies, said David Fisch, who runs a newly formed commerce partnerships group at Facebook. The aim is to help retailers set up shop on its pages and build tools that let Web users interact while buying.

Facebook is adding e-commerce features to attract users, keep them logged on longer and generate higher advertising sales. The effort may turn the company into an online shopping alternative to retailers such as eBay, said Sucharita Mulpuru, an analyst at Forrester Research Inc.

"It's not natural to go to Facebook to shop - yet," said Mulpuru, whose firm is based in Cambridge, Mass. "But it's not a long step."

Fisch's team was set up in November within a larger division that includes groups focused on gaming and media.

"Ultimately, the onus is on my team to prove we can create a lot of value for users," Fisch said. "We hope to see a lot of innovation."

The group is meeting with retailers to help Facebook develop software that lets users solicit advice and product reviews from Facebook friends in real time, even while they're shopping on other sites.

Facebook is also building analytic tools to let retailers learn more about who's drawn to certain products, Fisch said.

Facebook now lets users buy in-game products, such as weapons and additional lives, using its Facebook Credits virtual currency, purchased with real dollars. It has no plans to let consumers use Credits to buy physical products, Fisch said.

Fisch is getting assistance in his e-commerce drive from Alvenda, a Minneapolis startup whose technology helps companies, including shopping site HauteLook and air-travel provider Delta Air Lines, sell products from Facebook pages. HauteLook opened its Facebook store in November. Delta's opened in August.

J.C. Penney added features to its Facebook page this month that let its more than 1.39 million fans interact while purchasing clothes and other products from the Plano, Texas, retailer.

Another startup that helps retailers peddle wares via Facebook is San Francisco's Payvment Inc., which makes software that can turn Facebook pages into storefronts that accept a credit card or eBay's PayPal online payment service.

Payvment has been starting 250 new Facebook retailers daily; that's up 42 percent since August, according to Payvment Chief Executive Officer Christian Taylor. Its stable of more than 40,000 retailers offers more than 750,000 items including all-natural cosmetics, handmade jewelry and T-shirts.

Facebook shopping is still tiny. Retailers that use Alvenda reached a daily record of $100,000 earlier this month. That translates to about $1.16 in sales a second. That compares with about $2,000 a second at San Jose eBay.

Investors expect social commerce growth to accelerate. Eventbrite promotes events from yoga classes to conferences on Facebook and Twitter and directs consumers to its own site to buy tickets. It raised $20 million in October in an investment round led by DAG Ventures LLC. Last month, Payvment got $6 million in a round led by Sierra Ventures Ltd.

"The goal is to become as big as eBay and Amazon," Vispi Daver, a partner at Sierra Ventures, said in an interview. "Payvment's growth has far surpassed all kinds of expectations."

Payvment, which is still developing its business model, doesn't impose fees on buyers or sellers. Alvenda, on average, charges $5,000 to $10,000 a month for custom Facebook store setup and maintenance. EBay charges fees for placing an ad and for when an advertised item sells.

This article appeared on page D - 2 of the San Francisco Chronicle