Facebook quietly launched Marketplace, its consumer-to-consumer (C2C) platform for buying and selling used items, in Singapore last month.
While the social media behemoth’s entry will rustle feathers in Southeast Asia’s crowded ecommerce space, it’s Singaporean C2C portal Carousell that arguably has the most to be concerned about.
First launching in the US in 2016, Marketplace evolved from Facebook groups that users set up for trading second-hand goods. It is live in 47 countries other than Singapore, mainly in North America and Europe. Prior to arriving in the city-state, Thailand was its only other Southeast Asian market.
Facebook’s key rival
According to Applyzer, Carousell’s iPhone app is the second most downloaded free app in the shopping category for Singapore at time of writing – Alibaba’s AliExpress nabbed top spot from it on February 9 – and takes 139th place in Thailand.
It is also the 24th most downloaded free iPhone shopping app in Taiwan, 32nd in New Zealand, 43rd in Australia, and 180th in India – the four other Asia-Pacific markets where Facebook Marketplace is available.
Facebook – which is the world’s top company in terms of app downloads across both Apple’s and Google’s app stores, according to App Annie – does not have a separate app for Marketplace, making it difficult to ascertain the platform’s popularity. But its main app is among the top three in Applyzer’s free social and networking category across all six markets.
So while it may be entering the scene later than Carousell, Marketplace already boasts significant penetration across the region.
Lawrence Cheok, senior research manager at IDC, told Tech in Asia that Facebook’s entry into C2C ecommerce “warrants strategic concerns” for Carousell.
“Facebook’s relative advantage is its broader user base in [Carousell’s] target countries. Communities of users are already actively using Facebook as a pseudo-trading platform through Facebook Pages and Facebook Groups. Such consumer activities reflect market potential and this is likely one of the reasons which prompted Facebook Marketplace’s Singapore launch,” he said.
Marketplace is unlikely to be considered a direct competitor to the region’s throng of business-to-consumer (B2C) platforms such as Amazon, Alibaba’s Lazada, and Sea’s Shopee – for now, at least.
See: Amazon launches full Prime membership in Singapore after ending free US shipping
In the US, Facebook has trialled the addition of business pages and third-party online stores to Marketplace. Extending these features to Singapore could present a formidable challenge to B2C incumbents, Seshan Ramaswami, associate professor of marketing education at Singapore Management University, told The Straits Times.
“Facebook’s extensive experience giving advertisers the ability to target very narrowly defined customer segments might make it the platform of choice for many retailers and service providers,” he said.
Until that happens, however, Marketplace will remain a C2C affair – and in Singapore, Carousell will be its main competition.
Different ways to make money
Despite the rivalry, Cheok sees potential for co-existence, as the two platforms may diverge in terms of their respective monetization models.
While Carousell has introduced a number of paid-for features and marketing tools aimed at vendors – such as Bumps, Carousell Coins, and Carousell Pro – Facebook may be more likely to play to its strengths in user data and advertising to earn from Marketplace.
“Facebook has traditionally been ad-revenue driven, and it will make sense for Facebook to leverage Marketplace as an advertising platform for retailers; either in the form of direct ad placement, or as part of a broader data monetization strategy,” said Cheok.
See: Carousell raised over $45m in new funding last year
The US company could use Marketplace to harvest community-based insights for localized ad targeting, for example. Cheok noted that localized discovery through online-to-offline commerce, where offline businesses sell their products online, is a growing trend in the region. In this respect, Facebook may have the edge on Carousell; Facebook Marketplace’s browsing experience is anchored on locations, while Carousell’s is based on product categories.
However, what Marketplace lacks in its current form are adequate features to assure trust between buyers and sellers, Cheok said. For example, it doesn’t offer a seller review mechanism, while Carousell users can leave reviews of those they have bought from.
“Social traffic’s primary intention is to socially engage, not to make a purchase. Facebook Marketplace needs to focus on facilitating the customer journey from social-based discoveries, to consideration, until the user is ready to buy,” he added.
It will be an Everest-like climb competing with the likes of Amazon and other ecommerce players.
Here, Carousell’s senior vice president Chai Jia Jih thinks his company, which has been anticipating Marketplace for some time, has the edge over Facebook.
The startup’s “commitment to trust and safety” sets it apart from competitors and provides the foundation for a healthy and active marketplace, he told Tech in Asia.
“Technology also enables us to detect unusual user activity and patterns at scale, and we are constantly innovating to improve this capability. We currently have built-in features for user feedback as well as trust and safety guidelines.”
Carousell is also deploying technology to improve user experience – including AI-enabled features such as Smart Listings and context-based chat replies – and weed out counterfeits and fraudsters, said Chai.
More local expertise
In the meantime, Chai said Carousell’s proximity to its main markets means it better understands the needs and expectations of users in Singapore and other Southeast Asian communities.
Its familiarity with the region has led to localization efforts like its recent Chinese New Year collection in Singapore, and its Muslimah fashion initiative for Malaysian Muslims, he added.
Singapore is the golden goose market for Facebook.
As for Facebook Marketplace, its reception in longer-established markets might shed some light on how it will fare in Singapore and the region.
It has had an “underwhelming performance” in North America and Europe so far, though it has shown signs of improving demand over the last six months, noted Daniel Ives, chief strategy officer and head of technology research at GBH Insights in New York.
“It will be an Everest-like climb competing with the likes of Amazon and other ecommerce players, as Facebook’s DNA is not in this arena,” he said.
“The jury is still out on success in Thailand, although early indications are positive, which could lead to more country launches during 2018. Singapore is the golden goose market for Facebook to penetrate,” Ives added.
According to startup consultancy Momentum Works, some in the tech community have argued that Facebook might buy Carousell to fast-track its Asian ecommerce ambitions and acquire a fully-formed platform.
But Momentum Works thinks such a deal unlikely, for two main reasons.
Second, Carousell’s current position in Singapore looks particularly strong. As mentioned above, it is the city-state’s second most-downloaded free shopping app. Before being displaced by AliExpress on February 9, it held top spot on all but five days since the end of November. According to App Annie, Carousell has only fallen out of the top five iPhone shopping apps by downloads once in the past two years (last November, when Amazon Prime Now rocketed to the top of the charts.)
It’s “not only because the country still sees [Carousell] as the poster boy of successful homegrown startups, but people genuinely love the product,” Momentum Works writes on its blog.
It’s still far too early to say if Marketplace has made a dent on Carousell. But the stage is set for an intriguing battle.
Tech in Asia has reached out to Facebook for comment, and will update this article as necessary.
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