Facebook's (FB) Marketplace platform, which had 800 million monthly active users (MAUs) as of last spring, has already become a thorn in Craigslist's side. Thanks to a couple of new moves, Marketplace might start to become a problem for eBay as well.
At this week's F8 conference, Facebook announced that U.S. Marketplace sellers in general will be able to provide shipping options for the continental U.S. with their listings, as well as let buyers pay for items on Facebook's site or app using a payment card or a PayPal (PYPL) account. For the moment, such options are only provided to businesses with Facebook stores able to sell items via Marketplace's Deals feature.
Letting consumers and businesses in general provide shipping and payment options turns Marketplace, whose listings for now still skew heavily towards Craigslist-like local classifieds, into more of a rival to eBay's U.S. marketplace, whose sales still depend heavily on listings from individuals and small businesses. One could argue that Facebook is also becoming more of a competitor to Amazon.com (AMZN) , but Amazon still has Prime, its fulfillment services and its customer service to act as moats.
Importantly, whereas eBay's selling fees are substantial -- for most categories, it charges 10% of an item's sale price, along with a $0.35 insertion fee following the first 50 listings in a month -- Facebook only monetizes Marketplace by selling ads that individuals and businesses can use to promote their listings (echoes of Alibaba's (BABA) Taobao marketplace). Since Facebook's core app already produces massive amounts of revenue via news feed ads, there's little pressure for Facebook to aggressively monetize Marketplace; if Marketplace boosts usage rates for the Facebook app (recently under pressure in the U.S.) while providing a moderate amount of ad revenue, that's a win for Mark Zuckerberg's company.
None of this necessarily means that Marketplace will wreak havoc on eBay's sales. eBay remains a very popular venue for selling items such as collectibles and vintage goods (among other things), and its network effect of buyers and sellers in such fields isn't easy to disrupt. But between Facebook's giant user base and lack of selling fees, it's not hard to see how Marketplace could do a measure of damage.
And at a time when eBay is struggling to keep gross merchandise volume (GMV) growth for its marketplaces positive -- GMV was actually down 1% annually in Q1 on a constant currency basis -- this is damage that eBay, whose shares are up 34% this year with the help of Elliott Management and Starboard Value's activist efforts, can't afford to see.
