Yes, it’s happening. Facebook Marketplace has finally been launched. The Marketplace is a new feature inside the Facebook mobile app.
The Marketplace comes as a response to marketplaces type sites like Craigslist and eBay. It works on the same principle where people can buy and sell goods, filtered by location.
The new feature has been rolled out in the USA, UK, Australia and New Zealand. The choice of these four countries does not come as a surprise – they are mature markets with high mobile internet penetration.
My question is: Should Facebook look at emerging markets (or even frontier markets) as a better opportunity for its new marketplace feature?
Definitely yes. And I think the best bet for Facebook are where the eCommerce market are not yet developed but mobile internet usage is high. Although, the numbers of those who shop online are small compared to mature economies, familiarity with the Facebook app is almost second nature.
Let’s look at some numbers: The top 5 countries by number of Facebook users are India, US, Brazil, Indonesia and China – 4 out of 5 are emerging markets.
What makes developing countries different are where people primarily browse the internet – which is mostly through smartphones. Laptops and Wifi connections are still too expensive, but smartphones are becoming more accessible.
Recently in India, a smartphone that cost only US$ 4 made headlines. In Indonesia, 43% of the population owns a smartphone, and active mobile social users are 25% of the population. In Brazil, Facebook is not only the country’s favorite social network, but it’s the absolute favorite (94%) among smartphone owners. In China, a small tweak on its Android app earlier this year, allowed mobile internet users to circumvent the censorship on some of the mobile phone networks
The “unbanked” wants to shop
A big challenge for the eCommerce market in emerging economies is the large number of unbanked -those that don’t have bank accounts. They even want to buy online but how can they pay for their shop online without a debit/credit card?
Latin America, despite being a region with slightly lower rate of people excluded from financial institutions, is still pretty much a cashonomy. In South East Asia, in 2016, only 27 per cent of the region’s adult population have a bank account.
In Africa, financial inclusion is happening through mobile money accounts. Kenya became world famous for its P2P mobile payment app M-Pesa. In 2013, one third of the country’s GDP was through M-Pesa transactions.
Does that mean that the unbanked doesn’t have an income? Absolutely not.
Let’s look at Carlos in Brazil- he would be your typical Facebook Marketplace customer. And here is why: Carlos works and has a low but a steady income. He doesn’t have a bank account either- like in many developing countries, banks charge high admin fees and are highly bureaucratic. An year ago Carlos bought a mid-range smartphone, a Motorola Moto G. Like most Brazilians (70%), he has a pre-paid plan. Carlos uses his mobile internet mainly for Facebook and Whatsapp. Carlos heard about MercadoLibre (the Latin American equivalent of eBay) but never bought anything from there. He is also very wary of online scams. Carlos is looking for a new TV for his house and sees on Facebook Marketplace that someone is selling one within his budget, a couple of street down his house. They even have a friend in common on Facebook. For that reason, Carlos feels a little less apprehensive about potentially buying the TV from there. He messages them and buys the TV paying in person with cash.
This just one scenario, but Carlos could be anywhere within the developing countries. If he lived in Africa, probably he could use a mobile payments app instead of cash.
Carlos is more likely to use Facebook Marketplace than me, that lives in Europe, for instance. I’m already familiar with eBay and have no problem in buying something online as I have a bank account and PayPal.
If Mark Zuckerberg ever reads my post- and let’s hope he will – he should seriously consider looking at emerging markets for his next Facebook Marketplace move. The money is there, but it’s buried under financial exclusion and poor internet infrastructure. And in my opinion, even with all these challenges, Facebook Marketplace can grow and thrive in these markets.
Photo: By Maurizio Pesce from Milan, Italia – Mark Zuckerberg on stage at Facebook’s F8 Conference, CC BY 2.0, https://commons.wikimedia.org/w/index.php?curid=51057904