Facebook Shopping Mall Snares a $1.5 Million Investment

Promises Big Brands Will Soon Join Mom-and-Pops in Social Commerce

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NEW YORK (AdAge.com) -- More than 20,000 mom-and-pops and small retailers have started hawking real goods on Facebook in the past five months, thanks to an e-commerce platform called Payvment. And with a $1.5 million investment the big brands are coming soon, said the startup's CEO, Christian Taylor.

Through Payvment, retailers have sold 125,000 products on Facebook.
Through Payvment, retailers have sold 125,000 products on Facebook.
Payvment is a Facebook e-commerce app that lets any user -- businesses and individuals alike -- download a storefront and set up shop for free. Since it launched in November, small and midsize retailers have taken notice and put 125,000 products up for sale and 500,000 Facebook users (out of nearly 500 million total) have shopped with the app, which transacts "tens of thousands" of dollars per day, said Mr. Taylor, who declined to provide specific sales figures.

Today, the e-commerce provider announced $1.5 million in new funding led by Blue Run Ventures, the venture-capital firm that originally funded PayPal. What's more, Mr. Taylor said a beta program with well-known retail brands is under way, and the startup plans to launch tools for larger brands in June.

"All these brands are giving budgets to launch Facebook pages," said Mr. Taylor. "But what's the value of fans? Couldn't they be converted into paying customers?"

Plugging into distribution
Most retailers have complex distribution systems and Payvment is developing plug-ins that can port Facebook sales into existing data and shipping systems. "Any large retailer is going to have their own systems for conducting e-commerce," said Debra Aho Williamson, eMarketer senior analyst on Facebook. "It has to sync. It can't be yet another layer on top of what they already have implemented."

Payvment also aims to amass all sales on the social network into one marketplace or searchable shopping mall that spans all retailers. For example, a search for "shirt" within the Payvment store turns up a variety of brands.

While this isn't the first time brands set up shop on Facebook, the attempt to try to network all sales on the platform is new. Payvment is angling to become the "de facto shopping cart" for all purchases on Facebook.

That diverges from brand sales apps currently on Facebook, which are often created by third-party developers or agencies. Minneapolis-based developer Alvenda created an e-commerce Facebook app for 1-800-Flowers early this year, and has since followed with commerce apps for Avon and other brands. In a partnership with Synapse, a Time Inc. division that sells magazine subscriptions, Alvenda will also be launching a tool to sell print without leaving Facebook.

Competitor to Amazon?
Payvment could shape up to be a competitor to Amazon and eBay, which also allow any internet user to market goods, said Jeffrey Grau, eMarketer senior analyst on retail e-commerce. He also points to Facebook's recently launched currency, "Credits," which could acclimate users to buying goods on the social network. "Facebook has been experimenting with a payment system on the site," he said. "That would make it easy for retailers to sell through Facebook once that takes off. Users wouldn't have to flash credit cards; you'd be in a more secure transactional environment that way."

For those skeptical that Facebook will become the social-networking corollary to Amazon, other brands are using Payvment to convert fans rather than drive sales.

Cosmetics brand Orglamix, a Payvment user, provides instant product discounts to users that fans or "like" its Facebook page through an app feature. Similarly, instead of featuring a lengthy product catalog, Procter & Gamble used a Facebook commerce app from agency partner Resource Interactive to sample a new Pampers product. In one hour, Pampers sold out 1,000 diaper packs at $9.99 each.

Tech at right time
Payvment's storefronts are completely free for now -- Mr. Taylor says he won't worry about business model until the concept is proved out -- and completely automated. Retailers download an app from Payvment's Facebook page, upload products and price points and users can start shopping on their pages in a "Shop Now" tab. (Mr. Taylor said it takes a retailer roughly five minutes to set up a storefront.)

"Today it's about the right tech at right time," he said. "And then we'll throw it out there and put a price tag on it."

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