Moms & Markets: how Facebook Groups are slowly killing eBay
I love eBay. Love it. One of my first forays into entrepreneurship was as a college student, selling Canal Street “replica” handbags on the platform*, delivering the fabled New York City knockoff experience to people in other states. Location arbitrage. I may also have sold a Beanie Baby or two.
eBay is a fascinating company that has maintained its market prominence for decades, against dozens of upstarts, largely because of lock-in: it hasn’t changed much, but it remains the primary already-thriving two-sided market. If you want to sell your stuff, you go where the buyers are, and vice versa; eBay’s existing user base makes it really hard for startups to compete. But now, a big company is stealthily positioning itself to become the world’s biggest peer-to-peer exchange: Facebook. And what’s interesting about this is that the push in that direction seems to be a result of the company carefully observing and then building tools to support a certain type of organic user behavior: moms who have been hacking Facebook Groups to create a kind of eBay-Craigslist hybrid with an added layer of community conversation. A true virtual yardsale.
For some time now, there’s been a growing underground community of moms** who have turned the social network into an easy-to-use, no-fee trading platform. This world was unknown to me until I was inducted into it by a friend who’s super-passionate about baby gear: I needed a new diaper bag and was complaining about not liking anything in stores, so she added me to a Facebook “Buy Sell Trade” group (“B/S/T”) for a niche brand she liked. And so, I fell down the rabbit hole…
B/S/T groups are generally organized around brands (like Poshmark) or regions (like Craigslist), and seem to be almost entirely populated by women. Since women do the majority of the household shopping and manage household budgets, it makes sense that they would be the ones driving this kind of P2P e-commerce. The groups are mostly set to “Closed”, to protect member privacy, and often have thousands of members.
Trading in B/S/T groups is far more complex than just using the FB post interface to put up an ad. Each group maintains a pinned post stating the norms and rules for trading in that particular community. Some are very loose: “We’re adults here; post what you want but please stay within the following brands list.” Others are more regimented, and implement rules — market regulation! — governing everything from price ceilings (“Max sale price for a Tula blanket is $15 over retail”) to what to do if you’re in search of a specific product (“ISOs, post to this thread only”).
The B/S/T groups go far beyond recreating Craigslist-type ads. Some hack Facebook’s post structure to simulate auctions: the seller posts a photo, terms, and end date, and buyers bid in the comments according to the group’s price increment rules. Deleting a bid is grounds for getting kicked out of the community. Other groups use Facebook structures to replicate eBay’s Feedback forum, with an added dose of IRL identity: members who want to buy or sell are required to join a “Feedback group” and post a photo of themselves. Any item listed for sale in the main group includes a link back to that “feedback photo”; at the culmination of the transaction, each person leaves feedback as a comment on the counterparty’s photo.
Facebook seems to be recognizing that this behavior is taking place, since it’s been gradually and quietly introducing tools to turn the old selling hacks into part of the platform’s official design. It introduced a formalized “Sale Post” format, which includes price and location fields, and recently began to promote Facebook Marketplace (which has been available since 2007, surprisingly, but this weekend became a promoted feature on my app). The option to post to Marketplace now defaults to “on” in Sale Posts, in an effort to entice sellers to cross-post what they’re already listing in the B/S/T groups. And the platform will push a notification when an ad with a specific keyword appears in a Group.
Organic B/S/T culture has given Facebook a ton of data about what a user actually owns, what they’re looking to buy (intent!), and what brands they really like. There’s also information about what items trade, and at what prices (sale posts have a Mark As Sold button, and Facebook confirms whether the item sold or if you’re simply deleting it). Presumably, the ad-targeting value of this data is why Facebook encourages these transactions without trying to take a cut. This business model is a stark contrast to eBay and almost all of the “eBay killers” apps, which charge fees averaging between 10–18% of the item’s sale price. The absence of fees is a significant incentive that is responsible for the growth of these communities on Facebook; some people list the same product on both sites, but mark up the eBay listing so that they earn the same net amount. eBay still has an audience, but their buyers are paying more than they would in a Group.
Facebook is exploring ways to own the whole transaction. Clicking on a “For Sale” post in the mobile app now opens up a special type of Messenger note, so that a prospective buyer can engage with a seller who otherwise normally wouldn’t see their messages due to privacy controls. These special Sale messages also offer the option to pay in-app; I tried this once and it’s phenomenally convenient. It eliminates the need to leave the platform and completely the transaction on PayPal**. This also means that the seller not only avoids the eBay Final Value Fee, they also avoid PayPal fees. It’s effectively entirely free to sell…just like Craigslist, but with a global buyer base. That said, most Facebook buyers are still extremely wary of the payments feature, and prefer closing the deal with a PayPal invoice because of PayPal’s seller and buyer protection policies. Facebook may have real identities, but PayPal’s protection terms keep customers loyal.
One other interesting aspect of Facebook Mom B/S/T culture is that it extends beyond the transactional. Many brand-specific B/S/Ts have spin-off “fan chat” groups: closed, commerce-free communities where women congregate to trade tips, post photos of products in action, share news about upcoming brand releases or sales, etc. The brands themselves are also increasingly engaged in these groups — it’s a great way for a small business to have their finger on the pulse of what their most devoted customers really want. The threads in these groups give small business owners an intimate way to gauge demand, or solicit feedback on a design before investing in production. I’ve seen several mom-and-pop companies take note of very high secondary-market prices in the B/S/T groups and respond by announcing an additional run or pre-sale of the high-demand product (this pushes down secondary trade value, but is great for the small business). Participation in these groups offers customer intelligence (personas, pricing data, etc), and is an easy way to engage directly with passionate fans. eBay and other online yard sales apps don’t offer this added layer of customer insight or direct connection, whereas Facebook’s existing community structures make it effortless.
The main limitation to the increasing popularity of Facebook as a trading platform is Facebook’s mediocre search engine. It’s really difficult to find B/S/T groups if you’re not in other similar groups, since Facebook Search prioritizes results that are near you, or groups that your friends are already in. Finding new groups often happens through word-of-month in an existing group. The other barrier to adoption is that many people still want some privacy around their buying habits…and on Facebook, any friends who happen to also be in the Group are notified about your activity — items you post, things you buy, any haggling or disputes that may arise.
It’s been fascinating to watch ad-hoc P2P commerce hacks evolve in these communities over the past year. Facebook hasn’t replaced eBay for me entirely yet, but the B/S/T ecosystem has introduced me to new brands, interesting products, and great people. eBay should be paying attention.
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*It was a profitable business until I got a cease-and-desist from Hermès.
**If you’re a man who has joined brand-specific B/S/T groups, I would love to hear about your experience— I’m curious if these are thriving for things like electronics or other types of gear, what other demographics they’re popular with, etc.
