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December 17, 2012

Facebook Gifts Should Be A Cash Cow for Social Network

Facebook stands to make millions if not hundreds of millions of dollars now that Facebook Gifts has become available to all U.S. users.

The social media site, which announced the launch this week after two months in testing with tens of millions of people, has added more charities and a wine category.

Facebook is describing Gifts as a way to choose, purchase and ship real gifts in a matter of minutes right on the site. A message can be sent either to the recipient’s Timeline or as a private message, Facebook says.

Gift options include items such as gift cards, chocolate, bakery items, or a stuffed animal along with a digital greeting card. The recipient gets a notification within seconds of the purchase, along with the card and preview of the gift.

The recipient responds with the address where they want the gift delivered. It ships within a few days. They may also select the color, size and flavor of the present when fitting. There is also the option to exchange it for an item of lesser or equal value. So far, gift selection items range from $5 to $50.

Combine $50 gifts with the 170 million users in the U.S., and Facebook should soon be raking in the dough.

Even if only 20 million of the 170 million users make use of Gifts, Facebook still stands to make a hefty sum.

For instance if 20 million users order one $20 gift and Facebook earns a 10 percent profit, the social network would still pocket $40 million. If 20 million users ordered one $50 gift, Facebook, at 10 percent profit, would earn $100 million.

If Facebook, however, received a 15 percent profit, it would earn $60 million or $150 million, using the equations above.

Facebook has not yet said if it will roll out Gifts in other countries, but it could choose to do so in countries like Canada or the U.K., where spending habits are similar to those in the U.S.

Since the beta launch of Gifts earlier this fall, Facebook has added to the selection of gifts available.

Facebook has partnered with iTunes, Hulu Plus, Pandora and Rdio for music lovers. Some of the other retail partners are BabyGap, Fab, Brookstone, Dean & Deluca, L’Occitane, Lindt, ProFlowers, Random House, Inc. and NARS Cosmetics.

It now offers a fine selection of choices from the following wineries: Amuse Bouche, Blackbird, Bonterra, Capture Wines, Clark-Claudon, David Family, Domaine Chandon, Goose Cross, Mondavi, Mutt Lynch, Recuerdo, Tasting Room, Terra Valentine,Titus, Twisted Oak, and Wine Country Gift Baskets.

For those wishing to give the gift of giving, non-profit organizations include organizations such as The American Red Cross, Blue Star Families, Boys & Girls Clubs of America, DonorsChoose.org, Girls Inc., Kiva, LIVESTRONG , Oxfam America, RAINN, St. Jude’s Children’s Research Hospital and Water.org.

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