Is Meta's Marketplace Dead?

Metrics and thoughts on Faire, TikTok and Poshmark.

Ahoy Metamates! 🚢 🏴‍☠️

I was browsing r/ChoosingBeggars and pretty much half the posts on the subreddit are about FB Marketplace:

or this gem over here:

Is Marketplace Dying a Slow Death?

Possibly. Or, so I thought…

From one of the most promising products at Meta with $1B reach- to not being mentioned a single time in earnings this year. It’s looking more and more than the future of commerce will be driven by Business Messaging/ WhatsApp.

But really - Why does Marketplace suck?

Read this week’s issue to see why Meta has high incentive to make commerce confusing.

  • Political landmines and turnover in the Marketplace team

  • Why Faire is my long term bet in the space

  • Poshmark vs Marketplace user flows

  • Why juicing boomers for clicks creates an inverse incentive

  • Why Marketplace is shy to fully pursue commerce

The Drama, The Lawyers & The Consequences

From Bowen Pan, who first conceived it, to Deb Liu who hired half of Ebay to run it - everyone who incubated Marketplace is gone. It’s an org that lived through lots of turnover (and drama to go with it). A few years ago, it was a place you didn’t want to go unless you somehow excelled at internal politics.

The issue with the product seems to be: it was built for lawyers, not for users.

Every big product decision from verification to messaging is designed in a way that reduces liability for Meta - but then increases risk of fraud for the end user. Essentially, Meta’s happy to keep the lights on but nothing more than that.

While I’m usually hardcore pro-Meta, this is one of those rare instances where I’ve always felt confused by the product execution and legal constraints felt like the only logical explanation until I dug in deeper.

Death by an Abundance of Caution

Look, I never thought hyperlocal P2P commerce was going to work at scale. But that’s just me - I hate strangers and I’m sure as hell not meeting anyone in person to make a purchase, that’s some boomer sh*t.

But in the past I strongly saw Marketplace as the connective tissue to make Meta a super app, the likes of which we have yet to experience in the US ecosystem.

But instead - nowadays it’s just… confusing?

The monetization strategy is senseless and discourages serious sellers

The lawsuits keep on coming- in fact, Marketplace is the key argument for antitrust in Europe.

Why is Marketplace Even Around Still?

Now, with all that in mind - you might ask yourself (as I did) : Why in the hell is Marketplace still around? I mean, it’s abundantly clear product investment is at the speed of snail 🐌🐌🐌 compared to WhatsApp/ Business Messaging Org.

The answer: it’s a heavy MAU driver.

It’s all in the #s:

  • In an avg month, up to 1.212B online shoppers buy on Marketplace.

  • Which is 40% of Facebook’s 3.03B TOTAL MAUs

  • 485M ( 16%) log in solely to shop

    It’s still also early days for incumbents:

    Comparison only for platforms listed, Sep ‘23

TLDR: Marketplace remains one of the smartest ideas Meta ever had.

But, as you’ll learn in a second, it’s a product that was never allowed to grow to maturity and a strategy that has no intention of competing on commerce, in favor of bamboozling boomers for clicks. This is also why Business Messaging in general is at the core of Meta’s future success.

The New Haven For Nigerian Royalty, Russian Scammers and the like…

Catch 22: Meta has struggled for a long time to verify its users are real people (Dr.Phil made his whole career on broadcasting Facebook messaging driven scams). Now add a marketplace on top of that. Yeah, not so hot, is it?

On one side, Marketplace verifies sellers identity and address and Paypal issues tax documents.

Meta Marketplace verification

On the other hand, this is stupidly easy to get around.

  • The majority of scams happen from the buyer side and buyers are not verified. The most common being going off platform to complete a payment.

  • A big appeal for P2P commerce is paying cash in person for a purchase. In theory, even a verified seller can cause harm. Case in point, a recent lawsuit in New York alleges a seller sold counterfeit goods - Meta won the lawsuit by saying they did not facilitate the transaction/ it happened in person.

Meta has negative incentive to fix this - offering better payment rails or curtailing in person scams by making sellers mail items, both make Meta liable for doing seller KYC, and therefore also liable if something sold is fake or defective. Point won for the lawyers.

Essentially, this means we will never see a verification flow like what Poshmark uses to manage P2P sales:

…and without robust user verification, the marketplace will remain fairly limited to garage sales and small businesses selling heavier items locally that require pickup. Essentially, if you’re looking to sell a bed frame, Mark’s gochu.

Message- Driven Are A Disaster for P2P

The ecommerce world is increasingly moving into two major categories:

1) Discovery driven sales - I wrote extensively on this here

  • Watching a video or searching for a product

  • Easy way to buy from point of discovery

2) Creation driven sales

  • Connecting directly with a manufacturer for a custom product or wholesale order

  • Easy way to communicate customization and check out

Facebook Marketplace is kinda neither of these. While messaging works for business commerce, it is a pure disaster for P2P and small businesses alike. The future of P2P/ small business is influencers, AI driven recommendations and one stop point of sale.

Why doesn’t Meta fix this to make Marketplace better?

Your uncle sending 10 messages to haggle for an old dresser from a neighbor juices those MAUs real good. Basically - it’s highly desirable to make sales hyper messaging intensive.

None of the mature P2P platforms use messaging

Most P2P platforms make it very hard to message a seller by either 1) only offering canned messages or form driven UI 2) only offering communication in a support escalation scenario or 3) offering messaging in an open community where other buyers can see the communication as well.

Only user direct interaction on Poshmark

Ebay has 3-4 steps before you can contact a seller

TikTok - no message prior to sale

TikTok after sales- form driven UI

FB Marketplace is Hard to Scale On

Maybe the single biggest issue on Marketplace - it’s hard to scale on unless you’re selling to your local community only. Even then, the tooling is just not on the level of a Faire, for example.

Let’s compare, shall we?

Marketplace UI for sellers is focused primarily on creating new listings.

  • Secondarily focused on driving reach through ads

If I am a business with any type of inventory of more than 10 items, this is a pain to operate on, compared to what I can get on Faire. FYI most sellers, who are not incidental ( think: not garage sale), will cross list the same item on an average of 5 platforms. There is an entire ecosystem of tools like Vendoo.

… but back to Faire:

1) Faire will create your listings for the seller

1) Faire’s focus is on driving quality buyers ( instead of selling ads to sellers)

  • Facilitates offline commerce

  • Provides sellers with a marketing kit

  • Automates ads, campaigns and tracks insights in a more actionable format than Marketplace

Faire is capturing the users FB Marketplace really wants and already is half the size in sellers: folks who are operating a small business and have some inventory to start with. Their strategy though is online B2B and offline P2P - essentially helps wholesale online and also facilitates a seller at a farmers market or in person event.

Key metrics for Faire:

  • $12.59 billion post-money valuation

  • 3x YoY Growth ( vs Marketplace 1.75% growth)

  • 100k brands/ sellers ( vs Meta : 250M)

  • $216M in sales ( vs $1B + Meta)

While significantly smaller than Meta, Product at Faire is led by Ami Vora - someone who has intimate knowledge of Meta’s commerce contender WhatsApp. Idk, personally I’m super long on Faire.

The Strategy is MAUs + Ads, not Commerce

Business messaging = MAUs = more yield on ads. That’s pretty much it. There’s no incentive to help Marketplace become… a marketplace. It just needs to be good enough to keep driving traffic.

In fact, the opposite is true: going deeper into commerce, puts Meta deeper in the sh*t with its regulators.

I can’t help but wonder though, if we lived in a world where antitrust wasn’t an issue - how big could this get? Arguably, at least to me, Marketplace could have been bigger than Amazon, while still driving the same strategic outcome on ads. It sucks to see a product with so much potential get its wings clipped so early on.


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