Unit 7.case

Case Study: Facebook Marketplace – Informal Commerce in Nepal

IT 204: E-Commerce

Learning Objectives ✅

By the end of this case study you will understand how a social network feature evolves into a high‑liquidity informal commerce layer.

✅ Map the end‑to‑end buyer and seller journey on Facebook Marketplace (Nepal context).
✅ Identify trust mechanisms substituting for formal platform protections.
✅ Connect behaviors to Unit 7 concepts: social networks, portals, auctions (implicit pricing).
✅ Evaluate triggers that push sellers to formalize (pages, websites, inventory tools).

Why This Case Matters 🎯

Marketplace = Low Friction Experiment Layer. Individuals test product demand with almost zero setup cost before investing in formal infrastructure.

High daily active users → immediate reach.
Search + group surfacing → demand discovery.
Messenger → conversational negotiation replaces structured checkout.

Buyer Journey 🔍

Discovery Channels

Marketplace feed algorithm (recency + proximity).
Buy & Sell groups (niche: phones, furniture, rentals).
Friend shares & story reposts.

Decision Flow

Scroll & skim photos / price anchor.
Profile credibility check (age, mutuals).
DM for condition / negotiation.
Agreement → meet / delivery / COD.

Seller Operations ⚙️

Listing

Rapid photo capture, minimal structured data.

Price informed by scanning similar active listings (informal price discovery).

Negotiation

Messenger handles FAQs, bargaining, reservation promises.

Emoji / voice notes to build rapport.

Fulfillment

Pickup preferred for bulky items; riders / courier for small electronics.

Payment: COD, cash transfer at meet, or QR wallets (eSewa / Khalti).

Trust Mechanisms (Social Graph as Proxy) 🔐

Information asymmetry lowered by social context.

Profile age & activity → legitimacy heuristic.
Mutual friends → reputational spillover.
Group admin rules & ban threats → soft enforcement.
Photo evidence / video demo for electronics.

Platform Design Influence 🧩

Affordances

Auto-suggested categories accelerate listing.
Location filtering → hyperlocal liquidity.
Saved searches create return loops.

Limitations

No integrated escrow / warranty.
Limited structured specs for condition.
Conversation fragmentation across devices.

When Sellers Formalize 📈

Scaling forces process evolution.

Volume >10 items / week → spreadsheet or lightweight inventory app.
Repeat buyers → create Page for reviews + messaging funnel.
Need marketing attribution → migrate to website / catalog.
Desire to accept prepaid → integrate payment gateway.

Informal → Formal Transition Ladder 🪜

Stage 1

Ad hoc listings + DMs.

Stage 2

Consistent niche + group domination.

Stage 3

Branding (Page) + basic inventory tracking.

Stage 4

Standalone site (catalog, SEO, analytics).

Stage 5

Integrated logistics & digital payments.

Stage 6

Omnichannel + retention programs.

Nepal-Specific Observations 🇳🇵

High reliance on COD keeps transactions conversational.
Rising QR adoption (eSewa/Khalti) beginning to shift negotiation leverage.
Trust gap for higher-ticket items → in-person inspection remains standard.
Seasonal spikes (Dashain/Tihar) drive temporary micro‑entrepreneur onboarding.

Key Lessons ⚡

Social graph lowers startup friction; formal systems emerge only when transaction complexity demands them.

Marketplace acts as experimentation & demand validation layer.
Trust proxies (mutuals, profile history) partially replace platform guarantees.
Informal negotiation = dynamic pricing similar to auction behaviors.
Formalization driven by scale, efficiency, and need for analytics.

Thank You 🙏

Next: Portals & Platform Strategy Deep Dive

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