Dive Brief:

• Facebook has introduced more artificial intelligence (AI) features to its Marketplace for price-range suggestions and auto-categorization, according to a company blog post. 
• The company is testing camera features using AI for visual search to recommend products of interest to users. It currently uses AI to automatically improve photo quality, as well as to translate product listings and conversations on Messenger. Forbes reported that the entire platform of Marketplace is currently powered by AI.
• Facebook Marketplace has a wide array listings in such categories as vehicles, furniture, electronics, musical instruments and clothing — almost all are from individuals, and are sorted by geo targeting tech. But the company recently added content from businesses providing automobiles, home rentals, home services and offerings from e-commerce retailers.

Dive Insight:

Facebook Marketplace mainly caters to individual buyers and sellers, like Craigslist, and it doesn't get as much attention in trade discussions of e-commerce on social media. But the broad base of individual users using Facebook Messenger, coupled with the wider universe of Facebook users, could make it an attractive e-commerce destination for businesses.

The newest uses of AI by Facebook Marketplace are the automation of price suggestions and categorization, and this is similar to eBay and Letgo, according to TechCrunch. The technology will help Facebook assign a category to an item based on the photo and seller-supplied description, which can often be very brief — "chair," for example — and also suggest a price range for the benefit of sellers.

The future camera features will use AI to do a visual search based on photos submitted to the Marketplace and recommend products, according to Facebook's release. For example, a photo of headphones could yield similar listings offered for sale in close proximity to the buyer. In a similar way, it can be used to add a matching piece of apparel to an outfit, or to get suggestions on furniture.

As of the second quarter of the year, Facebook had 2.23 billion monthly active users globally, an 11% increase over the previous year, according to a regulatory filing. One in three U.S. Facebook users go to Marketplace on a monthly basis for products or services, the press release said. There are "millions" of global uses of Marketplace, Forbes noted.

But one report this month indicated that the hype surrounding social media commerce may be excessive. Fifty-eight percent of U.S. adults said social media influences their purchase decisions, compared with 45% in 2016, according to digital commerce firm Sumo Heavy. But while 80% of shoppers are familiar with social commerce, 82% have yet to transact using buy buttons or other forms of social commerce.

Most people are wary because of security and privacy concerns. However, 74% said they are open to making a purchase through a chatbot. That's an area Facebook Messenger has cashed in on.

Facebook-owned Instagram is also reportedly developing a shopping app, according to The Verge, and is driving jewelry sales, according to Edited. Meanwhile, Facebook recently filed a patent application for a payments capability based on AI that would work within Messenger, CB Insights found.

There are only preliminary signs that Facebook is moving Marketplace beyond the Craigslist-like hodge-podge of used products, housing and garage sales from individuals. If and when it does, tech advances like AI it is incorporating could help it succeed with corporate advertisers selling new goods and services. It may yet become a force in a growing online marketing space where names like Amazon, Walmart and eBay dominate in the U.S., and Alibaba, JD.com, Rakuten and Flipkart are prominent on the global stage.