Facebook has taken the next logical step in its push to drive social commerce (the combination of social networking with e-commerce) by launching Facebook Shops.
This is another important step Facebook has taken to help small businesses since it launched a Small Business Grants programme as a measure to fight against the effects of COVID-19 pandemic.
Users have for years used the platform to buy and sell things on Marketplace and Facebook continues to drive various e-commerce initiatives like its Libra cryptocurrency collective.
Facebook isn’t the only tech giant to make a strong pivot toward e-commerce recently. In April, Google allowed sellers in the United States to list their products on Google Shopping free of charge as a way to lend a helping hand to the retail sector that was hurt by the pandemic.
However, Facebook has made a deeper impact than Google.
Facebook’s latest e-commerce service allows consumers to view and purchase products straight from the Facebook Business Page or Instagram profile of a business.
Businesses can set up an online shop on both Facebook and Instagram easily and with no cost using Facebook Shops.
In a period of mass unemployment and closure of small businesses, this announcement could not have come at a better time.
During the height of the pandemic, people were searching both Facebook and Instagram to learn when businesses were open and whether they did delivery.
Companies around the world have had to adapt and innovate during the pandemic and Facebook is doing the same by throwing a lifeline to the businesses that rely on Facebook ads the most – small businesses.
Facebook CEO Mark Zuckerberg hopes that this service will also let businesses thrive in a post-pandemic world where consumers will do a lot of their shopping online.
The social media giant recognises that small businesses are moving online, which is why this service was designed to make it easy for them to do so – setting up a shop inside Facebook apps is simple.
It also makes it easy for consumers to discover new products. Consumers can use, “a business’ Facebook Page or Instagram profile, or discover them through stories or ads.”
Facebook wants to make shopping an enjoyable and frictionless experience while letting businesses – both small and large – to use the app to reach customers.
Consumers will also have the option to connect their Facebook profiles to various loyalty programs.
Facebook COO Sheryl Sandberg said that the company has always “been in the business of small business”.
She said in an interview with CNBC that, “there are 160 million small businesses that use our free tools and around 8 million businesses advertise with us. In the age of coronavirus, people have to migrate online and they need to get there quickly. But it’s really expensive for a small business owner even before this to set up a mobile presence; this is free, cheap, easy, so that people can do it literally within minutes.”
If you have a question about a product, then simply send a message to the virtual store through one of the messaging apps: WhatsApp, Messenger or Instagram Direct. Facebook has stated that the goal is ultimately to allow consumers to make purchases directly in the messaging apps.
Another important part of the service is that Facebook will be partnering with Shopify, along with other major brands like BigCommerce, WooCommerce, Channel Advisor, CedCommerce, Cafe24, Tienda Nube, and Feedonomics.
Facebook decided to pair up with Shopify instead of doing this single-handedly because Facebook wanted to focus on doing what it does best: being a “connective tissue” that connects “people and businesses and people and people.”
This means that merchants on Shopify can manage their stores on Facebook and Instagram while running the operational side of business – managing inventory, orders, billing, etc. – within Shopify.
Will our friends know when we buy something?
Zuckerberg allayed our fears by claiming that Facebook, “won’t tell anyone your buying history across services without your permission. That’s not a big part of this experience. This is about people being able to connect with small businesses.”
Almost one million businesses have registered to showcase their products on Instagram where visitors can view, save, and buy products.
Instagram will have a dedicated Instagram Shop button showing up on our navigation bars sometime this year.
Coming soon, sellers on Instagram will be able to tag products from their catalogues while endorsing them on their live video streams.
What Does this Mean?
Apart from feeling good about helping struggling businesses, what else does Facebook gain from launching this service?
After all, selling on Facebook isn’t new – Marketplace has been around since 2016.
Well, Marketplace was used mostly by people selling second-hand products locally, which doesn’t present insightful data on online shopping trends.
While Facebook will collect a small fee from each purchase, the real financial opportunity will come from advertising. Facebook is betting on more businesses buying ads to promote their virtual shops and of course collecting users’ purchasing history to make more targeted ads.
This will also be huge a benefit to Facebook’s bottom line, since ad sales were negatively impacted starting in March because of the damage that the global economy sustained due to the pandemic.
What benefits do sellers or merchants get from Facebook Shops? There are countless digital platforms that can help small businesses sell their products. Why go to Facebook?
Customers for many small businesses are already on the Facebook network; from Instagram and WhatsApp to Facebook itself. Therefore, the marketing opportunities available on Facebook outweigh any possible benefits of migrating to a dedicated e-commerce platform.
Facebook will definitely help small businesses to sell more products, which could mean that Facebook wants to give Amazon a run for their money.
After adding small retailers and hospitality providers to the service, Facebook will try to get giant retailers to sign up as well.
But for right now, let’s hope that Facebook Shops stems unemployment and reignites entrepreneurship in a meaningful way.