Will Facebook Shops launch social commerce into the mainstream?

Discussion
Source: Facebook
May 28, 2020
Tom Ryan

Facebook last week introduced new tools that let small businesses set up online storefronts on its site and Instagram for free.

Businesses can upload a catalog of merchandise to a new “Facebook Shop,” accessible through their Facebook page and Instagram profile. Shoppers can then browse merchandise directly within the social media apps, save products they’re interested in and place an order — either on the business’s website or without leaving the app, if checkout has been enabled.

Customers can use WhatsApp, Messenger or Instagram Direct to ask the business questions, get support and track deliveries. Facebook is collaborating with Shopify, BigCommerce and other online specialists to support integrations.

Facebook hopes to enable purchases directly within Messenger and WhatsApp, add Shop features to Instagram Explore, and live-connect merchant loyalty programs to Facebook apps.

Will Facebook Shops launch social commerce into the mainstream?
Facebook Shops’ live shopping features – Source: Facebook

COVID-19 prompted the social platform to accelerate the launch. In a live-streamed announcement, CEO Mark Zuckerberg said, “For the first time, and we’re seeing small businesses that had online presences now make them their primary way of doing business.”

Facebook charges a modest processing fee for using its checkout features. It expects to monetize the program by selling advertising to merchants looking to reach Facebook’s more than 1.7 billion daily active users.

The two main rivals to the service are Amazon and Google.

Citi analyst Jason Bazinet believes retailers will have more incentive to advertise with Facebook now that e-commerce is more seamlessly integrated. He noted that ads on Amazon generate about four percent of the company’s gross merchandise volume. “This suggests marketers are willing to spend more on ads when they are confident the consumer is close to making a purchase,” he writes.

“It could be a big game changer or it could fall flat,” added Lauren Rockwell, associate director of SEO at Cogniscient Media, to MediaPost. “Amazon is so ingrained in our culture. It may be another place for users to go play and purchase. It’s another auction we have at our disposal, but it will depend on who will use it.”

DISCUSSION QUESTIONS: Is Facebook Shops positioned to accelerate online sales across social media?  What do you think of Facebook’s targeting capabilities and reach compared to Amazon and Google?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Facebook Marketplace became a major player in private party sales in very short order. Facebook Shops could do the same."
"Facebook Shops could be a game-changer for smaller retailers and young DTC brands who have struggled to survive during the lockdown phase of this crisis."
"Omnichannel has always been important, but now it is crucial, and the channels are now broadening. This is a smart move for Facebook as well as for businesses..."

Join the Discussion!

18 Comments on "Will Facebook Shops launch social commerce into the mainstream?"


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Suresh Chaganti
BrainTrust

My gut feeling is that it would work. Anything that reduces friction in the buying journey is better. If a consumer doesn’t need to switch websites to go to Amazon or search on Google to purchase, it could be extremely powerful.

David Naumann
BrainTrust
David Naumann
CEO and President, Cogent Creative Consulting
5 months 28 days ago

Facebook Shops is an easy way for small businesses to promote and sell their products on their Facebook page or through Facebook ads. Facebook Shops are not on par with Amazon and Google, as it appears that there is no product search feature to search all shops that offer the product you are looking for. Unlike Facebook Marketplace, which is similar to Craigslist, you won’t find a Facebook Shop from a search. I am sure Facebook will be offering the search capability soon to make it a platform that can compete with Amazon, Google and Walmart.

Stephen Rector
Guest

This is another option for small businesses to get their brand/store out to customers. While the first place to start is creating their own website where they can collect and keep the customer data, this could be another place for digital growth.

Ben Ball
BrainTrust

Facebook Marketplace became a major player in private party sales in very short order. Facebook Shops could do the same. But Marketplace had a ready source for demand as newspaper classifieds disappeared. Online markets aren’t going away. It will be very interesting to see what kind of relationship Shops develops with Shopify.

Brandon Rael
BrainTrust

Similar to what Instagram has enabled with their “shop now” capabilities, Facebook Shops represents another opportunity for community-based or indie retailers to extend their reach, with Facebook’s community of followers. The key to social commerce is the seamlessness it offers, and the personalization targeting capabilities based on data and analytics.

Social commerce integrated within posts and other engagement could potentially lead to significant revenue growth opportunities. Without having to navigate from Instagram or Facebook to shop, consumers will appreciate not only the ease of shopping but also how each ad resonates with their interests and desires.

Jeff Sward
BrainTrust

Facebook Shops is a natural extension of the Facebook business model at this point. How could they possibly resist the opportunity to expand their revenue stream? But when it comes to social media these days, things pretty quickly become political. How a social media platform chooses to handle social/political issues becomes part of their brand promise. Facebook is choosing one direction while Twitter chooses another. I’ll continue to enjoy the family and friends aspects of Facebook, but I won’t be shopping or buying on Facebook any time soon. As a corporate citizen they are making what I consider to be very unhealthy decisions, all in the name of the almighty dollar. There are no simple answers to the lines drawn between free speech and censorship, but enabling the spread of outright lies and disinformation should be easier to manage than it is proving to be.

Lisa Goller
BrainTrust

Facebook Shops will absolutely accelerate social commerce in Western markets. This launch is evidence of a clear trend toward social commerce, which includes the evolution of shopping on Instagram and competitor Pinterest.

Facebook’s uniquely rich insights into our social relationships, pinpointed ad targeting and impressive reach across generations makes it a worthy rival to Amazon and Google. Eventually Facebook will integrate its Libra cryptocurrency for seamless mobile payment.

Although Amazon and Google are direct competitors, China’s wildly popular social commerce platform WeChat is a model for Facebook’s aspirations and it provides a glimpse into what we could see in North America.

WeChat integrates e-commerce, mobile pay, search, messaging, livestreaming, video calls, and group discounts. As such, WeChat combines many strengths of U.S. tech titans as well as Zoom and Groupon, and its broad appeal and stickiness have attracted more than a billion users.

Jeff Sward
BrainTrust

Good point! The ubiquity of WeChat in China is truly something to marvel at. Lots of businesses turned to WeChat for instant reach into the sheltering public during the virus shutdown. And the point about including the features of Zoom and Groupon is a reminder of just how vast WeChat’s reach really is.

Gene Detroyer
BrainTrust

Good point. Since I spend a lot of time in China, I am very familiar with WeChat and use it regularly. All our platforms here should be looking at it.

Their technology is not only advanced compared to ours, but seems to be beyond the imagination of ours.

Ryan Grogman
BrainTrust

Facebook Shops will accelerate online sales via social media simply due to its 1.7 billion daily user count who may find this a more simple path to purchase than navigating to another checkout site. However, with their core site demographics skewing towards an older audience who will be reluctant to move en masse from preferred shopping sites, I do not see Facebook Shops becoming a serious competitor to Amazon or even Google. Their decision to also focus on WhatsApp and Instagram will be critical.

Gene Detroyer
BrainTrust

Like all online retail, if it provides reach, ease, convenience and time savings, it will be successful. It is that simple.

Jason Goldberg
BrainTrust
Pampers launched a Facebook e-commerce store in 2010, so this year marks the 10th anniversary of social commerce not working in North America. At the same time, social commerce is wildly popular in other other parts of the world, such as WeChat and Weibo in China. Even Taobao and JD.com, two dominate e-commerce platforms, have largely become social platforms in the last few years in China. So are American consumers fundamentally different than Chinese consumers? Are Chinese consumers just more digitally disrupted than those in North America? Is there something different about the executions in the North America than Asia that make them less popular? The biggest problem with social commerce in the U.S. is lack of a ubiquitous digital wallet. Two digital wallets, Alipay and Tencent have almost 100 percent consumer penetration in China, and represent 16 percent of GDP spending in China. Digital Wallets in the U.S. are far less ubiquitous and represent less than 1 percent of GDP spending (although COVID-19 is helping adoption a bit). Simply stated, China leapfrogged credit cards… Read more »
Jeff Sward
BrainTrust

Terrific observations and insights. My distaste for FB didn’t take my thinking very deep, so I’m glad to be reminded of the FB rule book and machinations.

Shep Hyken
BrainTrust

This is another channel for retailers to sell to customers. While this looks to be a good option, there are many out there. The business will have to find which channels are best. The key is it needs to be easy for both the retailer and the customer.

Joel Rubinson
BrainTrust

I think this is not much competition for Amazon. Maybe more of a mashup of eBay and Etsy. With Amazon or eBay you start with a product in mind. Here you start with a small shop in mind. those are such different shopping starting points I just don’t know how this will fit into the retailing ecosystem. I’m thinking it’s a small idea for Facebook but a good thing for local merchants.

Meaghan Brophy
BrainTrust

Facebook has been inching toward seamless shopping for so long that the reveal almost feels anti-climactic, though I think the results will be big. For many local shops, Instagram has been the main source for new customers for years now, and Facebook has served as a big engagement and retention driver. The new Shops features will be a nice supplemental tool (in addition to storefronts, online stores, and email marketing) for small businesses to boost sales with current customers and decrease the time between discovery and purchase for new customers.

Shikha Jain
BrainTrust

Omnichannel has always been important, but now it is crucial, and the channels are now broadening. This is a smart move for Facebook as well as for businesses: other than going directly to a search engine or shopping platform, social media is the next-best place that consumers visit for ideas, reviews, and more. The experience is streamlined and made more convenient by the ability that Facebook will provide to shop, save favorites, put together a cart and click “purchase” on the same platform where they are seeing ads and browsing favorite accounts for inspiration. Facebook is upping the ante on consumer experience, which is what will ultimately gain loyalty.

Ricardo Belmar
BrainTrust
Ricardo Belmar
Retail Transformation Thought Leader
5 months 28 days ago
It’s becoming more and more difficult to predict what consumers will do in a post-pandemic world or even in a re-opening of retail world during the pandemic, but Facebook Shops could be a game-changer for smaller retailers and young DTC brands who have struggled to survive during the lockdown phase of this crisis. Shopify retailers would seem to be a no-brainer for this type of social commerce and I expect those retailers to jump on board quickly. How will this fare compared to Amazon’s advertising marketplace is anyone’s guess, but a big part of how successful Facebook will be with this is consumer sentiment towards the Facebook brand. They continue to see a lot of negative press lately, although in past instances that did not do much to dull consumer appetite for Facebook services. For larger retailers I see this as another sales channel they’ll want to explore to see how their customers react to it, but I think it’s more suitable to smaller retailers and could give them quite a sales lift in the… Read more »
wpDiscuz
Braintrust
"Facebook Marketplace became a major player in private party sales in very short order. Facebook Shops could do the same."
"Facebook Shops could be a game-changer for smaller retailers and young DTC brands who have struggled to survive during the lockdown phase of this crisis."
"Omnichannel has always been important, but now it is crucial, and the channels are now broadening. This is a smart move for Facebook as well as for businesses..."

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