Last month Facebook announced its latest attempt to break into the eCommerce market: Facebook Shops. Facebook Shops lets visitors browse products and purchase without leaving Facebook, but that functionality has existed on the platform since 2019. So what’s changed with this announcement?
What It Means for Local Businesses
Whereas previously Facebook or Instagram acted predominantly as an extension of your existing eCommerce store, Facebook Shops has more flexibility to merchandise and organize your products the way you want on Facebook. That means businesses can launch a store selling only through Facebook/Instagram, or at the very least businesses can keep customers in the Facebook app experience without sending them to a website.
Facebook has a unique ability to help these kinds of merchants in this hyper-local market because they have so much location data on their customers and really understand their interests
This can be valuable for a business that has a significant social media presence, but not necessarily a fully functioning ecommerce site, to start selling online quickly. Speed and flexibility are very important these days, as so many local retailers are scrambling to bring their previously in-person brick-and-mortar sales online to practice social distancing. Facebook has a unique ability to help these kinds of merchants in this hyper-local market because they have so much location data on their customers and really understand their interests. This means Facebook will be able to help those businesses target their ideal customers through ads on the platform.
What it Means For Established eCommerce Businesses
This announcement is less significant to businesses that already have an established ecommerce presence because they have relatively little control over the shopping experience on Facebook compared with full eCommerce platforms like Shopify or Magento. Many of these businesses already have their product feeds set up on Facebook for advertising purposes, and may use this “Shop” feature in individual promotions for a way to merchandise specific products. But due to the complexities of their business requirements, such as shipping, tax, and product availability, many will still opt for sending customers to checkout on their full website.
What it Means For Facebook
Regardless of whether you’re exclusively doing business on Facebook or plugging Facebook Shop into your existing ecommerce platform, ultimately, Facebook’s goal is to incentivize merchants to market their products on Facebook so that they can sell more advertisements. Effective eCommerce ads are potently powerful because it’s very easy to quantify the cost/benefit of advertisements that lead to direct ecommerce sales. This means Facebook is not competing head-to-head with independent ecommerce platforms like Shopify that don’t do any advertising for their merchants, but with other advertising giants like Google, which recently announced their Google Shopping would be free, and Amazon, which has a booming sponsored product business.
What It Means For The Future
The understated part of this announcement is that these social shopping features will also be coming to Facebook’s messaging apps: WhatsApp and Facebook Messenger. This is especially significant because in the US and Europe, Facebook is the dominant player and has a huge share of the messaging market. Apple’s Messages service is their only serious competitor and it doesn’t have nearly the size of potential customer base because it’s still an iOS exclusive. The messaging ecommerce play is an untapped and unique eCommerce opportunity for Facebook. Particularly in highly social peer-to-peer categories like fashion, the value of a messaging app ecommerce experience can’t be understated. Messaging ecommerce is already a huge market in China, which WeChat dominates. Many brands even exclusively sell their wares on the WeChat.
eCommerce has been emerging as the emerging way to shop in most industries, some more than others. But since coronavirus has shuttered brick-and-mortar stores and disrupted local supply chains, eCommerce has become an essential channel of sales for almost all businesses. Without it right now, your sales are likely close to 0 unless you’re selling truly essential products and allowed to stay open. Facebook Shops offers a new way for businesses just breaking into ecommerce to start selling online quickly, as well as an interesting new and improved channel for established eCommerce businesses.
Also published on Medium.