22nd May 2020

POV: Facebook Shops

Background:

Facebook has launched a new shopping experience on Facebook and Instagram, enabling businesses to create a storefront and providing new ways for consumers to discover products and shop.

Details and Implications:

Facebook has accelerated the development of Facebook Shops, given the increasing shift to online shopping during the COVID-19 pandemic. Facebook Shop is designed to make it easier for businesses on the platforms to connect with their customers. For businesses that have been struggling recently it’s an opportunity to adapt and build an online presence for free.

Facebook Shops is a solution primarily for businesses, as opposed to the peer-to-peer selling service offered through Facebook Marketplace. Given Facebook’s userbase it has the potential to quickly develop into a threat to popular online commerce platforms such as Amazon and eBay, both of which charge a fee for their services. Mark Zuckerberg said that Facebook won’t charge for Shops because Facebook’s business model is ads and the uptake in Shops will result in more advertising.

The aim is to provide a seamless experience for the consumer, including customer service via WhatsApp, Messenger or Instagram Direct. In future, browsing and purchasing will even be possible directly within a chat.

In the near future ‘live shopping’ will be possible with products tagged from a Facebook Shop or catalogue showing at the bottom of the live-video for consumers to click, explore and buy. This feature could well have high potential as live-streaming is an increasing consumption trend and live-commerce has taken off in countries like China that have integrated social and commerce platforms that are more mature than in the West.

As the volume of shopping behaviour on Facebook’s platforms increases, the number signals and quality of data available to further optimise Facebook’s advertising algorithm will increase, resulting in better performance for advertisers using both. There is also the potential to generate more relevant audience lookalike models and offer more sophisticated targeting options over time with the increased data available.

Summary:

Facebook Shops has potential to shake-up this space and provide real competition with the online commerce giants with integrations with commerce partners like Shopify providing the necessary tools for any business to set up on the platform quickly and easily. This launch has the potential to significantly shift user behaviour on the platform and impact the advertising landscape. We can expect rapid innovation, with Facebook looking to replicate much of the success of WeChat in China, as an end-to-end commerce solution.

Further Reading:

Facebook | Tech Crunch | The Guardian

Written by Jason Cotrina-Vasquez, Paid Social Business Director

Mindshare Global
Mindshare Global