Facebook Seeks to Make Social Commerce a Reality

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Facebook Seeks to Make Social Commerce a Reality

By Thad Rueter - 05/20/2020
The social network launches Facebook Shop, other programs
Can Facebook help retailers recover via a new e-commerce program?

The COVID-19 outbreak has given a tremendous boost to e-commerce and now Facebook is looking to become an online retailer with an initiative called Facebook Shops. The retail program could provide benefits to smaller businesses hit hard by store closures and stay-at-home mandates and make social commerce a reality.

The goal of Facebook Shops is, “to make shopping seamless and empower anyone from a small business owner to a global brand to use our apps to connect with customers,” according to the social network. “Creating a Facebook Shop is free and simple. Businesses can choose the products they want to feature from their catalog and then customize the look and feel of their shop with a cover image and accent colors that showcase their brand.”

That’s not all that’s coming on the e-commerce front for Facebook. This summer, it said, it will launch Instagram Shop, trying to get more online retail power from the Facebook-owned social network that focuses on photos and other images, and which tends to skew younger than does Facebook. “And later this year, we’re adding a new shop tab in the navigation bar, so you can get to Instagram Shop in just one tap,” Facebook said.

Facebook, while hardly a stranger to e-commerce, gains most of its revenue and influence via its ads sales. It forms what amounts to a digital marketing duopoly in the U.S. with Google, though Amazon continues to make a serious play for more dominance in that area. Facebook might have its Marketplace offering but that feature severely trails similar programs from other companies. And while Facebook has put serious effort into building the commerce features of Instagram since buying the operation in 2012 — and though Facebook remains a vital digital channel for businesses of all types and sizes — no one ever calls the Facebook an e-commerce leader.

That seems unlikely to change even with the launch of Facebook Shops and the upcoming Instagram additions. Still, the product launch seems tailored to meet at least some of the needs of these uncertain economic times, and perhaps even assuage the anxieties of smaller businesses. After all, as Facebook has found via research conducted with the Small Business Roundtable, at least 30% of them have stopped operations during the pandemic, and 11% of them fear imminent failure.

“People can find Facebook Shops on a business’ Facebook Page or Instagram profile, or discover them through stories or ads,” the social network operator said. “From there, you can browse the full collection, save products you’re interested in and place an order  either on the business’ website or without leaving the app if the business has enabled checkout.”

Customer service also plays a role in this new Facebook offering. “And just like when you’re in a physical store and need to ask someone for help, in Facebook Shops you’ll be able to message a business through WhatsApp, Messenger or Instagram Direct to ask questions, get support, track deliveries and more,” Facebook said. “And in the future, you’ll be able to view a business’ shop and make purchases right within a chat in WhatsApp, Messenger or Instagram Direct.” 

Of course, enabling more e-commerce is not the only goal of this new Facebook program. The new Facebook Shops program will enable the social media operator to boost its own non-retail business and could spark a flywheel effect similar to what exists with the third party marketplace operated by Amazon. Business who sell in the Amazon marketplace pay various listing, fulfillment and advertising fees while helping Amazon deliver on it value proposition of offering the world's largest assortment. Facebook isn't likely to build a fulfilment infrastructure to rival Amazon, but it could generate fees from Shop participants for services such as advertising and payments.

As economies start to reopen, retailers of all types are trying to figure out how to best get back on their feet. There is little doubt that e-commerce and mobile shopping will play a bigger part in the post-pandemic retail world, and Facebook clearly wants to play a bigger role in the future beyond its core advertising services.