Facebook this week launched its new Shops feature and in doing so moved a step closer to realising Mark Zuckerberg’s ambition to emulate We Chat and their in-app commerce capabilities while also taking a swing at retailers of all shapes and sizes.
Shops will allow businesses to set up free storefronts on Facebook and Instagram. Previously, Instagram had been home to shoppable functions and was seen as the platform Facebook would use to drive its e-commerce ambitions. But with the announcement yesterday, Facebook firmly pushing to compete with Amazon, eBay and other online retailers in a serious way.
Zuckerberg said on his live stream announcing the launch of the new feature: “If you can’t physically open your store or restaurant, you can still take orders online and ship them to people,” adding that we are “seeing a lot of small businesses that never had online businesses get online for the first time.”
This is a smart bet for Facebook and an interesting place to play in. Rather than market this as a product for big brands, though they can use this, Facebook has used the cover of the pandemic to make this feature set seem like a direct response to the issues facing small and independent businesses, many of whom have been slammed by the effects of the pandemic and the lockdown measures that have been in place across the globe.
In reality this is really about ensuring that Facebook has a desirable ad product that can maintain a high value from advertisers. In an interview with the Financial Times yesterday Zuckerberg, said that Shops will enable businesses to “complete the conversion and the transaction [of a sale] more frequently with less drop-off” which in turn will drive up the price of advertising.
This presents a huge opportunity for Facebook not just in terms of direct advertising but also across payments, and support services. Users will have the ability to directly contact a business using either Facebook Messenger, WhatsApp, or Instagram Direct Message to ask questions or track orders and deliveries. Facebook said in a blog post that they are “exploring ways to help small businesses create, manage, and surface a loyalty program on Facebook Shops.” This could be huge for food, beauty, and other DTC brand categories that can successfully drive repeat purchases and loyalty from core customers or audience segments.
Zuckerberg admitted in his announcement this week that Facebook had rushed forward the launch of Shops to take advantage of the current online retail boom and has said in the long term “it would be good“ to host restaurant and food delivery services, potentially hitting the likes of Deliveroo and Uber Eats in the months to come.
I believe this is the first real step, in the west at least, to the birth of social commerce in a way that has so far been untapped. It could be the biggest announcement Facebook has made since the acquisition of Instagram back in 2012. The timing of this is also flawless as Facebook gets the chance to ride in as the savior to small business during the pandemic, whilst at the same time driving up ad revenue and creating new revenue opportunities from customer support and loyalty features.
Some have said this poses a threat to Amazon but to me, this spells bigger trouble for the likes of Etsy, Uber Eats, Asos, Boots, Deliveroo, and could be the death knell for the traditional department store, unless that is, of course, they adapt quickly.
Tom Jarvis, founder and chief executive officer, Wilderness Agency