Facebook’s push into e-commerce has become a reality when it launched the Shops feature in the third week of May. The new initiative is expected to redraw the dynamics of the online shopping sector impacting many entrenched players.
Announcing Facebook Shops, CEO Mark Zuckerberg sounded altruistic and said the closure of millions of small businesses in the wake of the COVID 19 pandemic has made Facebook and Instagram offer its platforms to set up shops so that businesses can sell directly to the consumers.
In the live stream, Zuckerberg said: “If you can’t physically open your store or restaurant, you can still take orders online and ship them to people,” and noted, “we are seeing a lot of small businesses that never had online businesses get online for the first time.”
Facebook shop set up is free. Small businesses can open digital storefronts across Facebook and Instagram. The roll-out of Shops has started in the US. For Instagram and nd other markets the Shops roll out will happen in the coming months.
Multiple Gains for Facebook
Facebook can sell ads to businesses setting up digital storefronts on its platforms. The social media platform will also charge merchants for the checkout feature meant for transactions.
Facebook will be gaining handsomely in terms of more ad revenue and revenue opportunities via customer support and loyalty features.
Facebook Shops aims to onboard millions of small businesses. The online storefronts will appear on a Facebook page or in the Instagram profile. Zuckerberg has also assured the shops’ feature will be expanded to Messenger and WhatsApp as well.
Who will take the hit
According to analysts, Facebook’s new venture may not pinch Amazon much. The FB Shops will propel social commerce, an untapped area so far.
Although many see Facebook Shops as a threat to Amazon, it will impact more on the likes of Etsy, Uber Eats, Asos, Boots, Deliveroo, noted an influencer in e-commerce. The worst-hit could be the traditional department stores if they do not adapt quickly.
Boost for Facebook stock
That Shops will help the social media giant at the stock market was apparent when Goldman Sachs analysts raised the stock’s price target to $250 from $220 citing on the opportunity presented by FB Shops and checkout.
Analysts noted shops will help drive customer checkouts on the platform. “With over 1 billion monthly active accounts of which more than 500 million use stories daily, Instagram can monetize by enabling businesses to promote their shopping products on its Feed and Explore functions for increased brand awareness, engagement and ultimately conversions,” wrote Goldman analyst Heather Bellini.
Facebook introduced Checkout on Instagram in March 2019 allowing users to purchase items directly on Instagram using securely stored payment information.