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| Mark Zuckerberg |
“Facebook
Shops” will allow sellers to create digital storefronts on Facebook or
Instagram, the company said on Tuesday, adding that it would benefit by
gathering valuable data on what shoppers want. Users will be able to browse
products, message businesses to arrange purchases, and in some cases buy them
directly via a recently introduced online checkout feature.
The Facebook
boss said in an interview with the Financial Times that he had accelerated
plans for Shops to take advantage of the boom in online shopping during the
coronavirus crisis. He added that the social media giant would be able to use
the data to improve its advertising service and charge more for it.
“If you browse a shop inside of our app or if you buy something, we
will see that and we’ll be able to hopefully use that to show you better
recommendations for other things that you'd be interested in in the future,” Zuckerberg said.
Facebook
Shops will allow sellers to create digital storefronts on Facebook or Instagram
Shops
will help businesses “complete the conversion and the transaction [of a sale]
more frequently with less drop-off”, he added. This will, in turn, translate
into higher bids for advertising.
In the
US, where Facebook has rolled out a checkout service from Instagram, the
company will also collect a small fee to cover credit card processing costs and
fraud monitoring. The venture, which is Facebook’s most significant foray into
ecommerce to date, represents a challenge to Amazon because of the huge number
of users that Facebook can channel to storefronts.
It may
eventually also present a challenge to food delivery platforms such as Grubhub.
Zuckerberg suggested that, in the longer term, it “would be good” to host
restaurant and food ordering services.
The
Facebook founder said, however, that he was not trying to replicate Amazon’s
“end-to-end experience” and instead would work with existing ecommerce services
such as Shopify, which helps small businesses create online shops and takes
care of analytics and payments. Zuckerberg added that Facebook would also
integrate with shipping and logistics services.
“What took them so long?” said
Rich Greenfield, partner at
consultancy LightShed Partners, of
Tuesday’s announcement. “It appears very obvious that
the next step, especially if advertising is under pressure, is how are you
going to take advantage of the ecommerce wave which is benefiting the likes of
Amazon? People don’t want to go to third-party websites or go to checkout, they
want one-click buy. They want it simple, easy,” he added.
“While the move signals Facebook’s bid for dominance in markets beyond
social networking, the social element of the platform will stand it apart,” said Debra Aho Williamson, an analyst at eMarketer. “It’s going to be about tapping the connections that are
formed between consumers and businesses in a social sense — that’s not really
something that’s done on Amazon or Google [Shopping].”
Facebook
Shops will make use of Facebook’s messaging capabilities: users will be able to
contact businesses through WhatsApp, Messenger or Instagram Direct to ask
questions or track deliveries, for example. It will also have tools for
creating and tracking loyalty programmes. Facebook will work with existing
ecommerce services such as Shopify © Bloomberg
Zuckerberg
said Facebook would focus the rollout in developed regions such as the US and
western Europe, where the company had the resources to vet sellers properly —
as rivals such as Amazon battle against counterfeits.
“In countries that don't have as much infrastructure, that’s one of
the challenges [preventing] the full launch of this,” he said. In the longer
term, he said he envisaged a system whereby sellers had reputation scores and
star ratings. Analysts have speculated that Facebook has long-term ambitions to
emulate so-called “super apps” such as WeChat that allow users to message, buy
products and send money on one platform. (Financial Times)
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