Facebook has made a major push into ecommerce with its launch of Shops, its very own ecommerce platform that allows businesses to create storefronts across Facebook and Instagram.
Shops is a grand culmination of online shopping features released across both social platforms over the years (Marketplace, Instagram Shopping, Native Checkout, Live Video Shopping) that aims to bridge seamless commerce between Facebook and Instagram users and businesses.
Here’s how Facebook Shops work, their features, and what it means for small business ecommerce and advertisers.
“This is another big step by Facebook that will eventually allow users to interact with brands directly on the platforms from start to finish, from discovery to transaction.”
— Avi Ben-Zvi, Group Director of Paid Social at Tinuiti
“The idea here is that a user will eventually be able to do all their shopping within Facebook of Instagram, limiting any requirements for direct site traffic. In a way, it’ll be similar to brands trying to sell their products on Amazon by reaching a huge user base and making it easier for them to follow through on a purchase,” explains Ben-Zvi.
What Are Facebook Shops?
Facebook Shops is a new feature that allows Facebook and Instagram users to seamlessly browse and purchase products from digital storefronts set up by small businesses.
Facebook Shops include:
- Digital storefronts and catalogs integrated with inventory
- A desktop and in-app browsing and buying experience
- Customized branding and creative for each Shop
- Ability to drive traffic to and from Shops
- Saved shipping and billing information for native checkouts
- Customer service through Messenger, Instagram, and WeChat
- Loyalty programs and live shopping events
Shops are free to create but will reportedly charge a fee when Facebook’s native checkout is used, which is still currently in alpha. In the meantime, users cannot purchase within the app unless the brand has access to Instagram Checkout beta.
While Facebook’s original announcement emphasizes the focus of Shops being for helping small businesses as they struggle during COVID-19, there’s little doubt that the platform will become a major opportunity for brands and businesses of all scale.
“Facebook has been adding shopping features to its platform over the years, but this is a significant move towards becoming a social commerce platform. Long-term, they’ll be able to utilize WhatsApp and Messenger to drive higher engagement through chat.”
— Evan Kirkpatrick, VP of Shopping & Feed Management at Tinuiti
“They also aim to let users tag products during Facebook and Instagram live streams that click-through to product detail pages. These types of features are essential for playing to their strengths and make this a more social commerce experience different from Amazon and Google.”
Shops are free to create but will reportedly charge a fee when Facebook’s native checkout is used.
Journalists claim that Shops are part of Facebook’s larger initiative to drive more revenue from advertising and payments, especially considering the development of its own global digital currency, Libra.
Some analysts already foresee Facebook Shops as a multi-billion dollar revenue opportunity for Facebook.
What Is Instagram Shop?
Instagram Shop is an extension of Instagram’s current shopping features that allow users to browse and buy directly from the Explore feed as well as specific brand and creator pages.
The new feature, which will reportedly launch later this summer, will include a new shop tab in the main menu bar that allows users to shop with a tap.
Live Shopping and Loyalty Programs Coming Soon
Facebook’s big announcement also teased live shopping and customer loyalty features that aim to recreate the shopping in-store shopping experience.
Sellers on Facebook will reportedly be able to tag items they are selling from both Facebook Shop and their catalog at the bottom of a live video so that viewers can select those products for more information.
What Does Facebook Shops Mean For Small Business Ecommerce?
An Easier Way for Small Businesses to Reach and Transact With Social Followers
“Facebook Shops is initially being marketed for small businesses. It allows these companies to generate a simplified, but enticing shopping experience, all within Facebook and Instagram feeds,” says Ben-Zvi.
“Instead of having to pour more resources into trying to drive users to their websites, they can focus their efforts on converting users with core products without the bounce rate variable. In a way, it’ll be similar to brands trying to sell their products on Amazon by reaching a huge user base and making it easier for them to follow through on a purchase.”
“Given the landscape with COVID and the need to shift more sales online, this is a big development for small businesses,” explains Kirkpatrick.
“Navigating Facebook’s platform will be a familiar experience for many, and an opportunity for them to more easily expand their ecommerce presence. It’s likely that Shops will allow them to tie into local community pages, groups, and events for more visibility.”
An Experience That Plays to Facebook’s Strengths Against Amazon, Google
One differentiator that Facebook has against its major ecommerce competitors is its core strengths in product discovery and demand generation.
“This is a big move for Facebook announcing Shops today. A shot across the bow of Amazon and response to Google’s Unpaid Shopping announcement. Facebook and Instagram are far better for product discovery than Amazon because they’re designed to keep you hooked for hours, whereas Amazon is designed to get you in and out as quickly as possible as a highly effective conversion engine.”
— Adam Harms, Senior Paid Media Manager at Tinuiti
“Facebook is the king of product discovery and demand generation but loses out to Amazon and Google for demand capture. If you’re looking for a product, you don’t go to Facebook’s non-existent search engine; you go to Amazon or Google,” explains Harms.
“Facebook could easily open up the Shops tab to merchants who don’t advertise (like new Google’s Unpaid Shopping option) to provide a better customer experience and develop a functioning product search engine. These are complementary objectives since more product data means better search results.”
Harms also notes that Shops might prove a tempting play for sellers that want more control over customer data retention.
“Selling through Shops could be attractive because of better customer data retention, since merchants will fulfill their own orders, unlike those reliant on Amazon FBA. This provides another boost for platforms like Shopify, who are cut out of the Amazon stack but will power Facebook shops.”
What’s the Long Term Impact?
While it’s still early to see how Shops will immediately impact advertisers, you can expect more resources dedicated to capturing demand and supporting transactions directly on Facebook and Instagram.
“Not only are they [Facebook] primarily targeting small advertisers, but they are also enticing small businesses by allowing them to set up Shops for free, but Checkout will have transaction-based fees. Facebook plans to make most of its revenue through the advertising of Shops across Facebook and Instagram,” explains Kirkpatrick.
“While Facebook hasn’t stipulated the exact fees for Shops, the current fee structure for Facebook Checkout is 5% per shipment or a flat fee of $0.40 for shipments of $8.00 or less.”
“The long term impact could be massive for ecommerce: simplifying the process for brands to host their products via these ‘microsites’ on Facebook, and also making the barrier to purchase for consumers much thinner,” says Ben-Zvi.
“Facebook Shops remains in alpha right now, but the most important part for those who are interested is to make sure you have either Instagram Shopping or a Facebook Page Shop. This ensures your eligibility when the alpha opens up,” suggests Ben-Zvi.
Facebook is partnering with Feedonomics, Shopify, BigCommerce, WooCommerce, ChannelAdvisor, CedCommerce, Cafe24 and Tienda Nube on this rollout.
Tinuiti has a partnership with Feedonomics and can help drive any conversations pertaining to integration for those interested.