Facebook recently announced the gradual launch of Facebook Shops over its platforms. The current quarantine situation has pushed the American giant to look for solutions to help small businesses and their customers stay connected.
The company’s various apps (Facebook, Instagram, WhatsApp and Messenger) are being used more than ever as gathering places for users and their friends and families.
The massive and unexpected increase in the use of its platforms has enabled Facebook to increase its 2020 Q1 earnings by 18% compared to the previous year, despite a significant drop in advertising demand and costs.
In conjunction with the previous Facebook Small Business Grants Program announcement, Facebook Shops is being presented as a response to the challenges businesses are facing in the current situation.
Unlike the subsidy program though, there is little doubt that Facebook Shops has been a part of Facebook’s plans for some time. For several years now, the platform has offered features which allow companies to promote their products, in particular Facebook Marketplace and non-transactional showcases on pages. Facebook Shops should, however, take the experience to the next level, much like the launch of Instagram Checkout in 2019 (or its Buy Button test in 2014).
At the Facebook Summit in Toronto in 2019, the consumer buying experience and the different frictions this might entail were at the heart of many of the sessions. Instagram Checkout was unveiled, which would allow certain American advertisers to sell the products presented in their photos and videos directly on the platform (in exchange for a service fee), without the user having to leave the interface.
Similarly to Instagram Checkout, Facebook Shops will gradually allow companies to present and sell products on their Facebook page or Instagram account over the next few months. The big difference compared to the product catalogs that are already available will be the opportunity for companies to brand their shops, and for users to make in-app purchases.
New: Facebook Shops on Instagram
Users will be able to find these shops by searching for company pages or profiles, through stories and of course… through advertisements. Facebook is looking to support small businesses affected by the crisis, which are at the heart of its income generation. The solution comes in response to a recent Facebook study on the state of SMEs in the US:
Setting up a shop is free, and there’s no membership fee. As Mark Zuckerberg said during the introduction of Facebook Shops, Facebook is not looking to change its business model and will remain focused on generating advertising revenue. Companies wishing to expand the reach of their shop to a larger audience than that of their page will have no choice than to advertise.
Once a product has been selected, the user will have the choice between carrying out the transaction on the company’s website or in the application. The in-app transaction option will only be available in the United States at first and will have transaction fees of 5% per order, or $0.40 per order when the amount is less than or equal to $8.00.
It will also be possible to ask an employee of the company for help, ask questions or follow up on deliveries in Facebook Shops via WhatsApp, Messenger or Instagram Direct. In this regard, the next step for Facebook will be to develop access to shops within its messaging applications, or even to allow transactions to happen directly within them, like the Chinese application WeChat.
As part of the same launch, Facebook Shops on Instagram will officially become Instagram Shop later this year, with the opportunity to find products via Instagram Explore or to access shops via a new native tab. Pending the arrival of these additions, users will be able to consult brands’ stores through their Instagram profiles. Ultimately, Facebook is even talking about integrating loyalty programs — which were previously only available in stores — into the app.
In a world where websites are becoming “boutiques” in a sea of others, it is more essential than ever to have a robust inventory and a good product management structure. A shop rating system will be put in place that will allow Facebook to warn or ban companies that have repeat inventory issues or that simply do not deliver the products displayed.
Shops’ inventory can be added manually, but products can also be loaded through partners. Here’s how. Facebook is currently collaborating with Shopify, BigCommerce, Woo, Channel Advisor, CedCommerce, Cafe24, Tienda Nube and Feedonomics. With these, companies will be able to manage their Facebook Shops in an integrated way and make the dream of “frictionless” transactions a reality, from product discovery to delivery.
Much like the various government aid programs and subsidies, Facebook Shops is currently declaring itself an additional aid to small businesses, particularly those that have lost their brick and mortar presence before having the chance to begin a digital shift.
That said, even when the crisis is over, it is a safe bet that Facebook Shops will remain in our modern digital landscape, with the potential for native integration with bigger players like Magento, SalesForce or Oracle Commerce, and will become a new channel for promotions and full-fledged product distribution.