Can Facebook get shopping right?
By design or by a twist of fate, Facebook's biggest foray into online shopping to date is perfectly timed.
The world's largest social network this week announced Facebook Shops, which will allow businesses to list products on Facebook page, Instagram profile and in adverts. Eventually, they'll also be able to sell their products directly to customers directly via the WhatsApp, Messenger and Instagram messaging platforms, which Facebook is in the process of making compatible so they form the biggest messaging network in the world.
Facebook has dabbled in e-commerce before, allowing businesses to list products on their Facebook pages. But now they will be able to upload their entire catalogue of products, allowing it to act as a fully-fledged digital shop front.
Facebook has previously dabbled with direct purchases through the platform with Facebook Checkout, an invitation-only service it has extended to some US companies, more as an experiment than anything else.
While Facebook Shops will initially still require shoppers to click through to a company's website to complete a purchase, the holy grail in frictionless shopping is one-click purchases from within a social media app, and Facebook is making a major play for exactly that.
It also has the vastly popular but unregulated Facebook Marketplace, a popular platform for buying and selling goods that has emerged as a strong rival to Trade Me's auction business.
With millions of small businesses all over the world struggling to find their feet and surging interest in online shopping driven by Covid-19 lockdown restrictions, Facebook Shops will be a very welcome arrival. Using highly targeted Facebook adverts, they'll be able to draw eyeballs to their Facebook shop and hopefully convert them into paying customers.
Fronted by Zuckerberg
Facebook won't charge businesses for the service. It instead plans to make more money from adverts as businesses use the ad platform on Facebook to drive people to their shop pages. A range of features, such as the ability to tag products during live streams.
"It's one simple and consistent experience across this family of apps, which means it is easier for people," Zuckerberg said in a live stream on Facebook. "That, of course, means there'll be higher conversions and more sales for small businesses."
Facebook and Instagram live streams, so customers can click on the tags and be taken to a product ordering page.
The priority Facebook is giving its latest shopping push is evidenced by the fact that CEO and founder Mark Zuckerberg is heavily pushing it himself.
"It's one simple and consistent experience across this family of apps, which means it is easier for people," Zuckerberg said on a live stream by Facebook.
"That, of course, means there'll be higher conversions and more sales for small businesses."
Amazon remains the undisputed king of e-commerce in the US, with Alibaba and a host of Chinese online stores are massive players. So Facebook enters a crowded e-commerce marketplace.
The edge it has is its data-driven understanding of its users, drawn from the social media content they generate. Facebook also has artificial intelligence it can apply to good effect. One technology it plans to employ will identify products in photos displayed in a newsfeed photo and then display purchase options in a pop-up overlay.
Ecommerce partners onboard
It is also partnering with major e-commerce platform providers like Shopify and BigCommerce with Facebook Shops suggesting it wants to offer a seamless shopping experience across its own platforms and the websites of small businesses. Integrating loyalty programmes is also on the cards and will be crucial to shoppers staying 'sticky' on Facebook.
There will be privacy concerns, as there is with most things Facebook does. Amazon has incredible insights into customer behaviour by examining their purchase decisions. Users will need to read the fine print to see how Facebook uses shopping-related data.
"We're not going to tell anyone what you're buying or your shopping history across our services without your permission," said Zuckerberg.
"And that's not really a big part of this experience. This is really more about people being able to connect with the small businesses that they care about."
The local impact
Facebook Shops is set to roll out in the US from this week. There's no word on when it will launch for local small businesses. But locals will be watching developments carefully. New Zealand businesses are big spenders on advertising on Facebook already, so being able to leverage shops on the platform to their advantage will be a priority. With a strong Instagram user base here and millions of messaging users here on its platforms, Facebook has a reach that local online marketplaces can only dream of.
For the likes of Trade Me, which last week announced a restructure to deal with the Covid-19 fallout, it is a potentially powerful rival to the new product sales through its site that now make up a substantial part of its business.
As always, there will be a long list of pros and cons that go with joining the Facebook empire. But Facebook Shops may well extend a lifeline to small businesses finding themselves struggling to get noticed in a sea of tiny online retailers.
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