The Funnel

Facebook pages are now becoming Facebook stores.

In a post on Facebook this week, Mark Zuckerberg announced the launch of what could be Facebook's biggest push into the e-commerce space yet: Facebook Shops.
Businesses will now be able to list the goods they have for sale on Facebook and Instagram, and users will be able to buy them without ever leaving these apps.

It is part of a major push by Facebook in recent years to move into e-commerce, putting it headfirst against Amazon and smaller players like eBay and Etsy.

Facebook said it sped up rolling out the feature in response to COVID-19 to help small businesses struggling during the crisis.

What is Facebook Shops?

As Mark Zuckerberg put it himself:

Here's a breakdown of the new features that will be available in Facebook Shops.

Facebook Shops

The basic idea is that any small business can easily go online and start a shop on any of Facebook's apps and sell things directly to customers.

In other words, Facebook Pages will morph into Facebook Stores.

If you go to someone's shop, you will be able to see that business's story, their feature products and be able to check out and buy their items right there without ever leaving Facebook.

Small businesses often already have Facebook business pages set up for brand awareness and social media marketing, and many use Facebook ads as a way to reach customers and build brands.

Facebook Shops go one step further by adding a new way for businesses to sell directly on Facebook instead of forcing buyers to leave apps to another website.

Free and Simple

Facebook has decided to make Shops completely free to create.

For anybody who wants to start a business and sell things online, Facebook Shops will offer all the tools available to get your business running.

If you have already uploaded a product catalog in Facebook or Instagram, a store can get set up automatically without you having to do anything at all.

If a small business uses Shopify or another ecommerce platform to run their online store, Facebook will offer a quick import option to get all your products into Facebook in just a few clicks.

By making Facebook Shops free, Facebook has adopted a different approach to that of Shopify which charges customers a monthly fee to create shops online.

Facebook's hope is that by keeping shops free, businesses will eventually spend more on ads to reach their customers, and this is where Facebook will see a return.

Facebook will also charge a small fee for purchases made within the app.

Privacy concerns

Facebook has had its reputation tarnished in recent years because of how it handled sensitive user data.

In a separate blog post on the subject, Facebook outlined the steps it would take to ensure that the consumer data that is generated through Facebook Shops would not be used to identify individuals and compromised.

How much of this can be trusted is up for debate, but Zuckerberg claimed in his Facebook post that no data would be used without the permission of users.

Facebook Shops available in Whatsapp, Instagram, Messenger

Once a Facebook Shop is set up, that same shop will be integrated and available across all of Facebook's sister apps, namely Whatsapp, Instagram and Messenger.

This means that you only need to set up a shop once in Facebook and that same shop will be available in Instagram, and eventually in Whatsapp and Messenger too.

If a user messages a business in whatsapp, they will also be able to access their product catalog through whatsapp and buy things. The same goes for Instagram and Messenger.

The goal is to offer one simple and consistent experience across all four of its apps.

A native and smooth experience

A big advantage with Facebook Shops is that the purchasing journey will be within one interface.

All too often when users click on ads they get redirected to websites that are slow and not user-friendly.

The experience varies each time because websites come in all shapes and sizes. Users are forced to enter in credit card information and shipping addresses manually every time.

With Facebook Shops, all you have to do is make one purchase. After that your credit card info will be saved and you can shop freely and seamlessly browsing thousands of brands.

Overall, Facebook Shops could lead to a much smoother experience for customers, which translates into fewer abandoned carts and higher conversion rates for businesses.

Dedicated Shopping Tab on Instagram

Another feature that is expected to be released this summer is a dedicated shopping tab on Instagram.

There will also be a shopping destination within explore where users will be able to find and buy products.

If a user sees a story from a business, they can simply swipe up and buy it from checkout.

Live Shopping

Live streaming is popular among influencers on Instagram and businesses on Facebook. Often times these include product tutorials or product launches.

Facebook plans to add features that enable users to make purchases in real time while watching a video.

Customization

In order to enable brands to tell their story better, Facebook Shops will be fully customizable.

The background imaging and coloring can be customized in order to fit with the branding a business already has.

"When you walk down a road, or when you used to walk down a road, not every shop was the same. They all have their own story to tell. And we built Facebook Shops with this in mind," Zuckerberg said in a livestream this week discussing Facebook's new product.

Small businesses will be able to connect loyalty programs so people across apps can see points and rewards they have with particular businesses.

AI and Personalization

In addition, Facebook plans to leverage its AI to create an even more personalized shopping experience for the customer.

For example, Facebook's AI systems are able to use visual search to automatically identify and tag products in photos.

What this means is that ideally businesses won't have to do any manual tagging themselves when creating their shop, Facebook will automatically tag everything for you.

In addition, because Facebook knows your gender and identity through your Facebook profile, Facebook Shops will be able to personalize the customer journey experience in a way that a website would not be able to.

For example, if a small business sells clothes, and a male visits their Facebook Shop, the data Facebook has will enable the Shop to only show the men's clothes to male visitors and female clothes to female visitors, since most likely males will not be shopping for female clothes.

In addition, Zuckerberg said that Facebook was rapidly developing its augmented reality technology, so that a girl could try lipstick on 'virtually' to see what she would look like before making any purchase.

The positives of Facebook Shops

Overall, Facebook Shops will allow small businesses, or anyone who wants to start one, to utilize a set of tools that can fully build out your business online.

Whatsapp, Messenger and Instagram Direct can be used for communicating with customers and customer support.

Facebook's ads can be used to reach new customers.

And now businesses can set up a full online shop experience with Facebook shops.

Partnership with Shopify

Crucially, Facebook is partnering with Shopify and other ecommerce platforms like WooCommerce and Wix. For any business that has already built out their online shop through another ecommerce platform, importing your products into a Facebook Shop should be a relatively straightforward process.

"Rather than try to own this whole process end to end ourselves, we think we are going to service small businesses better by helping build out a whole ecommerce ecosystem. We are going to offer our tools, but ultimately it is going to be up to businesses to decide what tools to use and what level of integration they want," Zuckerberg said.

Why now?

Facebook's push into e-commerce couldn't come at a better time as people remain cooped up inside and retailers struggle across the country.

In many ways, you could see this coming.

Facebook Marketplace has been a hit for years in key markets like the United States and the United Kingdom where it has challenged Craisglist and eBay as the go-to platform for buying secondhand goods.

Moreover, Facebook's Libra currency, which has stalled in the past few months as several important players have backed out of the project, offers a clue to where Facebook would like to go toward.

The company has made no secret of its aim to emulate China's WeChat, an all-in-one app where you can do everything, from staying in touch with friends, to ordering taxis to purchasing goods.

Shops brings Facebook one step closer to becoming America's WeChat, with the ultimate goal of having users not only do all their shopping on Facebook's platform, but also to use Facebook's currency Libra too.

The Reaction

The markets reacted positively to the news, as Facebook's stock jumped nearly 6% in trading, closing at an all-time high above $230.

But the reaction from small businesses and the marketing industry seemed positive too across Twitter and Facebook.

The Positives

To sum up, here are the positives of Facebook Shops:

• It's completely free.
• It's integrated with Shopify and other eCommerce platforms like WooCommerce.
• Shortens the customer journey
• Simplifies customer support by allowing users to message businesses through WhatsApp, Messenger and Instagram Direct to track deliveries, ask questions and offer feedback.
• Facebook Shops will soon get integrated with Facebook's AI and AR technology. This includes plans to develop visual search and create an AI fashion assistant
• Leverages Facebook's user data for even better targeting.

The Negatives

However there are also a few downsides to relying on Facebook Shops. These are a few:

• Re-enforces Facebook's monopoly status.
• Third-party tools will get wiped out. Lots of small startups built their businesses offering integration with FB. Facebook's move will cause a lot of these adtech products to be obsolete.
• Consumers less trustful of Facebook due to privacy scandals. May be wary to hand over data.
• Facebook's rules will limit businesses. With a website businesses have more flexibility with how to place their products and what to sell. Facebook has strict guidelines that may hold businesses back. .
• Relying only on one platform is dangerous. If Facebook fails, then your business does too.

Conclusion

Overall it will be interesting to see to what degree Facebook can succeed in penetrating the ecommerce space and set itself up as a rival to Amazon. If executed well, this could catapult the company into becoming the next major ecommerce giant in the next few years.