One of Facebook's first initiatives against covid-19 pandemic breaking results was a 100 mln grant program to help thousands of small businesses in 30 countries. But, the social network didn’t want to stop on donation only.
As Facebook reports, 160 mln people are using its services while a vast majority don't spend money on the platform. Considering that - the latest announcement seems to be a win- win situation for sellers, users and in the future as well for Facebook.
Shops was announced during a Facebook Live event featuring Tobi Lütke, CEO of Shopify, and Mark Zuckerberg, CEO of Facebook. The move was partially triggered by the struggle of small and medium-sized enterprises, caused by the COVID19 pandemic. Many are looking for solutions enabling them to transfer at least part of their activities to the network.
It is said that 31% of small businesses have stopped operating since the coronavirus outbreak. Facebook introduced a free feature that will be a great opportunity for these businesses and other businesses that have not been utilizing the business side of the social platform yet.
Zooming in on Facebook Shops you’ll likely notice that it’s more of an evolution of the existing tools, rather than an entirely new feature. Let’s take a closer look!
Table of Contents
What is Facebook Shops
Facebook Shops is a simple version of your online store that lives inside the Facebook and Instagram apps.
This new feature allows users to create a store for Instagram business page just after they set up Facebook Shops. It will be a customized storefront that Merchants will manage from their Facebook Commerce Manager.
Retailers will be able to customize the layout and the colors of the shop to showcase their products and brand in a distinct way. By organizing products in collections & highlighted tiles sellers can match the look and feel of their regular online store.
Facebook’s goal is to build a consistent and unified experience across all FB apps - an experience that feels native to each platform and on any device. It seems Facebook is aiming to keep the entire shopping path within its platform. In reality though, only businesses participating in the closed beta for Checkout will be able to close a sale without sending shoppers to an external site. For all other businesses it means their potential customers will be redirected to the retailer’s web-shop to complete the purchase. At least for now.
Where users can find Facebook Shops
People can find Facebook Shops on a business’ Facebook Page or Instagram profile. The discovery is also possible through stories or ads. From there, users may browse the full collection, save products and place an order.
In the future, it will also enable the sale of products via WhatsApp, Messenger and Instagram Direct chat functions. Sellers will also be able to tag products during live broadcast on Facebook and Instagram, so that customers after clicking are transferred to the product ordering page.
What the costs for sellers are
The feature is completely free. Facebook gets a fee if the user goes with the checkout option but this one is still in beta in the US and the fee amount is not available to the public yet.
Facebook’s vice president of ads Dan Levy said that while the company will charge “small fees” on each purchase, the real monetization will come from driving more advertising. The prediction is: if businesses find value in Facebook shops, retailers will eventually want to expand their Facebook activity to paid ads as well.
What is the timing and location of the release
Facebook is rolling out the experience in the US and planning to roll it globally within next few months.
As part of the Facebook Shops announcement, Facebook said they are partnering with Shopify, BigCommerce, WooCommerce, CedCommerce, Cafe24, Tienda Nube.
Merchants will be able to use these third-party platforms to manage their Facebook Shops, as well as the ads tied to those Shops.
As Shopify reports: “Facebook Shops allows Shopify merchants to get control over customization and merchandising for their storefronts inside Facebook and Instagram, while managing their products, inventory, orders, and fulfillment directly from within Shopify.”
How Facebook Shops is different from other product listings options on the platform
Facebook has its own Marketplace and Facebook Shop Tab and the range of other operations. Instagram allows the users to purchase products tagged in posts and ads and last year they’ve introduced the Checkout feature.
The social giant has already built an impressive arsenal of e-commerce tools. But this time the company's new feature - Facebook Shops - goes further, enabling businesses to create full-fledged stores and unify the shoppers experience across all Facebook apps.
Facebook Shop Tab was a real game changer for e-commerce business. But with two distinct shopping areas within the platform (Facebook Shop and Facebook Marketplace), it was already tricky for businesses to know which is the best option.
For the majority of businesses, the Facebook Shop tab is the ideal choice to showcase and sell items from your business’ social profile, whereas the Facebook Marketplace, much like classified advertisements website Craigslist, is arguably targeted more at individuals looking to sell items.
This time Facebook offers customized storefront and cross-app presence which extends the potential of already existing features. It offers more customization opportunities and more personalized experience for users.
Benefits of the Shops tool and how retailers can take advantage of them
Shops have different features depending on your location. Here are some features we find interesting and beneficial for businesses utilizing Facebook Shops:
- Customization of product inventory: Organizing products into different collections in order shoppers can browse products by category.
- Possibility to upload videos and images that show how the product looks live in use: Soon, sellers, brands and creators will be able to tag products from their Facebook Shop or catalog before going live.
- Communication with customers: shoppers will be able to message the shop on page with questions, to get support, track deliveries etc. In the future, viewing a business’ shop and making purchases will be possible right within a chat in WhatsApp, Messenger or Instagram Direct.
- Smooth and cohesive experience: as mentioned before, Facebook is planning to bring the new Shops experience to all its apps including WhatsApp, Messenger or Instagram Direct. Such consistency across apps will likely translate into much better conversion rates for retailers.
- Insights and Analytics: Sellers will have access to comprehensive analytics to track views, clicks and purchases for each product. That simplifies managing and promoting the best selling inventory and organizing shop to achieve the best possible performance.
- Connecting Loyalty Programs to Facebook Account: Facebook is testing solutions for shoppers to easily earn rewards with businesses by enabling connection with existing loyalty programs. They are also exploring ways to help small businesses create, manage, and surface a loyalty program on Facebook Shops.
How to get started with Facebook Shops
To add a shop you need to have a Facebook business Page. You can use this section to list products and connect with more customers. Your Facebook shop must sell physical items and agree with Facebook Merchant Terms.
While any business can have a shop, this feature best serves merchants, retail, and e-commerce advertisers.
Adding products to Facebook Shops will be possible via manual one-by-one upload, via product catalog and a direct connection between certain shopping carts and Facebook.
Facebook Shops having just been rolled out to a handful of US businesses at this point don’t come with a user manual. Yet. The partnerships announcement that accompanied the release of Facebook Shops suggests that Shopify and Bigcommerce merchants may just be among the first to start utilizing the new tool.
How Facebook Shops Work With Catalogs
Facebook product catalog contains information about all the items you want to promote, including title, description, price, images, availability, quantity, and more. The catalog is connected to your Page shop and holds information about your products for sale. The tool to manage your catalog and inventory is Catalog Manager.
Many types of ads and commerce channels, including Shops, can pull information from your catalog to show items to customers.
A catalog can be automatically created when the seller adds at least one product to the Facebook Page shop. If a retailer already has products in a catalog, you can also set up a Page shop from your catalog and your products will upload to the shop automatically.
By now you can have many catalogs set up but only one can be connected with your Facebook Shop. You will be able to switch the connected catalog anytime and refine your product portfolio depending on seasonality, special occasions, or other relevant factors.
The main benefits of using the Product Catalog instead of adding products manually are the time-saving and centralization of your Facebook commercial activities. Choosing to manage everything on a catalog level will allow Merchants to expand their Facebook advertising easier and faster, as well as maintain cohesion across all the Facebook surfaces they wish to be present on.
What industry experts say about Facebook Shops
Julian Reiche - the Director of Paid Media at Northern Commerce - a full-service Canadian eCommerce agency, who is a part of Facebook's Marketing Partner Program - shares his thoughts about the latest Facebook release:
“'Facebook Shops' is the evolution of Facebook's push into the commerce space, we have seen them testing components of this through Instagram Checkout, Facebook Commerce Manager and Marketplace. The two big forces driving this are from the millions of businesses that still aren't transacting online & the pressure from Amazon as a fully vertically integrated eCommerce presence. For many businesses the barrier to open up ecommerce online is still significant and Facebook knows this, they have millions of SMB's boosting posts but can't transact online.
Facebook, like Google (Google Express), is watching Amazon dominating markets by making it as easy and friction-less as possible for customers. In the process Amazon is aggressively dominating the entire chain from logistics, eCommerce, discovery and customer relationships which in effect cuts out other players like Facebook & Google.
We know that this is a significant project for Facebook that they are introducing a lot of resources behind developing this, with Mark Zuckerberg doing the live discussion it signals that this is really a significant focus for Facebook. From our perspective we think that there will be some specific segments/niches that will benefit from this right away, businesses that sell through classifieds websites or Facebook posts likely will have the most to gain and lowest switching costs.
For larger businesses they will have to adapt and learn how to play in the space and not give up their ground, similar to how brands navigate Amazon or eBay today. That being said, overall it is really the customers that will decide if this is a buying behavior they will switch to or if they will prefer more traditional methods.”
The pandemic has probably made consumers even more likely to treat Facebook and Instagram profiles as the go-to source of information on local restaurants and stores. The new shopping experience is fast and seamless, so customers can quickly discover the right product on Facebook Shop and complete checkout.
Facebook expects that if small and medium businesses find value in the free Page Shop they will eventually start utilizing the paid advertising options as well.
The question remaining unanswered for now is what Facebook Shops will bring to those who cannot classify themselves as SMBs.
During the tumultuous times of pandemic we continue to observe new opportunities in the eCommerce space. First Google, and now Facebook are trying to help small industries with new costless features and possibilities. Is this a way of raising stakes in the race against Amazon?