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Facebook taps into growth in ecommerce with launch of Shop feature for retailers

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Social media giant Facebook has launched a new Shop feature, which will allow retailers to sell on its platform and to integrate selling from Instagram too.

Tapping into the global groundswell of online shopping instigated by the lockdown, Facebook has extended and developed its marketplace offering to allow small businesses to sell direct from its platform and app.

The move will allow retailers to create a single online selling presence on the platform and to sell from user’s feeds. It also will be closely allied to the company’s other social media selling tools on Instagram, which it launched last year.

In addition, it is also believed that the Shops tool will also work with the company’s proposed cryptocurrency, Libra, announced last year and which has failed to gain any real traction since.

“Our goal is to make shopping seamless and empower anyone from a small business owner to a global brand to use our apps to connect with customers,” Facebook CEO Mark Zuckerberg said in a video announcing the new product.

He went on to outline how, as with Facebook’s other e-commerce features, Shops will be free for businesses to access, with the expectation that the tool will boost consumer engagement and ad sales.

“Our business model here is ads,” Zuckerberg explains. “So rather than charge businesses for Shops, we know that Shops are valuable for businesses. They’re going to in general bid more for ads and we’ll eventually make money that way.”

In addition, Facebook is also rolling out a tool to connect loyalty programs and will be adding shoppable product tags to videos shown in its site.

The analyst’s view

Chloe Cox, Social Media Lead, Wunderman Thompson Commerce, comments: “Facebook’s online shopping initiative couldn’t have come at a better time for the social media giant. Its intentions to move into ecommerce were made clear with the launch of Instagram Shopping last year – and with many consumers encouraged to do their shopping online, there is a huge market for them to tap into. What’s more, a fifth of consumers already get their inspiration to purchase online from social media channels and buy 3.5 times a month through those platforms – figures almost certain to increase this year.”

She continues: “The move will be beneficial for retailers and other businesses. Social media has always been a great way to generate interest, but when customers want to convert that into a purchase, they are moved off the platform to a brand site. This introduces friction into the customer journey when you want to convert and also plays into customers’ desire for speed and convenience.”

Cox says: “Equally, Facebook Shops works for the social media giant’s own business strategy. We have seen from Amazon that if you own the interface, you own the customer. If you own the customer, you own the data. And if you own the data, you own the future. Facebook’s model has always centred around advertising and through its shopping platform will help it provide a hyper-personalised experience that keeps customers on its platform for more than just social media.”

Cox concludes: “The move into social commerce for brands and retailers is a no brainer. Our research found that a fifth of digital commerce leaders believe that social commerce would be important in 10 years’ time, thus making it the number one commerce channel. Yet, whether or not this was a smooth marketing move by Facebook during a pandemic that has forced everyone online is up for debate, but the company will certainly win brownie points from small businesses and consumers alike in helping out a sector in desperate need of commerce.”

What about delivery?

However, there is more to social commerce than just having the right platform, warns Joe Farrell, VP and Managing Director, PFS. He believes that brands can only be successful on social platforms if they look beyond the point of purchase and keep up with customer delivery expectations.

“Whilst the benefits of social commerce are many, brands can only be successful on this platform if they look beyond the point of purchase,” says Farrell. “The real test for brands competing online is the journey that follows – how quickly the item is delivered, how easy it is to return the item if needed, and the level of customer service along the way.”

Farrell adds: “Whilst expectations on delivery times during lockdown have eased slightly, UK consumers still expect their items to reach them quickly during this challenging period. According to our latest research, seven in ten (71%) of UK shoppers expect their items to reach them within a week (compared to 90% normally). The distribution, delivery and after-sales service can make a lasting impression on customers and will be the key to social commerce success. For emerging brands, partnering with distribution providers is often a cost-efficient way of keeping up with the latest customer delivery expectations.”

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