Facebook launches Shops

Facebook is making a major new push into e-commerce. The company recently announced the launch of Shops, a way for businesses to set up free storefronts on Facebook and Instagram. The shops, which will be powered by third-party services, including Shopify, BigCommerce, and Woo, are designed to turn the social network into a top-tier shopping destination.

In a live stream, CEO Mark Zuckerberg said expanded e-commerce would be important to begin rebuilding the economy while the pandemic continues. “If you can’t physically open your store or restaurant, you can still take orders online and ship them to people,” he said. “We’re seeing a lot of small businesses that never had online businesses get online for the first time.”

The launch of Shops comes as stay-at-home orders related to the COVID-19 pandemic have led to record sales for e-commerce companies. The pandemic has also been devastating for small businesses, with a third of them reporting that they have stopped operating in a survey conducted by Facebook and the Small Business Roundtable. An additional 11 percent say they could fail within the next three months if the current situation continues.

But online sales have been a bright spot for small businesses. At Etsy, where solo entrepreneurs have leaned hard into knitting fabric face masks and baking pastries for sale, revenue has doubled from three years ago. Facebook is betting that bringing more local businesses online will help them to endure while also creating big new business opportunities for Facebook itself.

While Shops are free to create, they could create significant new business opportunities for Facebook in advertising, payments, and other services. Businesses will be able to buy ads for their Shops, and when people use Facebook’s checkout option, it charges them a fee.

Businesses can handle customer support issues through Messenger, Instagram, and WhatsApp. Eventually, the company plans to let you browse store catalogs and make purchases directly from the chat window. It also plans to enable shopping from live streams, allowing brands and creators to tag items from their Facebook catalogs so that they appear on the bottom of live videos.

Facebook is also working to integrate loyalty programs with shops. “You’ll be able to easily see and keep track of your points and rewards,” the company said in a blog post. “And we’re exploring ways to help small businesses create, manage and surface a loyalty program on Facebook Shops.”

Shops will begin rolling out on Facebook today in the United States and are coming to Instagram sometime this summer. Instagram will showcase brands on its existing shop account, which already highlights items that are available for purchase. Later in the year, it plans to add a dedicated shopping tab to its navigation bar.

Why it’s Hot

This is a really smart move for Facebook. With small businesses across the country struggling to flex into e-commerce, Facebook stands to earn a lot of money (and even potentially good will) with this new feature. Plus, for small businesses – who often operate with very minimal staffing – having customer service, advertising, and sales all in one ecosystem will make the entire move to e-commerce a bit more manageable.

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