Facebook Launches Ecommerce Venture: Shops

Facebook Launches Ecommerce Venture: Shops

almost 4 years ago2 mins

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Facebook turned up sometime between 9am and 3pm to deliver a plan for its revamped ecommerce venture, Facebook Shops 🛍

What does this mean?

Facebook Shops will allow businesses to sell directly through their Facebook and Instagram accounts – for a percentage of each transaction, of course. While Facebook already offers similar services to bigger companies, this expansion could go some way to offsetting the slowdown in its main revenue source: the sale of targeted ads.

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Small business owners have been able to set up an Instagram or Facebook page for years, but their posts have always been buried in news feeds unless they paid to promote them. After all, there wasn’t much incentive for Facebook to draw attention to them if their transactions were happening elsewhere on the internet. But with Shops, Facebook could benefit even if the company refuses to spend a cent on Facebook ads. The fact it could also poach some revenue off payments-processing incumbents like PayPal and (https://en.wikipedia.org/wiki/Stripe_(company) is just a happy coincidence 👍

Source: Markets Insider
Source: Markets Insider

Why should I care?

The move should help Facebook capitalize on the recent boost in online shopping, and with more consumers browsing its digital shelves, it’ll likely benefit from increased ad spending too. And there’s another winner in all this: namely online shopping platform Shopify, one of several partners in the venture 🏆 Shopify’s shares have almost doubled this year, and this news could bring them even more attention. Just be warned: the company’s already trading at 300 times next year’s estimated profits – roughly 10 times Facebook’s valuation.

There’s a simple reason companies would pay Facebook a cut of their sales: the tech giant’s apps are a great distribution channel 📱 And if Facebook can prove loyal Instagrammers will become loyal customers – and that its slick platform will convert more transactions than their own websites would – marketing teams worldwide might be biting its hand off for a place in its shopfront.

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