November 5, 2020
Earlier this year, Facebook started to roll out its new feature ‘Shops’. The social commerce storefront is an attempt to regain customer access from marketplaces like Amazon. It’s based on enhanced catalogs that improve the discoverability of items, the quality of recommendations for individual users, and the relevance of the displayed product information. How promising this attempt is will be outlined in this article.
Facebook Shops is without a doubt a significant extension of Facebook's functionality when it comes to shopping. Previously, the eCommerce function for merchants consisted mainly of advertisements on Instagram in which products are tagged in photos, leading the user directly to an online store. With Facebook Shops, the social network has introduced a new digital storefront on both Facebook and Instagram, enabling social media users to discover relevant items and personalized recommendations within the social network.
The integration of new levels into existing value chains is common in the platform economy. Facebook pursues a similar approach with Shops, which is not a complete store system, but rather a higher-performance front end with close links to Facebook's advertising ecosystem. A checkout function has so far only been rolled out in the US.
Facebook platforms are based on feeds for different purposes. While in the main app the shift from following friends’ activities towards a news and advertising feed has been predominant over the past years; Instagram is the home of one of the most profitable new professions of the past decade: influencers. The shopping potential on Instagram is therefore inherently high. If Facebook Shops can impact the eCommerce world in a similar way, the future of the new shopping option could be a bright one.
Aren’t there already plenty of marketplaces and price or product comparison sites out there? Definitely, but Facebook Shops is on a whole new level of personalization.
As a social network, Facebook is able to predict much more accurately what the individual user likes and is likely to purchase. This allows for a more personalized and relevant display of product ads throughout the whole network and an individually composed product feed in the new Facebook Shops environment.
Access to a customer’s needs, wants, and preferences play a major role in today’s eCommerce. Something that is increasingly frequent is that product searches don’t start on Google anymore but rather on Amazon - granting the marketplace a valuable form of customer access. Facebook, on the other hand, profits from another form of consumer insights. Following recent statistics, the average user spends 144 minutes per day on social media. That’s more than 2 hours of potential exposure to product displays. In the past, Facebook has used this opportunity mainly by offering advertisements on Facebook and Instagram via Facebook ads.
Although these advertisements drive social commerce as well, the range of offers is limited. In comparison, Amazon is based on a recommendation system, drawing on the full pool of data that a seller provides for his product catalog. Facebook ads can only show one concrete product that is currently being advertised by the retailer. This brought Facebook Shops into play.
Closely tied to the Facebook ads data feed, Shops are based on enhanced catalogs that improve the possibilities of recommendation and the visibility of products. A catalog is a container that holds detailed information about the items that a merchant wants to advertise or sell across Facebook and Instagram. Category- and market-specific information allows customers to easily discover and consider a broad range of highly relevant products using search and filters in Facebook Shops.
Experts do not regard Facebook Shops as a serious competitor for Amazon when it comes to logistics and services. BUT, from a consumer perspective, Amazon is less inspiring than social commerce. The marketplace is ideal for finding and comparing a product you have been purposefully searching for. However, it is not particularly inspired by trends, fashion, or interior design, and it does not trigger the consumer to discover products that fit a certain lifestyle. This is where the strength of Facebook, and especially Instagram, lies.
In their feed, users will typically be exposed to offers from brands that they are already following, so the pre-selection of Shops content will be made by the consumer.
Facebook Shops can become a channel that makes simple store solutions with easy customer access available to merchants.
In the official announcement of Facebook Shops, the new ecosystem is primarily presented as an offer for small businesses. However, big brands will also have to take a closer look at how Facebook Shops performs compared (and as an addition) to their own online stores. Especially with regards to data collection through Facebook, it will be interesting for all kinds of brands to see what performance and customer data can be acquired.
The new data management system of Facebook Shops makes it possible to comfortably import even larger data feeds. An easy way to generate the perfect product catalog for Facebook Shops is by using a feed management tool with an integrated Facebook Shops connection. Product data from the backend of a merchant’s online store (such as WooCommerce, Shopify, Magento, Lightspeed, etc.) can be imported into the tool via a plugin and optimized until the ideal export feed for Facebook Shops is created.
Through its seamless integration into social networks and the use of detailed product pages, Facebook Shops offers an ideal setting for influencer products or additional ways to market a product.
The introduction of Facebook Shops brings a long-term opportunity for merchants to focus their offers even more on shopping activities that are fitted into the daily habits of users. Facebook can track the customer journey in an enhanced way and collect the data needed to target paid ads more effectively, which will also have an effect on CPC strategies.
The general trends in eCommerce will give Facebook Shops additional momentum. Customers will buy online and on mobile more often, and brands will want to avoid being too dependent on one big player such as Amazon. There will be room for new and innovative modes of shopping, such as offered by Facebook Shops.
Through its seamless integration into social networks and the use of detailed product pages, Facebook Shops offers an ideal setting for influencer products or additional ways to market a product for brands. Whether you are a small business or a renowned brand, Facebook Shops should not be ignored.