What is Facebook Shops? And how does it fit into the online ecosystem? Macy Edwards talks us through this latest announcement, including the implications for brands and retailers.
'The Four' Latest Announcement: Facebook Shops
Facebook has become the latest of 'The Four' to launch a fully integrated shopping platform called 'Facebook Shops'. This will directly compete with similar offerings from Google, Amazon and Apple, providing small businesses with an easy way to get online, access new audiences and drive revenue.
Facebook has launched ‘Facebook Shops’, investing in features across their apps that make selling products online easier, and that drive people to purchase. So, what does this mean for our 2020 marketing strategies? With many businesses forced to close their stores and strengthen their online presence in these unprecedented times, all marketplaces are racing to provide the best opportunities to help small businesses get online successfully.
How does this fit into the online ecosystem?
Facebook's new online shopping product is directly competitive to Google’s recent shopping feature (launched in response to the Amazon monopoly), encompassing free listings and in-app purchasing.
What is Facebook Shops?
Brands and businesses can set up stores on Facebook and Instagram that are fully integrated with their messaging platforms – for free. These stores will allow customers to buy what inspires them on social, speeding up the influencer to sale gap.
One way that Facebook Shops will have an edge over its competitors is its integration with WhatsApp, Messenger and Instagram Direct to offer support, answer questions and share information with customers. Facebook will be leveraging their mobile first solutions – which already have significant market share – to streamline the e-commerce experience and directly compete with business websites, in the same way that Amazon Storefronts do.
A key feature will be the integration of Loyalty Programmes, allowing users to earn rewards while they shop. It’s unclear whether this will be retailer specific or if Facebook is entering the affiliate publisher market – which would be a very clever move. Not only would it drive even more revenue for them, but their users would love it: not only can you shop on Facebook, you can also earn discounts for your favourite brands as you do it. This provides users with more reason to stay in-app to purchase.
To sum up, launching a Facebook shop presents a great opportunity to drive traffic and attention on a platform that has a proven track record when it comes to influencing desire and demand.
What will the implications be for brands and retailers?
The truth is, it’s hard for brands and retailers to tell what the implications will be at this time. I'd imagine it will be a similar story to what we have seen from Amazon over the last few years. In essence, it will just be another channel that brands and businesses can harness to drive sales.
The real question is, how do we effectively understand which channels are driving revenue when the data is fragmented across Google, Amazon and Facebook? Further fragmentation makes understanding the cross-channel relationship to our customers’ buying behaviour even harder to analyse and understand. There has long been a complicated relationship with major platforms such as Facebook, Google and Amazon, because they keep data and services within their own walled gardens, leading to questions over transparency. The launch of Facebook Shops is not spared of this criticism.
Though I’d recommend brands and retailers try this new feature, at the same time it’s important to be aware that it will mean more data is held by these platforms, further reducing first-party data. So, this trade-off will have to be evaluated with the impending cookie-less future in mind.
In short, this new product will fast track small businesses to get online and grow within a platform they are already utilising for marketing purposes. However, it may suffer from the same issues...
Will it encourage more companies to advertise on Facebook and Instagram?
More so than ever, brands are using content rich strategies across social media before implementing these campaigns into stores to engage mobile-savvy shoppers. With more shoppers now using their phones in-store to find what they need or to check if an item is in stock, the online vs. offline experience is becoming less defined. We are seeing the lines of content and advertising beginning to blur, as omni-channel strategies become increasingly important.
Over the years, the ROI of advertising campaigns on social media has grown, and it’s becoming an increasingly important channel for driving revenue for brands. It's one of the many 'online window displays' we are optimising for everyday in the ecommerce ecosystem; encompassing search, display, social and marketplaces. It makes a lot of sense for businesses to expand their advertising and give their social media marketing an in-store angle – the likelihood is that closing the gap from inspiration, research to purchase will drive more brands and businesses to advertise and sell on Facebook in the same way they do on Etsy.
It’s fair to say that brands and businesses’ advertising budgets are likely to increase as Facebook Shops starts to generate more directly attributable sales and revenue. Facebook have already said that they are releasing Facebook Shops for free, with the assumption they will make more money from paid ads as a result of this product.
Will it help with more effective Facebook Advertising performance reporting?
Yes, but only on Facebook itself. It’s hard to imagine that Facebook would support better business performance reporting, and it will most likely favour its own channels and products. As with all social advertising channels, Facebook is impression focused. Their algorithms are centred around user experience from a content perspective – unlike Google and Amazon whose algorithm is based on serving the highest quality result or product recommendation based on search behaviour.
In recent years, with the launch of the Catalogue Sales campaign type on Facebook, there has been more accurate Return on Ad Spend (ROAS) reporting. I predict that following this announcement, Facebook and Instagram will become more profitable and a bigger focus for brands and businesses when it comes to allocating their marketing budgets.
How will it affect other merchants like Etsy, Amazon and Google?
Facebook Shops will be another competitor in the marketplace arena, which will mean less market share that will most likely affect new and returning sellers and purchasers in the same way that Amazon steals share from brands and businesses’ websites. Where Etsy is concerned, though, I would expect impact to be quite low. Etsy seek the independent, bespoke, boutique, artisan market.
And it’s a similar situation for Amazon – they focus on quality e-commerce experiences, in comparison to Facebook who are attempting to close the loop between social marketing and e-commerce by streamlining the experience. Impact will probably be minor as it’s already a well-established platform with a market share that is big enough as it is. The interesting angle here is that it will provide a new opportunity to link data to what a customer likes and purchases, as opposed to what their friends like.
The timing of this couldn't be better with the fast or fail struggle to get online for small businesses following the stress of social distancing and quarantine around the coronavirus outbreak which is driving rapid ecommerce growth. This will enable more businesses to get online and become established significantly faster - which in turn will help them to drive revenue. I'd expect to see more search budgets being reallocated to social through the coming months as the trends have already shown more customers are very engaged on social with sufficient purchase intent - which will favour the Facebook ads algorithm from a ROAS perspective. During this time of uncertainty, you'd be mad not to jump on this new opportunity.
To learn more about the services we offer, get in touch with our digital marketing experts today.