Supporting Small Businesses with Facebook Shops

  • By Elizabeth Radziul
  • in
  • on May 28, 2020

Small businesses are the heart and soul of our communities, but with storefronts closed indefinitely and retail shifting almost entirely online, the struggle to stay afloat continues to intensify. Internet usage is at an all-time high, and eCommerce is thriving, but it is difficult for small and medium-sized businesses to compete with retail giants like Amazon and Walmart. In an effort to expand its influence into eCommerce and ease the pandemic-induced stress on small business, Facebook announced the launch of Facebook Shops

Facebook Shops allows businesses to set up a single shop that can be accessed from both the business’ Facebook and Instagram profiles, as well as through stories and ads on both apps. It is free to set up, and allows businesses to choose which products to feature and even customize the theme to match their brand. They also have the option to enable the checkout feature, which customers can use to make purchases directly from the app instead of being redirected to the company website. If a customer needs assistance, they can ask the business directly through one of Facebook’s subsidiaries, WhatsApp, Messenger, or Instagram Direct. The user-friendly platform is meant to streamline the user experience for online businesses, but more importantly, to bring some businesses online for the first time. According to a Facebook survey,

“One-third of U.S. small businesses have stopped operating, while another 11% expect to fail in the next three months,”

and the tech company is hoping to use the new platform to rescue as many of these businesses as possible.

Facebook Shops launched last week and will continue to expand availability throughout the coming months. After the platform’s Facebook debut, Shops will make its way to Instagram, too. Instagram Shops is set to launch this summer, taking inspiration from @Shop, the Instagram-run account that has been promoting small brands since May 2019. Instagram Shops is designed to make online shopping a truly enjoyable experience: users can browse collections from brands and influencers, filter by a category, and make in-app purchases. To make things even easier, the tech giant announced plans to launch a shop tab in the navigation bar. Facebook also has two features currently in the testing phase. Live Shopping, a feature in which creators and brands can tag products in their live streams that can be accessed by clicking the links at the bottom of the video, will be released soon. In addition, Facebook will release a feature that connects loyalty points to your Facebook account, which will hopefully forge a stronger connection between customers and small businesses.

With any new technological innovation, there are always questions regarding privacy and information security, but Facebook was fairly transparent about what information is collected and shared. According to Facebook, your shopping activity will not be shared with your profile or friends, although you have the option to share your purchases through Messenger or even through your Instagram Story if you want to spread the word on a brand or product you love. When using Facebook Pay- which can only be done in the US and if the business enables the feature- Facebook collects payment information, but will “securely store and encrypt your payment card numbers”. The information that is actually shared is comparable to any other online shopping experience. Business insights such as shop performance and traffic are shared with the brand, but this does not include information that personally identifies the customer such as names, email addresses, or any other information that would enable the brand to contact the customer without permission. Shop activity will also be used to personalize app experience, so don’t be surprised if your Instagram feed or Facebook ads show content similar to a recent purchase.

Facebook is certainly not the only platform that small businesses can use to sell their goods online. Small businesses, entrepreneurs, and artists have been using Etsy to sell their goods for years, and Facebook’s own marketplace platform has been around since 2016, so why is Facebook Shops any different? For one, Etsy serves a particular niche market for vintage and handmade products, and Facebook Marketplace is for second-hand products. The real draw to Facebook Shops, however, is the worldwide reach, unlike any other platform. Business owners can build off of the social media following they already have and interact with their followers directly. During this unprecedented time, many Americans want to help small businesses, but don’t know how.

The easily accessible online shops bridge the gap between businesses struggling to sell and customers with pent up demand. 

Of course, while this new platform will certainly help small businesses in a time of need, the venture is not entirely philanthropic. Facebook will take a small portion of all transactions, but the real profit will come from advertising revenue. Facebook has reportedly seen a drop in ad sales as a result of COVID, but also a drop in share value due to several factors involving the vulnerability of its revenue stream. For one, the majority of revenue comes from Facebook itself, and not its subsidiaries. Facebook Shops is not only a ploy to drive more traffic to ads, but also an opportunity to diversify the business by driving users to Instagram, Messenger, and Whatsapp. This is also a strategic move to further infiltrate the tech space into eCommerce, threatening to dethrone Amazon’s reign as an industry leader. Amazon and Facebook both have access to a tremendous amount of data and have the tools to use it to their advantage, but there are key differences in their business models. Amazon has a subscription service in addition to other resources that result in the hard-to-beat prices that have made the company the go-to for all things eCommerce. However, Facebook has the opportunity to bring a sense of community to online shopping in a world where people crave human interaction and personal connection more than anything. Facebook also appeals to the public’s willingness to help the small businesses that are the most vulnerable during this time. 

The full extent of COVID-19’s impact remains to be seen, but global tech companies and small businesses alike have the power to make the most of unprecedented times. Facebook is just one example of a company that is using the panic of the crisis to not only make a difference for others but to also strengthen and grow its own business. Facebook has big plans for Shops: Zuckerberg intends for this venture to extend well beyond pandemic times and into our “new normal”, but the climate created by the virus might just be the perfect storm to turn this business opportunity into a success. 

Leave a Reply

PUBLISHED BY Elizabeth Radziul

View all posts by Elizabeth Radziul

Related Posts

CISO

Botnet Attacks on the Rise: Companies to Invest Heavily in API Security

Recently, companies are beginning to shift to the use of the cloud and expose functionality via Application Programming Interfaces (APIs). Cybercriminals have been taking this new exposed entry to their advantage as new technologies often lack the proper security. With APIs becoming more commonly used in companies, cybercriminals have been using Botnets to carry out […]

CMO , Retail

How Businesses Can Begin to Change the Conversation

Contributed by [24]7.ai Over the years, we’ve spoken with countless businesses across multiple industries. And every time we strike up a conversation, we ask a lot of questions, because we’re constantly on the lookout for new ways we can use technology to improve the customer experience. During these conversations, however, we began to notice a […]

CISO

Cybersecurity Leader, John Felker, Keynotes Our August Assembly!

On August 17th, The Millennium Alliance Transformational CISO Virtual Assembly kicks off with a keynote address from John Felker, Former Assistant Director for Integrated Operations, Cybersecurity and Infrastructure Security Agency (CISA) at the Department of Homeland Security. Felker is a proven innovator in the cybersecurity space and is notably recognized for his work leading the […]

#MillenniumLive , Healthcare

#MillenniumLive The COVID-19 Shift to Telehealth

Our thought leader, Michele Chulick, the former President & CEO of Wyoming Medical Center, talks about her career journey, leading the successful affiliation between WMC and Banner Health, and the challenges leading a major health system during the pandemic in this weeks #MillenniumLive. Chulick touches on the rapid shift from in-person healthcare to telehealth during […]

Lovin’ Digital Diary?

Premium content to our readers interested in all things business.

Check Us Out!

Millennium Membership offers Fortune 1000 C-Level executives, leading public sector/government officials, and thought leaders across a variety of disciplines unique and exclusive opportunities to meet their peers, understand industry developments, and receive introductions to new technology and service advancements to help grow their career and overall company value.

About Millenium Alliance Next

About Digital Diary

Created to provide premium content to our readers interested in all things business.

Launched in 2017, Digital Diary was created to provide premium content to our readers interested in all things business. With our blogs catered to deliver the top news stories, trends, and interviews from across all industries.

Read all story Next

Millennium Alliance Membership

Learn More Next

What does it mean to be a Millennium Member? In the midst of the constant disruption across all industries, our members are given the tools they need to digitally transform their organizations and become the best leaders they can be. Millennium Members are provided the exclusive opportunity to attend our 40+ intimate in person and virtual Assemblies, take part in industry-leading Executive Education sessions conducted by the nation’s leading academic institutions, business leaders, and technology providers and receive industry leading content through our Digital Diary Platform as well as the rapidly growing #MillenniumLive Podcast Series.