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Is Facebook Headed For an End-to-End Commerce Solution?
2020 Jun 17
Andy Perez

Many small and medium-size business owners found themselves stuck when governmental orders mandated that non-essential businesses close their doors to slow the spread of Coronavirus. It left business owners scrambling for ways to conduct sales online to keep their businesses afloat.

Meanwhile, shoppers everywhere turned to their smartphones when states went into lockdown. eMarketer forecasted that the average US adult would spend 23 more minutes per day on their phone in 2020 due to Coronavirus, with social networking expected to account for 11 of those incremental minutes.

Enter Facebook Shops.



In late May, Facebook launched Facebook Shops, an online storefront embedded within both Facebook and Instagram. Facebook Shops can direct customers to purchase through either Facebook’s Checkout option (if enabled) or their own website. While at the onset this new feature will likely be most useful for SMBs, Facebook will be able to harness those learnings and adapt them to its full ecosystem of apps.

Shops are free to create, and business owners can use, Facebook ads to drive traffic to a Shop. And Facebook will charge a fee only when someone uses the Facebook Checkout option (vs. checking out on a store’s website).

Where is Facebook Headed?

Those who’ve been paying attention shouldn’t be surprised that for years nearly all social channels have been trying to push away from upper-funnel tactics and move into the mid- to lower funnel. Facebook-owned Instagram especially stands to capitalize on shopping features, since Instagram users tend to have a “discovery” mindset that can move oneself down the purchase funnel. Part of the “Shops” announcement even included a feature that enables Shops products to be showcased on a livestream – a feature influencers on Instagram are sure to use to drive product purchase.

To understand Facebook’s push into commerce, it’s important to recognize where eComm’s largest player – Amazon – is headed. There has always been a dichotomy between social media and Amazon; one is a place to connect and the other is a place to shop. But those are beginning to converge. Recent innovations at Amazon have incorporated influencer affiliate programs, and even social media-like feeds to bring more inspiration to the shopping experience.

Beyond the content innovations, Amazon expects its ad business to be half the size of Facebook’s in the next couple of years. However, Amazon’s key advantage is that it’s able to leverage its own shopper data to target consumers … and that’s where Facebook falls short. But a feature like Facebook Shops would build a framework where purchase data begins to flow into the Facebook marketing ecosystem.

And it’s Facebook’s ecosystem that may eventually give it the upper hand. China’s robust social commerce solution, WeChat, not only delivers on the usual aspects of social media, but is able to deliver upper- to lower-funnel solutions through conversion. Facebook could be following the WeChat model, where it would become a one-stop shop for everything: Content (feed and Stories), Shopping (Shops), Customer Service (Messaging).

The holy grail of an omnichannel experience is one where systems are interconnected to make the customer’s life easier. By aligning its family of apps and services with different customer need states, Facebook stands to deliver a truly integrated end-to-end commerce solution.

At Velocity Commerce Group we are staying ahead of the curve and looking for ways to push innovation in the social commerce and e-commerce spaces. For help with your Facebook and Amazon advertising in the new connected world we live in, feel free to reach out via LinkedIn or email.

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