With COVID-19 Accelerating the Shift to Digital, Is Social Commerce Becoming the Real Deal?

May 28, 2020

And what does the announcement of Shops say about the future of Facebook’s marketing ecosystem?

Businesses around the world are seeing a seismic shift from physical retail to digital due to the COVID-19 pandemic. While it’s still to be determined what changes will sustain at a consumer level in a post pandemic world, the large scale shift to online shopping is likely to be a sticky one, according to analysts, agencies and brands alike.

The call for digital transformation has been clear for some time before COVID-19, but with the overall acceleration of the shift,  there is now a much greater sense of urgency and even more at stake for the businesses who struggle to adapt quickly enough.

In a response to the threat facing small and medium-sized businesses, Facebook announced the launch of Shops, a compelling new e-commerce offering that allows brands to build customizable digital storefronts accessible to consumers across Facebook and Instagram. While there might be more immediate need in the small business arena for a solution like this that’s relatively quick to execute, Shops is available to any brand worldwide. 

Our quick take: Ultimately, we see this as a good thing, as lots of businesses are still confronting challenges to create a seamless online shopping experience for their customers. It’s also worth noting that the intention behind Shops is not to replace the “brand.com” shopping experience, but to provide an additional revenue channel. Additionally, we see this as a clear acceleration of Facebook’s longer-term plan for native shopping, which we believe is the future of social commerce for brands of all sizes.

Digging in: There are definitely some future-facing ambitions at play from Facebook in relation to Shops. It’s a mutually beneficial endeavor for brands and for Facebook, being that it’s a way for the company to diversify its business at a time when ad spend is being evaluated with a more critical lens. It’s certainly indicative of Facebook’s aspirations to play a leading role in the social commerce ecosystem. And it aligns with previous efforts, including the rollout of Instagram Shopping and Instagram Checkout features, which provide a cleaner path to purchase for consumers and aims to spur spontaneous purchases while shoppers are in an inspired state of mind on the platform.

The challenge for Facebook, dating as far back as 2014 when it initially tested the Buy button on products in ads, is transforming the consumers’ perception of what role Facebook, and by extension its suite of apps, plays in their lives. Are people ready to see Facebook and Instagram as prime shopping destinations. Has COVID-19 encouraged this behavior, with far less experiences with brands happening in-person? There are also questions around Facebook’s ability to truly compete as a shopping destination, up against the likes of Amazon. So far, the positioning around Shops has been strong, and we suspect Facebook will be thoughtful around previous challenges, as well as how they ultimately differentiate against some major competitors. 

Reading between the lines: What else could this move towards in-platform shopping say about the future of the Facebook family ecosystem? This might be a more concrete indication of Facebook’s intention to prepare for a pixel-free world. They’ve made changes in accordance with the CCPA and no longer accommodate pixel retargeting for California residents. Could it only be a matter of time before they have to follow suit for other states, as the calls for privacy become even louder and more widespread? In-platform shopping would help ease the mind of advertisers when considering the value of their investments on Facebook and Instagram, in the absence of pixel usage. This thinking is in line with Mark Zuckerberg’s very public focus on what Facebook is actively doing to ensure consumers’ privacy is protected. But only time will tell!

We’re here to help. 

ForwardPMX is working closely with Facebook to prioritize our clients for early access to the exciting Shops opportunity. In the meantime, we are here to provide support and hopefully answer any questions you may have. Here’s a quick overview of questions that have been top-of-mind so far:

Q: Is this a paid or organic social initiative?
This is currently organic only during the initial release and learning phase, but Facebook will be integrating into paid advertising eventually.

Q: Are there costs involved in Facebook Shops?
Facebook Shops are free to set-up.  Taxes and merchant fees are being investigated further, i.e. Shopify, Facebook checkout (in beta), etc.. 

Q: Do Facebook and Instagram Shops live separately?
Yes.  They each live within their own native environments to provide a seamless shopping experience.

Q: Will Shops be integrated with Marketplace? How does Shops differ from Marketplace?
Shops and Facebook Marketplace are two separate products. While Shops is a storefront on your Facebook Page featuring your products, Marketplace is a surface where your products can get distribution outside of your Shop. To learn about listing on Marketplace, see here.

Q: How do I create a collection? Can I get access to collections through commerce platform partners like BigCommerce, WooCommerce, Feedonomics, etc.?
We are rolling out Shops over the next few months. When merchants get access, they will receive an email instructing them to go to Commerce Manager to customize their Shops. If you are currently using Instagram Shopping, then no additional feed setup will be required.  Over the coming months, Facebook will be providing partners with integrations that will improve this experience.

Q: What is Commerce Manager? How can businesses access it?
Commerce Manager is a single interface with tools to help you sell products, manage inventory and fulfill orders for your business across Facebook and Instagram. Learn more here.

Q: Can I access Shops via an API instead of Commerce Manager?
At launch, there will not be any APIs to customize Shops. Merchants in the alpha audience who want to make visual layout changes and font and color changes to their Shops can do so in Commerce Manager. We will be testing APIs in June and rolling them out more broadly at a later date.

Q: How many products can I feature in each collection? How many collections can be featured in a Shop?
You can feature 6-30 products in any collection, and up to 20 collection in a shop.  We recommend approaching with priority product collections based on best sellers, new collection launches, promotions, etc.  As this product evolves, the idea is that FB will populate based on the individual viewer, similar to dynamic ads, using machine learning.

Q: Will Facebook Shops be integrated with Facebook Pay?
For consumers: There is no change for consumers. People on Facebook in the U.S. can continue to make purchases using Facebook Pay when shopping from merchants who have enabled onsite checkout. People on Instagram in the U.S. can continue to use checkout with businesses who are testing the feature.

If the merchant does not use onsite checkout, the shopper will be directed offsite to complete the purchase.

For businesses: There is no change for businesses. Only businesses on Facebook in the U.S. who use onsite checkout can continue to receive payments for purchases from consumers using Facebook Pay. Businesses on Instagram in the U.S. who are testing checkout and continue to do so.

Businesses that do not use onsite checkout will continue to receive payments from their offsite sales through their own payment systems.

Q: Will non-physical goods businesses/companies be eligible for the alpha?
Not at this time. Businesses must comply with our commerce policies to use Shops, one of which is that only physical goods may be sold.  Facebook is planning to accommodate all businesses eventually and will work with all service lines to customize a Facebook Shops experience that accommodates their offering.

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