On May 19th, Facebook launched its long-expected Shops feature, enabling customers with a Facebook or Instagram business profile to sell directly from the platform.
Menlo Park: 20 May 2020
With 2.6 billion users, Facebook is gradually adding services to its main platform as well as growing by acquisition. Instagram, Whatsapp, Oculus VR, and others point to its acquisition strategy. With Facebook’s main revenue source advertising, and with some of the highest online user engagement metrics in the only world, it was only a matter of time before Facebook converted into an ecommerce platform-as-as-service.
The central application in Facebook Shops is Commerce Manager. Commerce Manager is the e-shop application that integrates directly into a vendor’s Facebook page. This is where vendors manage inventory, set prices, and activate Facebook Checkout, which is the online shopping cart.
The Catalogue Manager is the database of inventory for sale. This inventory can include physical items or products, but it can also include trips, cars and property. We anticipate that future catalogues will become more specialized and include hotel nights as a separate sub-platform.
The selling fee is 5% per order, which includes all payment processing, platform use and taxes. An order of € 10.00, for example, costs just € 0.50 in fees to Facebook.
Facebook Shops places the company into direct competition with Amazon.com and eBay. Unlike Amazon.com, however, Facebook has not announced plans to allow drop shipping or central fulfillment. This would require building a network of central warehouses and stock picking systems.
Facebook Shops is currently only open in the United States, for a specific type of business. So far, however, Instagram has reported that over 1 million businesses have signed up.
Facebook’s future initiatives are visible with its Libra currency and payment system, as well as its existing Facebook Marketplace. Facebook reports that 450 million people visit its “buy-and-sell” groups each month. It’s a clear indication of the retail power Facebook is looking to harness.
Navigator Consulting supports small enterprises, large companies and institutions manage their social media engagement, digital transformation and online communications. We have been present in the tech sector since our inception in 1995.
Philip Ammerman
Managing Director
Sources:
TechCrunch. May 19,2020
Financial Times. May 20, 2020