Facebook Goes Further Into Ecommerce With New 'Shops' Feature

Facebook on Tuesday launched a new commerce toolkit, called Shops, with a revamped model for how the company fits into the online shopping landscape.

Shops will give every SMB, merchant and product company the ability to set up a virtual storefront across Facebook’s app properties. Unlike previous Facebook and Instagram commerce products, Shops will also be native to the platform, CEO Mark Zuckerberg said in a video announcement.

An Instagram product ad wouldn’t link to an unknown or inconsistent mobile site, Zuckerberg said. But instead it would load a zippy Facebook portal that incorporates product catalogues (which are often uploaded already for Ads accounts) and has credit card data stored, if that user has ever made a purchase on Facebook or one of its apps.

With Shops built natively into the Facebook business platform, products could be added to a cart on Instagram and purchased later on Facebook, or however across Facebook’s apps.

The other important difference from previous commerce initiatives is that Facebook “required small business to go all-in on our tools,” Zuckerberg said.

Now Facebook is giving away the platform for free, and partnering with tech companies to provide back-end ecommerce services.

“Rather than charge for Shops, we know if it’s valuable they’ll want to bid more for ads,” he said.

The anchor partner for the announcement is Shopify. With “a couple clicks,” Zuckerberg said sellers could start operating a Facebook Shops account through the Shopify platform.

“It’s an incredible new reality in the retail space to have these tools natively in the Facebook platform,” said Shopify founder and CEO Tobi Lutke.

He said what small businesses and sellers need right now is ways to find new buyers.

“Communications is incredibly important,” Lutke said. “For so long that’s been monopolized by large CPG brands on television.”

And instead of going through media retail and media intermediaries, this online commerce ecosystem goes directly to customers, he said. “The DTC industry, as some people call it, really happened on top of Facebook and Shopify.”

Facebook’s focus on small-business accounts and Shopify’s strength with entrepreneurs indicates the new Facebook commerce and communications platform is more of an Etsy rival, say, rather than a retail chain like Target.

Local business, restaurants and independent entrepreneurs will be able to reach many new people across the Facebook family of apps. And Lutke said the winners in this new ecosystem will be those who consistently ship good products and have solid customer service, as opposed to packaging and promotional value for products sold in stores.

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