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Facebook Introduces New E-Commerce Platform

In the wake of COVID-19, Facebook is looking to get in on the gains seen by e-commerce giant Amazon, and soon to be trillionaire CEO Jeff Bezos.


The best part is – you might be able to benefit too.


On May 19th, Facebook announced that it would be launching its new Facebook Shops feature in order to aid businesses affected by the pandemic and help them transition into the post-pandemic era where a robust digital strategy will be key.


Facebook Shops allows merchants to sell directly to Facebook’s 2.6 billion users through digital storefronts. Consumers will have the opportunity to browse products, direct message vendors, and complete transactions from beginning to end via Facebook.


This is all done in partnership with Shopify. The new platform allows merchants to control customization and merchandising via Facebook, where they can organize their products, inventory, orders, and fulfillment. Additionally, users can link payment directly to their website if they do not opt into Facebook’s payment option.


From a user’s standpoint, Facebook is looking to emulate the popular Chinese platform WeChat by combining a multitude of services. In the future, Facebook will allow shopping through live streams. Celebrity influencers will be able to tag themselves at the bottom of their videos. This, in combination with the opportunity to browse selections based upon favourite brands and creators will change the game of social media advertising.


Facebook will show users shopping recommendations based on the pages that they visit. With each interaction, the buyer’s Facebook becomes even more customized. Combined with the opportunity to integrate loyalty programs, Facebook shops creates a quick and convenient shopping experience.



How is this different from existing services?


Facebook Shops appears to prioritize seller experience more than other digital marketplaces. This is in stark contrast to Amazon, where sellers are treated as another offering, rather than valued customers. Many vendors may find that with Amazon, their product initially flies hot off the shelves. Consequently, they may begin to stockpile inventory. This is only to find that after a short period of time they are experiencing declining sales. Amazon takes advantage of its popular sellers by copying their products and undercutting them using economies of scale. In some cases, businesses are left with no more market share than they had before selling on Amazon.



In terms of pricing, the domestic transaction fee for Amazon is composed of a processing and authorization component. Purchase via web and mobile sites have a 2.9% domestic processing fee and an authorization fee of $0.30. For Shopify orders, transaction fees do not apply to use Shopify Payments, manual payment methods, or POS orders. Otherwise, transaction fees vary based upon the pricing plan. For a Basic Shopify, online credit card rates are the same as those of Amazon, consisting of a 2.9% + $0.3 rate. This is in addition to the $29 fee per month, which includes features such as an online store, unlimited products, staff accounts, and 24/7 supports. Facebook’s pre-existing e-commerce service has a transaction fee of 5% per shipment or a flat fee of $0.40 for shipments of $8.00 or less.


For individuals who want to take control of their e-commerce, Shopify is currently the leading solution. There’s a reason why over 800,000 online stores use Shopify – it’s flexible and easy to use. However, there are some drawbacks. With Shopify, you pay for the ease of selling, yet the URL structure is not ideal for Search Engine Optimization. This is because Shopify uses subdirectories such as /pages/. Although this is functional and efficient, this feature may not drive visitors the same way viewers are hoping.


Facebook Shops vs. Facebook Marketplace

Facebook’s Marketplace feature functions primarily as a peer-to-peer sales platform. This tool is community-based and works more like a virtual garage sale than a sophisticated sales channel for businesses.


Facebook Shops is a different service; it helps established, registered vendors drive Business-to-Consumer sales, process orders, and manage customer lists. Many of these offerings would be familiar to people that have experience using Shopify.



How can you benefit?


Deliver a unique value proposition


It is very difficult to position oneself against the thousands of products on Amazon with comparable features. The key differentiators of many small businesses is the unique expertise offered by staff. Many people prefer to visit a bricks-and-mortar location to gather information before making a purchase decision.


Disruptions from COVID-19 lockdowns mean that many small businesses cannot deliver this same level of quality. However, with the right tools, this can be largely rectified. Messenger, WhatsApp, and Instagram DMs can be utilized within the virtual storefront to address any customer inquiries and concerns. This option is much more personalized than an Amazon listing and can be targeted towards customers within a ten-kilometer radius of your retail location.



Create a seamless brand experience

Facebook shops will allow you to connect all aspects of your digital strategy. Shopify technology allows for total control of customization alongside organizational tools to aid with product management. 100+ professional themes ensure a professional appearance for even the least tech-savvy. The option to customize colors, layout, and tiles creates consistency.


An aesthetically pleasing display maintains your professionalism as a small business and ensures that you remain at the forefront of the consumer decision-making process. The better impression you have on shoppers, the higher your conversion rate will be - the percentage of visitors who take the desired action (ie. make an order). Ultimately, a strong digital strategy helps complete the conversion and shopping transaction with less-drop off, meaning your will easily meet your bottom line.


Break into new markets

According to a YesCycle Marketing Report, 57% of millennial customers say that social media influences their purchase decisions.


Why do millennials matter? By attracting younger audiences, you create lifetime value for your brand. As these young buyers begin starting families, their purchasing power increases exponentially. Younger generations look for a personalized, cross-channel experience, and by synchronizing your e-commerce platforms, social media, and in-store promotions, you are doing just that.



Take advantage of the tools at your disposal

Business owners have a lot of decisions to make when designing their e-commerce offerings. Facebook looks to solve this issue by encompassing a variety of tools for sellers. Partnerships with website development offerings BigCommerce, WooCommerce, ChannelAdvisor, CedCommerce, Cafe24, Tienda Nube, Feedonomics are designed to aid small business owners in the development of a concrete digital storefront. Basic shops are free to create and can potentially be seen by thousands of users.


An economics survey published by The National Bureau of Economic Research says that less than 40% of small businesses are expected to last beyond the end of 2020. Thus, vendors must step up their e-commerce game to increase their sales. It was only inevitable Facebook would look to share in Amazon’s gains, and you can, too, by creating a free Facebook Shops account.

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