Facebook Shops – new worlds for retailers and customers

During the coronavirus crisis, Facebook and Instagram were updated with a new shop system that could outcompete the likes of Amazon and other shopping platforms. What opportunities do the social media modules offer to e-commerce? Read on to find out what new features are available and what sellers need to watch out for.

Facebook Shops takes interactive shopping to a whole new level.
Image: © leszekglasner / Adobe Stock

What’s new in Facebook Shops and Instagram Shop?

With its “Marketplace”, Facebook has long been pursuing e-commerce ambitions. For some time now, it has also made it possible for sellers to run a shop on their own business page, where products can be presented along with a short description and their price. To complete a purchase, buyers are then redirected to the seller’s own web shop. The process is pretty much the same on Instagram. Entire themed worlds are opened up here. Sports gear, baby clothing, or interior design – everything of interest to the user is shown on the shop page. You simply have to click on an image or video to find out more about the linked products, but you can only buy them after you’ve been redirected to the web shop. And now Facebook has built on this.

Since May, it has officially been possible to sell goods directly on Facebook or Instagram. In the future, customers will no longer have to be redirected to the web shop, and the entire customer journey will take place on Facebook and Instagram. Facebook Pay will be used for payment. The new shopping environment is currently being rolled out, and retailers will gradually be able to set up shops there. Sellers who have been using Shopify up to now will have to wait until their e-commerce section has been automatically switched to Facebook Shops or Instagram Shop.

A major advantage for online shop owners is that shops on Facebook and Instagram are free – unlike on Amazon, for example. All you need to set up a shop page is a business profile on the relevant channel. Fees will only be potentially incurred in the payment methods area. The new shop features have therefore resonated well with online retailers, especially in light of the Covid-19 crisis. What’s more, the current trend toward personalized shopping experiences makes the launch cleverly timed.

How to set up your own shop

A shop can be set up via the Facebook business page and is automatically created for Instagram at the same time. The “Shop” tab in the left sidebar takes you to the “Commerce Manager” (only available if you are the page and business manager admin). There, a menu will guide you through creating your shop. It couldn’t be any easier. You specify the delivery terms, delivery charges, payment methods, and return options. Customers can save their credit card details or a PayPal account in their Facebook settings. Using the Commerce Manager, you can then upload the items you want to sell. The number of sales or return requests will also be clearly listed there. The shop will be automatically linked to your Facebook business account.

What possibilities does Facebook Shops open up to retailers and customers?

From a customer’s point of view, the product is displayed on the front end with an option to buy it directly by clicking on a button. The shopping process isn’t very different from the customer journey in a regular online shop: from browsing through “collections” right up to the checkout, everything now takes place on Facebook or Instagram. But Mark Zuckerberg wouldn’t be Mark Zuckerberg if there weren’t a vast array of extra features on the way for retailers and customers. For example, the shop also optionally runs via Facebook Messenger, Instagram Direct messages, and Facebook subsidiary WhatsApp so that retailers can communicate with customers directly. To encourage customers to buy more, Facebook has introduced a loyalty program in the form of a digital customer card that users can collect points with.

In this official video, Facebook introduces the new Shop.

Direct interaction takes shopping to a new level

The full potential of merging social networking with online shopping really becomes apparent in the direct interaction and personal contact with customers. Direct messaging is an especially convenient way for customers to ask questions about products and receive an answer from the seller just as quickly. The live features are also incredibly useful: “live shopping” lets retailers launch their new products to thousands of customers face to face and receive immediate feedback. Prospective buyers can express their opinion and ask questions about the product that sellers can then answer right away. This can lead to users making a spur-of-the-moment purchase, and the buying process is significantly simplified. Sellers have the option to integrate certain items from their shop in live streams, both on Facebook and Instagram. They are then displayed in the lower part of the stream so that viewers can fill their shopping basket directly.

billion people worldwide actively use Facebook, Instagram and Whatsapp.

It therefore goes without saying that the shopping function of these global social media giants presents online retailers with entirely new opportunities. Theoretically, retailers could completely do away with their traditional online shop. Nevertheless, Facebook faces regular criticism with regard to how it utilizes private user data. So, how is data privacy addressed in Facebook Shops and Instagram Shop?

  • When customers pay via Facebook Pay, Facebook does not share their personal data with the shop owner unless required to complete the purchase.
  • Customers can choose whether or not they want to receive emails from the shop owner.
  • Many users worry that their shopping activities will be visible in their personal profile, but that is not the case.

Of course, Facebook itself benefits in a business sense from collecting data. With its shop service, the corporation is able to gather valuable additional data about the buying behavior of users. An additional source of income for Facebook are the ads displayed by retailers on Facebook and Instagram to promote their shops.

What legal aspects do shop owners need to watch out for?

Online retailers definitely need to be aware that Facebook assumes no responsibility for the content displayed in shops. As is the case on Amazon, every seller must ensure that they comply with all legal requirements applicable to them. Since purchases can now be completed directly on the respective platform and not via an external online shop, all the information that needs to be made available to buyers must be directly incorporated. This includes the general terms and conditions, privacy policy, and transparent information about product prices, payment methods and delivery charges.

Will Facebook steal Amazon’s thunder

In view of the numerous features – which will no doubt be added to – and the numerous options for interacting with (potential) customers, Facebook Shops and Instagram Shop could certainly establish themselves as highly promising e-commerce platforms. But does this mean that they will be able to directly compete with Amazon? Amazon’s enormous range of products, sophisticated logistics, and extra services like Amazon Prime still make the e-commerce giant untouchable. However, Facebook and, in particular, Instagram come out on top when it comes to their innovative way of reaching buyers personally and giving them new shopping worlds to explore through images and videos – a huge plus compared to Amazon’s logical and plain layout. The fact is that shopping on social media won’t necessarily turn the future of e-commerce on its head, but it will play a role in shaping it.