Facebook launches Shops to bring more businesses online during the pandemic

Facebook is making a major new push into e-commerce. The company today announced the launch of Shops, a way for businesses to set up free storefronts on Facebook and Instagram. The shops, which will be powered by third-party services, including Shopify, BigCommerce, and Woo, are designed to turn the social network into a top-tier shopping destination.

In a live stream, CEO Mark Zuckerberg said expanded e-commerce would be important to begin rebuilding the economy while the pandemic continues. “If you can’t physically open your store or restaurant, you can still take orders online and ship them to people,” he said. “We’re seeing a lot of small businesses that never had online businesses get online for the first time.”

The launch of Shops comes as stay-at-home orders related to the COVID-19 pandemic have led to record sales for e-commerce companies. The pandemic has also been devastating for small businesses, with a third of them reporting that they have stopped operating in a survey conducted by Facebook and the Small Business Roundtable. An additional 11 percent say they could fail within the next three months if the current situation continues.

Image: Facebook

But online sales have been a bright spot for small businesses. At Etsy, where solo entrepreneurs have leaned hard into knitting fabric face masks and baking pastries for sale, revenue has doubled from three years ago. Facebook is betting that bringing more local businesses online will help them to endure while also creating big new business opportunities for Facebook itself.

While Shops are free to create, they could create significant new business opportunities for Facebook in advertising, payments, and other services. Businesses will be able to buy ads for their Shops, and when people use Facebook’s checkout option, it charges them a fee.

Zuckerberg said Shops will improve on the standard web commerce experience by storing users’ payment credentials in a single place that they can then use on any Facebook or Instagram storefront. There are currently more than 160 million small businesses using the company’s apps.

Shops can be found on businesses’ Facebook pages and Instagram profiles, and they can also appear in stories or be promoted in ads. Items that businesses have made available for purchase will appear within the shop, and users can either save items or place an order. (Some businesses enable users to make purchases directly on Facebook, while others will take you to the business’s website to complete the transaction.)

Image: Facebook

Businesses can handle customer support issues through Messenger, Instagram, and WhatsApp. Eventually, the company plans to let you browse store catalogs and make purchases directly from the chat window. It also plans to enable shopping from live streams, allowing brands and creators to tag items from their Facebook catalogs so that they appear on the bottom of live videos.

Facebook is also working to integrate loyalty programs with shops. “You’ll be able to easily see and keep track of your points and rewards,” the company said in a blog post. “And we’re exploring ways to help small businesses create, manage and surface a loyalty program on Facebook Shops.”

Facebook has been dabbling in commerce for years. In 2016, it introduced Marketplace, a destination within the app for peer-to-peer buying and selling. Two years later, Instagram began working on a standalone shopping app, though it was later abandoned. Instead, last year, Instagram added in-app checkout.

Shops will begin rolling out on Facebook today in the United States and are coming to Instagram sometime this summer. Instagram will showcase brands on its existing shop account, which already highlights items that are available for purchase. Later in the year, it plans to add a dedicated shopping tab to its navigation bar.