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Facebook makes its first serious move into e-commerce, but why now?

Facebook has announced a new online storefront feature called Shops, which will allow Facebook and Instagram users to list goods and sell them using this space.

After having dabbled with the sector before, Shops represents Facebook's first real push into e-commerce Unlike Amazon or eBay, Facebook is a much more personal platform that (for the most part) depicts user's real names and is home to friends and family For this same reason, user privacy concerns are compounded once more

Last week, Facebook announced its latest step towards global ubiquitousness, under the name of “Shops.” Shops represents Facebook’s first real push into e-commerce, after having dabbled with it through its Marketplace feature and Instagram’s Checkout feature where users are able to buy featured products directly from the app. 

With Shops, Facebook and Instagram users can create free storefronts where they can sell their goods directly to consumers, a significant step ahead of existing options. Marketplace has long been an afterthought, a glorified Craigslist in a sense, though Instagram’s purchase features have been much more successful in recent years, particularly with small businesses and influencers. 

“Facebook Shops is a mobile-first shopping experience where businesses can easily create an online store on Facebook and Instagram for free,” Facebook explained. “Shops let you choose which of your items you want to feature, merchandise with product collections and tell your brand story with customisable fonts and colours. In Facebook Shops, you’ll be able to connect with customers through WhatsApp, Messenger or Instagram Direct to answer questions, offer support and more.”

In a sense, Facebook is creeping into eBay and Amazon territory with this latest move, the kings of C2C and B2C e-retail. However, Facebook is a much more personal platform that (for the most part) depicts user’s real names and is home to friends and family. This in-built network of contacts will likely lead to a very interesting direction for e-commerce. Imagine receiving a notification from a family member highlighting a fancy home appliance on your News Feed, or receiving a gift from a loved one on your birthday through Shops. It took them a while, but Facebook are finally tapping into their site’s true potential as an e-commerce platform. 

“This is really the first very major push that we’re going to be making into that next step around commerce,” Zuckerberg said in an interview, as reported by Bloomberg.

Why is Facebook boosting its e-commerce game now?
The question, however, is why now? By all accounts, Facebook is way too late to the e-retail game, so why this particular moment in time? 

Well, consider that we are a few months into this global pandemic, and there doesn’t seem to be an end in sight. Vaccine discovery dates vary from 6 months to a year and a half and more. While e-commerce is booming, the global economy in general is suffering, and particularly small business. As it so happens, many of these afflicted small businesses are some of Facebook’s most populous advertisers. 

“It’s also worth remembering that the pandemic’s economic fallout is already hurting and killing off many small businesses — businesses that post and advertise on Facebook,” Tech Crunch (TC) noted. “So the company has a stake in helping those businesses survive in any way it can.”

Facebook has already stated that it was creating a $100 million grant program for small businesses back in March, which will include both ad credits and cash grants that can be spent on operational costs like paying workers and paying rent, as per TC. It would be available to up to 30,000 businesses in the 30-plus countries where Facebook operates.

Facebook would be charging a fee on sales, surely, but its true revenue driver will remain none other than advertising, as always. 

With the ‘new normal’ on everyone’s minds thanks to COVID-19, where we see online usage times increase and e-commerce boom, Zuckerberg and co. must have realized that when it comes to taking a big, meaningful leap into the e-commerce sector, it’s now or never. By additionally leveraging all 3 of its major apps, Facebook, Instagram and WhatsApp, it wil be creating an online retail ecosystem of nearly 3 billion monthly users. Coupled with Facebook’s database of users’ personal information, they are in a very strong position in the market. 

The privacy hazards

Speaking of users’ personal information, the US company will likely witness increasing regulator scrutiny as it gets itself involved with online commerce and transactions. If users can’t trust Facebook with their emails and phone numbers, can they trust them with their credit card information? This is a question both users and regulators will be asking in coming months. 

“I don’t think you can let the fact that there will be scrutiny and questions prevent you from doing things that you think are going to be good,” Zuckerberg said. 

Classic Big Tech mentality.