by Charlie Stewart (@CStewart_ZA) Facebook’s recent announcement that it’s launched Shops to help businesses sell products on its platform has been heralded as great news for small business owners reeling from the impact of the novel coronavirus pandemic. But merchants may wish to take note of Facebook’s chequered history before rushing to embrace this new service.
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What is it?
More on that in a moment. But, first, what is Shops?
Facebook Shops allows traders to set up a store which may be accessed via both Facebook and Instagram. Customers may either purchase products directly within the app or click out to a conventional ecommerce store.
While neither took off in the way Facebook would’ve hoped, this latest move has much greater potential for the Menlo Park giant in that it ties together a number of separate features that, in time, is likely to create a very compelling value proposition for its shareholders.
Freemium — with a steroids booster
What’s so smart, and potentially dangerous, about Shops is that it reinforces Facebook’s core business model which is founded on highly targeted advertising. It’s a freemium model but this play is freemium on steroids.
While there’s no cost to set up a Shop, entrepreneurs will have to spend serious money on advertising to drive traffic to their virtual stores. For those in bricks and mortar retail, it’d be a bit like having JCDecaux as your high-street landlord.
The move also provides Facebook with a foothold in the burgeoning ecommerce market as it’ll take a cut from the transaction fee when customers check out. This should be cause for concern for banks, payment gateways and anyone in the broader payment processing space — particularly given the likelihood that Facebook will take the opportunity to punt Libra, its much-derided crypto play, as an alternative payment method.
Shops will encourage further usage of WhatsApp and Messenger, too, as consumers enjoy the benefit of integrated live-chat services for customer support.
Another Zucker?
Although Shops must have been in the offing for a long time, covid-19 has accelerated a global adoption of online shopping, so the timing of this announcement must have had Mark Zuckerberg, Facebook CEO, rubbing his (hopefully frequently washed) hands with glee. It gives him an opportunity to reimagine his business and generate a good bit of PR. And that’s been hard to come by in recent times.
But, for a company that’s hardly renowned for its altruism, it remains to be seen how long the halo effect will last.
A number of years back, Facebook courted publishers in the same way it’s now appealing to merchants. They supported the platform and, over time, saw it gobble up their audiences and their advertising revenue. Will it do this to retailers? One merely needs to look 1 000km up the coast from Facebook HQ to Seattle, where Amazon has come under fire for playing fast and loose with its merchants’ data to bolster its own label product revenue. While Facebook has no known plans to sell its own products in competition with its Shops proprietors, it hardly has an unblemished record when it comes to the nefarious use of customer information.
If I were a merchant, I’d certainly look at Shops. But I’d do so in the same way I’d check out a Trojan gift horse. It definitely looks enticing. Perhaps it’s the real deal. But, maybe, as Helen discovered to her peril when Odysseus laid waste to her city, it ain’t.
See also
- Columns | Clicks ’n Tricks – Charlie Stewart
- #OpenForBusiness — Radar
- #CoronavirusSA — Radar
- #CoronavirusSA – Special Section
Charlie Stewart (@CStewart_ZA) is CEO of Rogerwilco, a multi-award-winning independent digital agency best known for its expertise with Drupal, SEO and content marketing. Together with Mark Eardley, he co-authored Business to Business Marketing: A Step by Step Guide, (Penguin Random House, 2016) and may be found on LinkedIn. Charlie contributes the regular column, “Clicks ‘n Tricks”, which looks at how brands are using digital channels to engage their customers, to MarkLives.com.
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