Facebook Steps Up Social Commerce For SMBs

A devastating small business survey on one hand, and a possible link to social commerce on the other. That was Facebook’s contribution to the pandemic crisis yesterday as the social media giant rolled out two new shopping services for small business — Facebook Shops and Instagram Shop.

Although the company’s survey with the Small Business Roundtable was in motion before the pandemic, its timing was prescient and its results were dramatic. It showed that one-third of small and medium-sized businesses (SMBs) have failed since the pandemic while another 11 percent expect to fail in the next three months if the pandemic continues.

“The numbers are devastating,” Sheryl Sandberg, chief operating officer of Facebook Inc., told Bloomberg. Facebook helped conduct the survey of 86,000 SMB owners. The survey also found that most of the closed businesses don’t know how they will reopen and don’t expect to rehire furloughed staff. “That’s because they think they can’t — it’s not that they don’t want to,” Sandberg said in an interview.

Partially driven by the crisis, Facebook will debut Facebook Shops immediately, which it says will make it easy for small businesses to open an online store on the social platform as well as Instagram. A template allows businesses to choose the products they want to feature and then customize the look with a cover image and accent colors. Shoppers can then find the shop through a standard Facebook page or Instagram profile. From there, shoppers can browse products, save or place an order. The transaction can be handled without leaving the app or through a redirect to the business website.

According to CNBC, only businesses participating in Facebook’s Checkout, an invitation-only program that Facebook is testing, will be able to conduct transactions within the network. Facebook exacts a fee for sales through Checkout but has not disclosed the fee structure.

Instagram Shop will be launched later in the summer via Instagram Explore with a similar model. Both apps will be joined to live video, also expected by the end of August.

“People have been using live video on our apps to showcase products for years, from shoe stores announcing new sneakers to beauty influencers trying on different lipsticks,” the company said in a statement. “Now, we’re making it easier to shop for products in real time. Soon, sellers, brands and creators will be able to tag products from their Facebook Shop or catalog before going live and those products will be shown at the bottom of the video so people can easily tap to learn more and purchase. We’re starting to test this with businesses on Facebook and Instagram, and we’ll roll it out more broadly in the coming months.”

Both services are free. Facebook CEO Mark Zuckerberg told CNBC that Shops and other eCommerce products could help Facebook drive ad revenue.

“Our business model here is ads, so rather than charge businesses for Shops, we know that if Shops are valuable for businesses they’re going to in general want to bid more for ads,” Zuckerberg said. “We’ll eventually make money that way.”

“Right now many small businesses are struggling, and with stores closing, more are looking to bring their business online,” read the Facebook statement. “Our goal is to make shopping seamless and empower anyone from a small business owner to a global brand to use our apps to connect with customers. That’s why we’re launching Facebook Shops and investing in features across our apps that inspire people to shop and make buying and selling online easier.”