How retailers can benefit from Instagram and Facebook Shops

On 27th August 2020 we discussed how Facebook Shop launched global access for retailers; (you can read more about the Facebook launch here) and following their platform updates, we thought it’d be interesting to look at the biggest benefits to retailers from the new Instagram and Facebook Shop solutions.  Overall, I think it’s fair to say that the updates will make it far quicker and easier for consumers to understand and embrace Instagram and Facebook Shopping than the previous range of different product sales options. 

See the main benefits, and how to utilise them in your business, below. 

Key benefits for retailers

  • The ability for customers to complete purchases without leaving Facebook and Instagram removing friction from social media promotion, and massively increasing the benefits of social sharing and advocacy.
  • Easier onboarding and inventory management via key integrations with the most popular eCommerce platforms, including Shopify, WooCommerce, BigCommerce, Magento and OpenCart.
  • Facebook Catalogue Manager and Commerce Manager unifying design, management and reporting to have it in one place reducing the resource cost when managing content.
  • Social commerce is ripe for growth in Europe and America, and the global reach of Facebook properties is enormous. Facebook has 2.6 billion monthly active users with WhatsApp recording 2 billion, Facebook Messenger 1.3 billion, and Instagram 1 billion.
  • Live video is already a huge growth area for retail marketing. Closing the gap between streaming video promotion and sales creates new opportunities for shopping channel promotions, and will help to offset the marketing costs, (especially brands using celebrities and influencers).
  • Social commerce is obviously hugely important to Facebook as a driver for future advertising growth. This is underlined by the addition of Shop sections on the Facebook and Instagram mobile apps. 
  • Facebook is currently waiving fees for sales made within its social networks until October 31st 2020 and linking out to your own eCommerce website for customers to complete sales has no costs involved.

Retailers will need to have signed up for Facebook Checkout to enable customer purchases within Facebook and Instagram. When the fees are reintroduced from November 1st 2020 the charge will be a flat fee of 5% per shipment for purchases over $8, and $0.40 for anything under this amount. There’s no information on the costs outside of the U.S as yet, but it’s likely to be very similar.

None of the other features and benefits for retailers will require any kind of payment, and that is likely to be the case indefinitely. Facebook will benefit from larger amounts of retail and consumer data by encouraging more business with a free social commerce solution, along with the additional revenue when those retailers want to advertise their products.

In a livestream to promote the launch of Facebook Shops, Mark Zuckerberg was clear about the focus on revenue.

“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.”

So, how could Facebook Shops impact your wider eCommerce strategy?

The launch of Instagram and Facebook Shops could mean social commerce finally fulfils the expectations held for it in Europe and America. The potential for retailers is demonstrated by the huge levels of success being seen in Asia with WeChat and other social networks powering a range of businesses.

Pinduoduo is a prime example as the fastest growing eCommerce start-up in China, now second only in size to Alibaba, and built largely on social sharing and commerce within WeChat. If social commerce does become more widely adopted by consumers in Europe and America, retailers will need to watch for new, potentially disruptive rivals built around the sharing and live streaming functionality.

The key for success will be to quickly integrate the new retail opportunities into your existing eCommerce strategy as an important additional channel. Removing the friction of directing customers to a separate eCommerce website is unlikely to threaten dominant brands such as Amazon, or reduce usage of Shopping Ads on Google for customers actively looking to buy products, however, the impact for individual retailers and smaller eCommerce sites is likely to be much bigger.

Competing for consumer attention on a third-party social network will create a more level playing field for retailers. While larger brands can invest more in creative resources and promotion it opens the door for smaller retailers to gain social commerce market share through innovation, especially using live video streaming. 

It’s important for retailers to consider the positioning of social commerce within customer journeys and conversion funnels. While the scale of Facebook provides a big opportunity the mindset of users is much different to visitors to your website, or those using Shopping Ads on Google.

Social commerce will mean capturing attention from users primarily connecting with friends and family or looking for entertainment. Around 39 minutes is spent by UK internet users on social media every day, with Facebook taking 23 minutes of that time on average (Ofcom 2019 report). This means habits are already deeply ingrained and will take significant effort to change over time.

The implication is that social commerce will be focused at the start of consumer journeys, as with existing social media advertising and marketing. Especially as Instagram and Facebook Shops will be new experiences for social network users and may take time to become adopted for regular purchasing.

This contrasts with eCommerce website traffic, and Shopping Ads on Google, which are much more concentrated with the middle and end of the customer journey. When a user visits your website, or searches for a specific product category or item they are much closer to making a purchase decision. 

The result is that social commerce will be complimentary to your existing retail advertising and marketing, rather than a direct replacement. As a mainly free option with a sale-based fee for purchases within Facebook and Instagram, it offers the possibility of incremental sales in a similar way to partnering with a Premium CSS provider for Shopping Ads on Google, but at a much earlier stage in the consumer journey.

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