The COVID-19 pandemic and the subsequent shutdown of face-to-face interactions in most economies globally has had a significant impact on many retail businesses, especially those with only a physical presence and no ability to sell online. Many customers, unable to visit stores as usual, have turned to online shopping (some for the first time) for both essentials and more discretionary purchases. We believe that a lasting impact of the pandemic will be an acceleration of the shift to ecommerce, a process that was already well underway at many large retailers. But where does this leave everyone else?

The life of a small business is hard. Not only do you have to make or source your products, but then you have to make sure customers know who you are, what products you are selling, how they can buy them, and then be able to communicate with them across multiple formats. Many small businesses therefore simply do not have the resources or expertise to develop an online commerce presence, which requires digital product catalogues, being able to accept digital payments, and requires significant logistical support to deliver products to customers.

This is where Facebook comes in. Contrary to some beliefs, Facebook is increasingly a company that serves small businesses, with over 160 million of them listed on its platform, mostly using it for free. It has eight million advertising customers, the vast majority of which are small businesses, and these small businesses account for over half of Facebook’s revenues. Facebook has said that it wants to be a champion of small enterprises and help them grow and stay healthy.

Up to now, small businesses have mainly been able to use the various Facebook sites and apps to make their businesses more digital. They have been able to build an online presence using Facebook and Instagram and then been able to find new customers by advertising on the sites. In addition, they have increasingly been able to communicate directly with customers using WhatsApp and Messenger. However, the recent introduction of Facebook Shops is arguably the biggest step forward for small businesses, and one which will them to sell directly to their social media followers on Facebook and Instagram.

Facebook Shops will make it easy for a business to set up an online store for customers to access through its Facebook page or Instagram profile. A business can choose the products it wants to feature from its catalogue and then customize the look and feel of its shop, in order to tell the story of its brand, which is crucial for many small businesses run by founders with a passion for their products. Facebook Shops will be free to create and operate, with Facebook’s revenue model based on increased advertising. It will also be an open ecosystem, meaning that third-party tools can also be used. This means any seller, no matter their size or budget, can bring its business online and connect with customers wherever and whenever it is convenient for them.

Facebook will offer many tools to improve the experience for small businesses and their customers. Products will be able to be bought directly from Instagram stories and videos, provided sellers enable Facebook Checkout, which handles order and payment processing within Facebook. Loyalty programmes can be enabled too.

Sellers will also be able to utilise cutting-edge technology, such as Facebook’s artificial intelligence tools, which can be used to automatically tag products in photos or to offer personalisation of the shopping experience. They will also be able to use augmented-reality tools that enable customers to see a digital product overlaid on their physical environment. For example, this will allow customers to test different shades of makeup with the press of a button, as well as too see what a piece of furniture might look like when displayed in their home.

We believe that Facebook Shops is a great initiative. By helping small businesses sell online in a cheap and easy manner, on a platform that they already comfortable with, and by utilising digital tools to improve sales conversion rates and customer satisfaction, Facebook can be seen as a champion of small business at a difficult time for such enterprises, as well as offering high-margin revenue growth opportunities through additional advertising.

 

Should you have any questions about anything raised in this article, please don’t hesitate to contact us via email, or on 0207 337 0777.

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