Facebook is going to compete with webshops, sees new data gold mine

20/05/2020

Facebook is going to compete with webshops, sees new data gold mine

Facebook wants to take advantage of the enormous increase in e-commerce. The world’s largest social network has announced a new feature that allows companies in Facebook and Instagram to get a virtual ‘shop window’ where users can order products directly.

This opens Facebook’s attack on parties such as Amazon and bol.com.

Companies can set up their own catalog via the two social media apps; these can be found via the profiles of the companies. Retailers can also answer customer questions via Facebook chat apps: WhatsApp, Facebook Messenger and Instagram Direct.

The use of the function, called Facebook Shops, is free for retailers. It is true that at the moment that Facebook’s own payment method is used, a commission of 5 percent is charged, writes the American tech site Recode. This starts as a trial in the US. In the Netherlands, users are temporarily forwarded to the website of the webshop.

Products can already be viewed separately on Instagram. Profile pages already show a shopping bag icon at some companies, who click on it will get an overview of products. On the product page you will find a link to the real webshop.

Speaking to the Financial Times, CEO Mark Zuckerberg says the position has been in the works for some time and has now been brought forward due to the massive demand for online orders due to the corona crisis. He also says that his company plans to use the user data that this generates, such as interest in products and sales, to further personalize ads. That will make Facebook even more valuable as an advertising platform, because it will be able to better link advertisers to relevant target groups. The platform will therefore earn more from the ads.

Zuckerberg’s ambition also extends beyond shops. He says there will also be room for restaurants and delivery services in the long run. This means that Facebook can also become a competitor for a party such as Thuisbezorgd.

Customer loyalty

In addition to a new stream of data, it is also an extra way for Facebook to bind users and companies. “The network wants to guide the entire customer journey,” said Kitty Koelemeijer, professor of marketing at Nyenrode University. According to her, the initiative has “all the potential to grow up”. She also thinks that influencers will use it. “Kylie Jenner can sell her lipstick directly to customers, rather than through an intermediary such as Amazon or Douglas.”

It also means that companies have to give up a bit of customer contact, especially if the payment is also done via the apps. At the same time, it can offer a smaller online store a larger target group.

It is still unknown when the position will become available in the Netherlands; this is expected to be sometime in the coming months.

NETHERLANDS WEATHER