Extract from the Fireside Chat #022 from 20.05.2020 for the launch of the new shop system on Facebook
On the 20th Mai 2020, Mark Zuckerberg presented the new Facebook shop feature in a 30-minute video. A major development for the platform and the entire network. By the end of the year, users should also be able to check out via WhatsApp, Instagram and Facebook Messenger.
For some time now, corporate accounts have been able to integrate their products with Facebook and Instagram. However, it was only possible to tag the products on the images and then forward the customer to the online shop.
It was not a perfect user experience. Because customers were always struggling with loading times. With this new extension, Facebook manages to handle the entire Sales Funnel on its platform. Customers can use the search function to find products, compare products and also perform a check-out.
What advantages does the Facebook shop have for retailers and companies and what does Facebook hope for from these innovations?
How does Facebook Shop work?
Before we dive into the details it is important to understand how companies can use the new shop system. The good news for any Shopify merchant, the connection could not be easier. By adding an app, which Shopify users already know, all products are imported directly into Facebook and management can still be done from within Shopify.
For companies that do not use Shopify, there is a very good guide from www.ecommerce-plattforms.com. Step by step they explain the necessary steps to create the shop, add products and also add all necessary information for shipping and payment options. An advantage of the Facebook shop over Instagram Shopping, the company is now able to connect your products through a larger product feed. This means that import via providers such as BigCommerce or other relevant shop systems is now also possible.
As a new Facebook shop provider, you have the option of setting up checkout for customers directly via Facebook or forwarding users to your own online shop. If you choose to use Facebook Check-out, there will be a charge for the payment. But this is also the normal case for your own online shop. The last option, redirecting users to your own online shop, will lead to lower conversion rates in the long term. Users can complete their purchase directly on Instagram, bridging the reflection time. Since the shopping experience is very fluid and loading times do not allow any time for reflection, impulse purchases will occur more often.
Facebook Shop Example Spearmint Baby – Theme Editing
The network as an advantage for Facebook
As just indicated, there is a great advantage for merchants to complete transactions directly on Facebook. Like the Magazin T3N (German link) wrote in their contribution to the renewal: “According to Statista, people in Germany spend 79 minutes in social networks. The age group from 16 to 19 years even 150 minutes and of these 150 minutes 72 go to Instagram.” A large part of online usage can be traced back to the Facebook network. Excluded from the statistics is WhatsApp, which will also account for a large share.
The target group is on the network to be inspired to follow their influencers, discover new brands and generally spend much of their free time there. In the past, however, brands and influencers could only ever advertise one product. There could have been several products on a single post, but there was only the possibility to forward a single click-out to one of the products. With the possibility to discover not only accounts but also shops, Facebook makes Amazon a competitor.
As already known, many product searches start directly on Amazon. Until recently, there was no other way to discover new products. Thanks to a longtail of products, users usually find a product that fits their needs. Often these include impulse purchases or direct “needs”. Buyers have tended to find inspiration on Pinterest to collect for new project ideas. However, nobody has started an Inspiration Phase on Amazon.
Facebook shop as inspiration for potential buyers
This is another advantage for the platform, compared to Amazon. Since users already spend a great deal of their time on Instagram and Co., they will also find inspiration there to find new brands and products. As explained in the introduction, Facebook now manages to cover the entire sales funnel.
Facebook Shopping directly from a live broadcast
Coverage of the entire Sales Funnel
Brands manage to reach new potential customers in the “Attention” phase, as Facebook makes suggestions to your users based on brands you already follow.
Since the Instagram account is now not only a history of contributions but also offers a shop with Shoppable products, customers can directly build an “Interest”.
By clicking on the shop and browsing through the products, brands directly create a “Desire”. Since Instagram and Facebook live on visually strong advertising media, many products are already adequately represented.
Without having to leave the platform, customers who are willing to make decisions can complete the purchase directly from within the network. Your address, as well as a credit card, is already stored and only one click is needed to execute the “action”.
Higher advertising expenditure in the Business Manager
With this expansion, Facebook also gains access to a large number of new data records. In the past, they already had a good understanding of which customers placed an order based on an advertisement and which customer simply clicked on an ad. The Facebook pixel is already capable of targeting a very specific target group. Because a large number of merchants will now join Facebook Shop, the catalogue of products and categories that you can cover also increases.
This makes lookalike Facebook ads based on buying interest much more accurate. Most likely there will be additional advertising opportunities based on product categories and price range. The ability to build custom audiences based on real e-commerce data will quickly become the focus of many advertisers. Companies can place more targeted advertising that is highly relevant.
Impact on Facebook Marketing
In the past, social media marketing was often neglected. Especially SMEs in Germany and Switzerland find it difficult to develop a long-term strategy in the channel without having the necessary resources in-house. In addition, it often did not show a comprehensible link between expenditure and turnover achieved. With the possibility to check out directly on the platform, there is no longer any reason to neglect social media marketing. The development of a community, a visual language and Brand values at Instagram thus slides into focus.
If merchants manage to reach a larger number of followers on the platform, you can also simultaneously convince more existing customers and also new customers for purchase. This creates a direct link between effort and number of transactions. This also makes the channel interesting for many SMEs and local businesses.
What should merchants do now
Now, before all companies quickly sprint to the platform, it is important to think about how to maintain the channel. Even if products can be connected quickly and easily, it is not enough to only publish your products there. The platform prefers accounts that drive active community management. The exchange of likes and comments on other Posts is the cornerstone of the platform. Companies that talk to their followers and other accounts in a targeted manner will have the upper hand in the long term and will be given preferences.
Questions that entrepreneurs must now ask themselves:
- What does my content strategy look like?
- Do I have resources to put more focus on the channel?
- Do I have the necessary know-how in the team?
- Can I connect my ERP system to Facebook-Shop?
- What is my competition doing on the platforms
Without question, the Facebook shop will become an integral part of the e-commerce sales funnel. However, they are still very different from Amazon, where the main focus is on finding a specific solution to a “problem”.
Retailers have the advantage that they can continue to build a brand image in the shop system of Facebook. The shops can be kept in the CD/CI look and the visual language is clearly in the foreground. At Amazon, companies continue to find it difficult to build a real customer base.
The shop system also offers a good short-term solution for many local retailers. An Instagram account is quickly set up and the biggest work is to set up the products. You do not have to think about expensive e-commerce solutions in the first step and you do not have to worry about a complicated integration.
The shopping cart
The target group focus here is increasingly on products with a small shopping basket. Products with a price below €/CHF/$ 100 can be handled quickly. Often no big comparisons are needed in the “interest” phase in the Sales Funnel and the fast checkout bridges the time for rethinking. This product category should not be redirected to your own online shop as potential customers can still jump off.
For larger shopping baskets, it is worth continuing to redirect to the online shop. However, it is recommended here to redirect to a landing page for the respective product. In this way, the USPs of the product can be clearly communicated and attention can be drawn to different variations.
Nevertheless, in the future, it will not be enough to run just one shop system via Facebook. Professional e-commerce projects will continue to be needed to pick up customers across a variety of platforms and continue to have the upper hand with their own data. As Mark Zuckerberg explained in his video, this is not a replacement for the classic e-commerce platform, but rather an extension to better reach customers on Facebook platforms.
Are you also thinking more about the possibilities of Facebook shops? Then we look forward to hearing from you. We would be happy to help you clarify open questions or build a long-term strategy in social media marketing.