Facebook confronts Amazon with online shopping company

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Facebook hopes its 2.6 billion users will start shopping on its platform because it has unveiled a service that puts it in direct competition with Amazon and eBay.

“Facebook stores” will allow sellers to create digital storefronts on Facebook or Instagram, the company said on Tuesday, adding that it would be beneficial to collect valuable data on what buyers want.

Users will be able to browse products, send messages to businesses to organize their purchases and, in some cases, purchase them directly via a recently introduced online payment feature.

Mark Zuckerberg, chief executive of Facebook, said in an interview with FT that he had accelerated plans for stores to take advantage of the boom in online shopping during the coronavirus crisis.

He added that the social media giant could use the data to improve its advertising service and charge more.

“If you browse a store inside our app or if you buy something, we will see it and we will be able to use it to show you better recommendations for other things that you might be interested in.” future, “he said. said.

Facebook stores will allow sellers to create digital storefronts on Facebook or Instagram

Stores will help businesses “complete conversion and transaction [of a sale] more frequently with less abandonment, “he added. This in turn will result in higher bids for advertising.

In the United States, where Facebook has deployed a payment service on Instagram, the company will also charge a small fee to cover the costs of processing credit cards and monitoring fraud.

The company, which is Facebook’s biggest foray into e-commerce to date, is a challenge for Amazon because of the large number of users that Facebook can channel to storefronts.

This could potentially pose a challenge for food delivery platforms such as Grubhub. Zuckerberg suggested that in the longer term it would be “good” to host food service and ordering services.

Facebook founder, however, said he’s not trying to replicate Amazon’s “end-to-end experience” and would rather work with existing e-commerce services such as Shopify, which helps small businesses to create online stores and take care of analyzes and payments. Zuckerberg added that Facebook would also integrate with shipping and logistics services.

“What took them so long? “Rich Greenfield, partner of consultancy LightShed Partners, said on Tuesday’s announcement. “It seems very obvious that the next step, especially if advertising is under pressure, is how are you going to take advantage of the wave of e-commerce that benefits Amazon likes? “

“People don’t want to go to third-party websites or go to the checkout, they want to buy with one click. They want it to be simple, easy, ”he added.

While this move signals Facebook’s desire to dominate markets beyond social media, the social element of the platform will set it apart, according to Debra Aho Williamson, analyst at eMarketer.

“It’s about harnessing the connections between consumers and businesses in a social sense – it’s not really something that is done on Amazon or Google [Shopping], ” she said.

Facebook stores will use Facebook’s messaging capabilities: users will be able to contact companies via WhatsApp, Messenger or Instagram Direct to ask questions or track deliveries, for example. He will also have tools to create and follow loyalty programs.

Facebook will work with existing e-commerce services such as Shopify © Bloomberg

Zuckerberg said Facebook would focus deployment in developed regions such as the United States and Western Europe, where the company had the resources to properly control sellers – as rivals like Amazon are fighting counterfeits.

“In countries that don’t have as much infrastructure, this is one of the challenges [preventing] the full launch of that, “he said. In the longer term, he said he is considering a system whereby sellers have reputation scores and stars.

Analysts have speculated that Facebook has long-term ambitions to emulate so-called “super apps” such as WeChat that allow users to send messages, buy products, and send mail. money on one platform.

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