Facebook vs. Amazon – has the battle now officially begun?

When the world’s largest social media network decides to become an ecommerce platform, you can expect potentially significant long-term impacts. So are we seeing the start of a battle between two of the world’s largest companies?

 

As the world remained largely in lockdown, it is no surprise that more people logged onto a Facebook service in April 2020 than ever before. The numbers are quite literally – staggering, as its reported that 3 billion internet users logged onto a Facebook service, including its central app, Instagram, Messenger or WhatsApp.

As the world looks to stay connected, Facebook has been seeking ways to build on the way the world communicates socially – one offering at the beginning of the month was Facebook Rooms – set to compete with Zoom and other group video chat apps, users can create a video chat room and invite up to 50 people to join a video call. This initiative, and others, have led to Facebook achieve their longest winning streak in the stock market since 2015 (DOW Jones Market Data). With this momentum, and to take advantage of the boom in online shopping during the coronavirus crisis, it’s no surprise that this week Facebook decided to bring forward their latest offering and rollout ‘Facebook Shops’, a service that puts them in direct competition with Amazon, Google Shopping & eBay.

Put simply, this new feature gives small and medium-sized businesses the ability to turn their Facebook pages into more accessible and attractive storefronts. The service is free to use, and Facebook will only collect a fee from small businesses that use the Checkout feature.

Users will be able to browse products, message businesses to arrange purchases, and in some cases buy them directly, via a recently introduced online checkout feature, meaning users stay within the platform.

So should Amazon be worried? With Facebook’s platforms reaching over half the world’s population, Facebook could have a major advantage against the competition in terms of initial reach once this offering launches. Users intuitively browse Facebook and Instagram much more than Amazon or eBay, which could in the long run prove to be the winning formula for Facebook.

One of the core challenges to overcome, is the fact the social media giant has confirmed the use of collecting data on transactions, to improve its advertising service and charge advertisers more for it. As users browse and subsequently buy products within the platform, Facebook will be able to use this data to advertise other product recommendations for items you may be interested in for the future. This information will be invaluable for brands, and will in turn, translate into higher bids for advertising.

This ‘trade off’ between privacy vs. relevancy is one that has proven to be troublesome for Facebook in the past. With the Cambridge Analytica scandal still in the headlines, even now in 2020, Facebook will be hoping the tide has turned in the view that the information being collected is being used to only improve relevant targeted messages. Of course, Amazon has used the same model for years, with audiences preferring to avoid third-party websites or go to checkout; with a one-click buy.

Regardless of audience initial reception, with most small businesses facing uncertain times, the service could be a great addition to your arsenal if you are currently selling or want to sell goods online. The full rollout dates are TBC but are confirmed to start with developed regions such as the US and western Europe first, with additional countries to follow as and when the infrastructure is in place.

We at Generation Media will be continuing to track and incorporate the new feature (when available and where relevant) into our GM Checkout initiative. For more information on this, and how to improve your ecommerce performance – please feel free to reach out.