Facebook's E-Commerce Move Facebook Shops

Facebook recently announced its e-commerce move, Facebook Shops. The company, which allows small businesses to manage the stores they open on Facebook Shops just like they manage their Instagram or Facebook page content, guarantees to provide businesses with a very efficient e-commerce infrastructure.

At this point, businesses will be able to communicate with customers through every channel, even through WhatsApp, Messenger or Instagram messages within Facebook. In this way, Facebook will be able to compete with platforms such as Amazon, eBay and Etsy. Facebook, which has moved itself beyond a social network platform with Instagram's shopping features and Marketplace, will also multiply its revenues with Shops.

Facebook Shops is expected to bring Facebook an additional $30 billion in annual revenue, including advertising fees and commissions, according to research by Deutsche Bank analysts.

While Facebook generated $70.7 billion in revenue in 2019 and $17.7 billion in the first quarter of 2020, it is expected to increase its annual revenue by 50 percent with Shops.

This means that Facebook, a $654 billion company, will grow even more and increase its dominance in the market. When Instagram’s payment feature was launched in April 2019, the same analysts announced that shopping features on Instagram would generate up to $10 billion in revenue for the company by 2021. The fact that Facebook has a larger audience strengthens the estimate that revenue will reach $30 billion.

Deutsche Bank's note to its clients underlined that Facebook Shop is expected to generate $30 billion in revenue, including commissions and advertising revenues from turnover. The note emphasized that Facebook Shops will offer businesses a more branded experience on a broader platform by expanding Instagram Checkout's tagging and buying-selling processes.

The note also emphasized that higher advertising prices will emerge with increased commercial activity, saying, “There are 140 million businesses serving on Facebook, but only 8 million advertisers. Allowing catalog uploads means more businesses becoming advertisers. In the longer term, rates will increase even more when the number of audiences addressed increases, provides more advertising volume, and develops the e-commerce set.”

This feature, which Facebook launched during the pandemic, was aimed to help businesses more. The aim of Facebook Shops can be explained as increasing sales for businesses, but it can also be thought of as gaining new advertisers in the long run.