On Tuesday 19th May, we heard from Mark Zuckerberg and Tobi Lukte on the launch of Facebook Shops. During the live broadcast, Mark and Tobi announced that the long term collaboration of Facebook and Shopify would be strengthened by the ability ‘to make it easy for businesses to set up a single online store for customers to access on both Facebook and Instagram.’
While the key focus was on ‘small businesses’, we wanted to examine how this would impact on larger Shopify brands. Over the past few days, we’ve been analysing the information currently available and talking with larger Shopify brands and Shopify partners on this.
What is Facebook Shops?
According to Facebook, users can create a single shop storefront for both Facebook and Instagram, for free. Businesses will then be able to add any products from their product catalog. The shop will be customisable in terms of cover image and accent colours.
A customer will use the Facebook Shop to browse products, and then checkout either on the business’ website or without leaving the app if the business has enabled checkout in the US. While the rollout has already begun, US users will be provided with the functionality first, and then gradually rolled out to the rest of the world.
What are the features that are interesting for Shopify brands?
While there will undoubtedly be a range of features available, the features we’ve outlined below are ones that we feel will be most important for Shopify stores:
Customer support through Whatsapp, Messenger and Instagram Direct
With Facebook acquiring Whatsapp, this also means that Facebook Shop users will be able to communicate directly with a customer through the platform. This should mean that Shopify store owners can bypass the use of third party chat apps, and get closer to the customer. What isn’t clear as yet is if Whatsapp communication will be limited to Facebook Shop users. If it is, this may give a bigger emphasis for larger brands to use the new Facebook service.
It’s also interesting that Facebook also announced that in the future, you’ll be able to view a business’ shop and make purchases right within a chat in WhatsApp, Messenger or Instagram Direct. For us at Blend, this could be a game-changer in eCommerce. We also see a big opportunity here for automated Whatsapp flows that may currently be taken care of with email and SMS.
Live shopping features
Many of our clients have had great results using the ‘Instant experience’ feature on Facebook Ads, and this feels similar. Shopify brands will be able to tag products from their Facebook Shop or catalog before going live. These products will be shown at the bottom of the video so people can easily tap to learn more and purchase. For brands using Influencers, we feel this could be a particularly strong tool, but understanding how to administer this could be an issue at present.
Another question for us is how the data from this feature can be used. For example, we’d like to know if it will be possible to get direct metrics from the Facebook live session on click rate, add to cart rate, and conversion rate. This would really allow Shopify merchants to assess the ROI in comparison to other marketing channels.
Loyalty Program integration
One of the most important announcements for us at Blend was that Facebook Shops will allow integration with Loyalty Program apps. As a long term partner of LoyaltyLion, we’ve seen first hand how loyalty and referral programs can skyrocket AOV and repeat order rate. At the time of writing, this feature seems to be one of the less developed ideas, but we see huge potential here.
One of the ways we’d love to see this be integrated is with the referral part of a loyalty program. For example, if a customer purchases via Facebook Shop and then has the ability to send a Whatsapp to a friend from the cart completion page, this could include a unique referral code. Points could then be awarded for shares and purchases, as well as driving up sales from the referral itself. We’ll be watching this space carefully.
What is the cost of Facebook Shops?
As with all marketing developments, cost is always a key question. The information so far is that the creation of a Facebook Shop will be free. It’s expected that Facebook will profit through “boosting consumer engagement” and “ad sales”. Understanding the cost and potential ROI of the service is going to be the biggest question for us before discussing with our clients. Some of the questions we’re asking as a team are:
- Will the increase in selling via Facebook increase the cost of Ad spend? How will this affect ROAS for all Facebook Ad users?
- Will there be a discount or benefit to Facebook Shop users for Facebook Ads? Could this create a two-tier Facebook Ad platform?
- While Whatsapp marketing is in the early stages, will this be rolled out further for smaller businesses?
- Will the use of Facebook Shops and ads then affect the use of Google Ads due to changing demand?
While there’s a lot of questions around the capabilities of the new Facebook Shop feature, we are focused on understanding the impact on marketing for Shopify stores who will and will not be using the new feature.
What do Shopify merchants with bigger brands think about Facebook Shops?
The current discussion on Facebook Shops has centered around ‘small’ businesses. As an agency that works with a range of larger Shopify and Shopify Plus brands, we spoke with a number of our clients on their thoughts.
Blend client, Cory McElroy, CEO of Aquarium Co-Op said:
“I think Facebook shops have huge potential like most things Facebook does. However it'll all be in the execution. If Facebook shops follow the pay to play model that Facebook typically favors to reach customers, it'll likely be a Facebook ad spend with a better user interface.
The question I have is, will Facebook finally be forward-thinking and create an opportunity for growth without suppressing exposure. With Google recently offering free google shopping listings, Facebook needs to match this and provide an opportunity to reach the audience businesses already have. Let them spend money getting a larger audience to their Facebook page, without paying twice to then get the products in front of them after they've liked the page.”
Another of our clients, Sarah Lowther of NI Candle Supplies commented:
“Whilst we are excited to have the ability to tailor our branding across all platforms, we have reservations about Facebook's stability. When it comes to our store, we’ve had several instances where the platform has disconnected for no apparent reason. We are hopeful the new platform will resolve these connectivity issues and are confident if it does that we will see an increase in revenue as a result of Facebook Store sales.”
The issue of stability is an interesting point for us too. As with all new features, Facebook is likely to make several updates, and for bigger brands, we wonder if this will be a risk in the initial stages of launch.
Blend client, Andrew Field, CEO of Freshpatch remarked:
"We have a unique product and people love to post photos of their dogs with it. The majority of our sales already come from social media so anything that can boost those revenues is a win for us.
I guess my biggest question: Is Facebook trying to get a % of the sale now?”
As we outlined above, the question of cost and how Facebook ‘monetizes’ this feature will be focused for larger brands. As Shopify brands grow, the .1%’s of revenue begins to matter a whole lot more. For example, we’ve worked with a number of Etsy users who have migrated from Etsy to Shopify. While the simple, but high fee structure of Etsy works well at lower volumes, processing in 100’s and 1000’s of orders a day has a big impact on the bottom line.
US and UK focused drinks brand Ugly also gave us their take on the announcement from Facebook and Shopify. Orla Weir – Head of DTC at Ugly Drinks told us:
“At Ugly, we're excited to see the launch of Facebook Shops. We want our customers to have seamless shopping experiences and the ability to check out in-app makes it even quicker for our Facebook users to get Ugly. As much as we love the customer who lands on our website and reads every part of the Ugly story - we appreciate that all of our Ugly Mob want to shop in different ways. This is going to be game-changing for the Facebook enthusiasts who want to get their fix of Ugly sparkling water quickly and effortlessly!”
The point that Orla makes here is a good one. Ecommerce has become far more flexible in the way that we allow customers to shop. Facebook Shops could be another way to expand this flexibility, albeit with some disadvantages.
We also spoke with Blend client, JimmyCase and their Head of Marketing, Aaron Harper:
We're looking forward to the launch of Facebook Shops, and excited to give it a spin. As a small company that has to find creative ways to optimize our resources, the cost of ad spend is crucial to our marketing initiatives. It'll be interesting to see how this plays out, and how the selling/ad spend relationship is affected here. We have a unique made in California product, and being able to properly tell our story on our website (thanks, Blend!) has done wonders for our conversion rate. We're hopeful that Facebook Shops will be helpful to us as we continue that journey.
Polina Micheva, Team Lead of Performance Marketing at Y-Food said:
"I am very curious about this new feature. I see its value in the organic social presence and in the area of influencer marketing. We will be able to showcase our products in live streams, via cooperation with influencers, etc. The native checkout within Facebook and Instagram environment is definitely a plus for the social media users – shorter user journey, higher conversion rate. So yes, it will be a revenue stream, but I do not expect huge scalability in the near future.
The main question is the integration of the shop within paid campaigns and if the shops are opening a new placement and additional reach for advertisers. Not a concern but rather a question: Is Facebook moving and copying WeChat who has integrated features like this long time ago? What will be the value for big brands and does it mean, that brands and e-commerce companies do not need a website anymore?"
As an active member of the Shopify Entrepreneurs Facebook group, we asked members a simple question on Facebook Shops - Do you think Facebook Shops will improve your bottom line as a Shopify merchant? Here are the results:
Based on the 50 respondents, 72% indicated that they did not feel it would allow them to improve their bottom line. Here is a snapshot of comments that were given along with the poll responses:
“What I'm seeing is functionality that has existed now for some time as being touted as something new in response to COVID-19. Many tutorials on how to use Facebook Shop pre-date the pandemic by several months. It doesn't seem realistic that shoppers will hand over their credit card information to Facebook to have on file. Facebook Shops that link to a Shopify (or other e-commerce) site will fare better because of the payout schedule to the business owner. My general impression is that Facebook's algorithm favors social engagement, and the business owners who don't have content marketing already working well will not see a bump in sales simply by re-discovering functionality that has been glitch-prone for years. Facebook has a nice PR message about it, but the message feels disingenuous at best.”
Another group member approached their response from a different angle:
“You want them (users) to visit your site where you have put in all the time, features etc into building a great UI/UX for your target audience. It probably would increase sales but might not be good for the long run.”
What do Shopify partner apps think about Facebook Shops?
Here at Blend, we have rich team of partner apps who help our clients grow. We spoke to a number of our partners on Facebook Shops. Fiona Stevens, Head of Marketing at LoyaltyLion said:
“Facebook Shops will provide bigger stores with a more efficient way of selling via another platform. As changes from the main store will sync directly to the Facebook Shop, merchants will be able to add an additional channel to their arsenal with minimal effort or maintenance. With the costs of reaching audiences increasing, and the effectiveness of paid advertising being regularly called into question, Facebook Shops will be instrumental in helping Shopify merchants to reach new audiences more efficiently and cost-effectively.”
The understanding of the impact of paid versus non paid benefits of Facebook Shops will be key here. While this unclear at the moment, learning more from Facebook over the coming weeks will no-doubt give Shopify merchants a better understanding of the impact Facebook Shops will have on the cost of marketing.
Lucas Walker, Marketing and Partnerships at Gorgias had a different take on Facebook Shops:
“I'm going to be pessimistic on this one. I think it's another avenue to use in abandoned cart strategies or secondary efforts, and I would be there just in case your customers are. I wouldn't put too much effort towards Facebook Shops as it's a less owned customer experience.
Consumers are just now getting comfortable giving websites their credit cards. Will they be comfortable giving Facebook that information? I'm not sure.”
The interesting thing about Lucas’s comments here is that while eCommerce has become more flexible in terms of how customers can shop, there has certainly been a move towards the concept of ‘Owned Customer Experience’, as Lucas rightly mentioned. Our partners at Klaviyo have seen huge success with their clients using this concept, so we feel there is definitely a good debate to be had here.
What is Blend’s verdict on Facebook Shops for bigger Shopify brands?
While the information we know now is limited, we feel that Facebook Shops will provide challenges and opportunities for bigger Shopify brands. From a challenge perspective, our key thoughts are:
- How will Facebook Shops affect ad cost for all merchants? If predominantly new or smaller brands use Facebook shops and ads, this could drive up acquisition cost for new customers. By doing so, this would mean retention ad spend becomes even more important, and the use of loyalty and referral programs even more important.
- What will the checkout fees be and will this have an impact on Shopify stores sending traffic to a mobile store vs facebook shops? If bigger brands do use Facebook shops, there will be a decision to made as to where mobile traffic is directed to. As the domain for the Facebook Shop will not be under the same domain as the main Shopify store, sending traffic to the Facebook Shop will have an impact on store SEO and ranking. With that being said, if Facebook Shops convert at a higher rate than a typical mobile store, there may be a trade-off between the two methods.
- Will there be any discounts for Facebook Shops users over other merchants? With the current economic climate, and focus on smaller businesses, we wonder if a cost-benefit will be given to small businesses using Facebook Shop and Facebook ad users. If this is the case, this could make the ROI of Facebook more difficult for larger brands.
In terms of opportunities that Facebook Shops could bring to larger Shopify brands, we ask the following questions?
- Does the use of Whatsapp marketing open up more capability for Whatsapp marketing? As Facebook has announced that Whatsapp will be a key tool for customer communication, we feel a lot of learning will be had by Facebook. If Facebook can really understand how Whattsapp can be monetized for ads and marketing, this may mean that a wider service for bigger brands can emerge. Given the success that our clients have had with SMS marketing through SMSBump, we see this as a very exciting potential.
- Will advanced functionality be created for bigger Shopify brands? With a big shift towards headless commerce over the past few years, it will be interesting to see if this forms part of the headless strategy for brands. While there would be a long way to go, we wonder whether Facebook shops open up more flexibility in terms of platform-based selling.
- Does this pave the way for a merger or acquisition of Facebook/Shopify? While there have been a number of suggestions of takeovers and mergers (both ways) between Shopify and Facebook, this further collaboration is interesting. With Shopify’s announcement of the Shopify debit card and more financing options for merchants, it clearly shows that Shopify is broadening its horizons again. Should a merger or acquisition take place, this could provide some huge opportunities for Shopify stores, especially over sellers on other platforms.
In summary, we feel this is an exciting announcement from Facebook and Shopify. While other platforms like WooCommerce are also involved, it’s clear that Shopify is the key partner in this project. As more developments emerge on Facebook shops, we’ll be sharing more views, opinions, and insights as one of the leading Shopify Experts agencies
If you’d like to discuss your growing Shopify brand with Blend and how to take advantage of both Facebook and Shopify features, get in touch today.