If you heard about Shopify and Facebook in the news recently it was probably because they made the ground-breaking announcement that our laptops function just as well from home, and offices are expensive, so their workers are going to be allowed to work from home pretty much as long as they’d like to. The flurry of tweets and articles that ensued all but painted over the real story of the week, which was the announcement of Facebook Shops.
The masters-of-the-Internet over at Facebook Inc. have learned their lesson about asking us to trust them with our money so in their effort to monopolize our entire web experience, they’ve teamed up with several of the world’s leading e-commerce platforms to launch a place where we can buy just about anything without leaving the Facebook universe.
Shops will be a Facebook-based platform where any business can load their products to be linked and sold directly from Facebook, Instagram, WhatsApp, or any Facebook-owned property. The big announcement was done in partnership with Canada’s own unicorn: Shopify. Business owners that have a Shopify catalog will be able to click a couple of buttons to automatically integrate their Shopify store with Facebook Shops, adding on a potentially powerful distribution channel at no additional cost. But that’s where things get really interesting.
The Shopping Wars
For the past few years, Amazon has become our go-to spot for just about anything we need to order online. Any retailer not selling through Amazon needed to have a compelling reason for us to choose them instead because the checkout, delivery, returns, and customer support through Amazon are just so dialled that literally any other site became an inconvenience. Luxury brands were doing alright because they can provide an elevated experience. Innovative Direct-to-Consumer brands like eyewear and mattress companies made some serious inroads, but they’ve recently been finding that more competition means a higher cost per acquisition and, therefore, lower margins. The one area that has been doing well is the small, niche shops that have passionate, loyal fans who are willing to wait the extra few days that come with a non-Amazon experience. Increasingly, those shops have been found on Shopify and now, with the Shops partnership, Facebook. In effect, Facebook just acquired hundreds of thousands of retailers, all of which will get hooked by the business they’re able to generate in this new channel.
If you’ve been around this space for a few years, I’m sure you’re already starting to see the pattern that’s emerging. It’s become Facebook’s playbook, the model that’s built their near-trillion-dollar valuation, to build an environment so valuable to businesses that they all flock in that direction, ditching their owned channels in favour of the new one that promises access to new audiences and cheap conversions. Then, predictably, they turn it into a business for themselves. In the past, that looked like aggressive algorithms that downgraded Page content, forcing businesses to pay for post promotion. Now, it’s a walled environment where businesses will be able to sell directly to Facebook users, and the gatekeepers will ultimately control exactly who businesses are able to appear in front of and when.
The real interesting drama that’s about to play out is the friction between Shopify and Facebook. Where Zuckerberg loves to build tightly controlled marketplaces, Shopify’s CEO, Toby Lutke, has advocated for the entrepreneur – building tools that put their brands out in the world, placing no barriers between the customer and the transaction.
Prior to last week’s announcement, Shopify had launched its own e-commerce app called Shop, where customers could seek out and follow any Shopify site that had opted in. That app, and Shopify’s entire existence, has seemed like a direct answer to the rising Amazon monopoly. It was the celebration of the open economy versus a controlled marketplace, but this partnership feels like it may lead us back to a battle of Bezos vs Zuckerberg. Stuck in the middle of all of this posturing is the poor retailer who’s just trying to figure out which platform is best for their e-commerce experience.
Don’t Get Zucked In
Having been through versions of this soap opera before, I can share a few pieces of advice to help you take advantage of what’s out there without getting squashed when they inevitably flip the switch:
1. Use the tools you are given to the best of your ability.
The Facebook Shops integration will be a massive opportunity for many businesses that have been looking for an easy way to sell on social. Big brands like Everlane and Warby Parker will scoop a ton of transactions, of course, but it will be even more convenient for the small business that may not have the resources to dedicate to an entire e-commerce experience. Shops just may be the gateway drug that gets you hooked on online retail.
2. Pay attention to your customers.
Ask them how they’re using this new tool. Watch as users start to adopt Facebook Shops – are they using it for convenience shopping, like Amazon? For style curation, like Pinterest? Or to connect with creative artisans, like Etsy? No doubt Shops will carve out its own space, and your job will be to see what that space is and use it to your advantage.
3. Own your business.
If we’ve learned anything from the first few Facebook bait & switches, it’s that businesses that get over-excited and shove all of their chips into their eco-system, assuming that the rules are going to stay the same, are the ones that get hurt. Make sure you own your distribution channels and the relationship with your customers. That may mean leaving a bit of money on the table right now as you direct some traffic to your website instead of your Facebook Shop, but it will also mean that you continue to have control over your business, rather than renting space on someone else’s platform.
Conner Galway is President of Junction.