Facebook Shops: Analyst Foresees Multibillion-Dollar Revenue Opportunity

Amazon and Google gained another ecommerce rival this week and SEO experts gained another platform in which to optimize content with the announcement of Facebook Shops, a mobile-first shopping experience where businesses can create an online store on Facebook and Instagram for free.

“Based on our analysis, we believe Facebook Shops and Instagram shop could be a multi-billion revenue opportunity for Facebook,” Aaron Kessler, analyst at Raymond James, wrote in a research note. “We assume Facebook can address ~50% of global eCommerce (excludes China). Assuming eCommerce penetration ranges of 0.5%-5% would yield $11B-$105B of GMV (based on 2020 estimates). Applying a ~5% take rate would yield $0.5B-$5.3B of revenues.”

Facebook CEO Mark Zuckerberg took to the platform in a video this week to tout the company’s move to help small businesses. “COVID isn’t just a health emergency, it’s also the biggest economic shock we’ve felt in our lifetime,” he said. “As people are being told to stay home, small businesses are having a hard time staying open.”



Analyst believe Facebook has begun to take ecommerce more seriously. The shop will appear on Facebook and Instagram accounts at first and then soon on Messenger and WhatsApp. They also will integration with third-party platforms such as Shopify, and ChannelAdvisor. They were previously lacked integration with third parties.

What is the opportunity for SEO experts? “It could be a big game changer or it could fall flat,” said Lauren Rockwell, associate director of SEO at Cogniscient Media. “Amazon is so ingrained in our culture. It may be another place for users to go play and purchase. It’s another auction we have at our disposal, but it will depend on who will use it.”

Facebook is making Shops a place to search and discover brands and filter by category. Later this year, Facebook will add a new shop tab in the navigation bar, so you can get to Instagram Shop in just one tap.

Shops’ goal is to facilitate more direct-to-consumer commerce through the company's four apps, complementing a merchant’s existing social media presence and advertising programs, according to Colin Sebastian, Robert W. Baird senior analyst.

In a research note, Sebastian explain how there are more than 160 million SMBs using and advertising on Facebook, but more than one-third of small businesses in a Facebook survey have already shut down.

Merchants surviving the COVID-19 shutdown are moving online quickly, with digital sales now the primary way to conduct business. 

“Facebook Shops are free for merchants, with Facebook earning payment fees from those using Facebook Checkout, and with expectations for higher demand/bids for product ads purchased across the family of apps,” he wrote.

Facebook also is working with Shopify, BigCommerce, WooCommerce, Channel Advisor, CedCommerce, Cafe24, Tienda Nube and Feedonomics. The shop will appear on Facebook and Instagram accounts at first, and then soon on Messenger and WhatsApp.

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