How the Future of Retail Favors Facebook Stock
Facebook Inc. (NASDAQ: FB) is one of the most trafficked sites on the internet, and it has only gotten busier since the coronavirus pandemic hit. The social network has become a place for many to congregate online, and now it is looking to do even more by breaking into e-commerce.
The retail sector has been completely ravaged by COVID-19 and stores are only now starting to reopen. However, the goal posts may have already shifted — meaning more consumers are going online for their shopping needs. This may be a tenet of the “new normal.” Brick-and-mortar retailers have long been a failing breed but this pandemic seems to be the last nail in the coffin.
Shares of Facebook are up about 10% year to date. The stock has greatly outpaced the Dow Jones industrial average and S&P 500, and the market in general. The social media giant is only looking to extend its lead with its push into e-commerce.
Facebook is facing off against other big tech companies with its foray into e-commerce through its initiative dubbed Facebook Shops. The company announced in mid-May that its Shops business will be taking shape over its Facebook and Instagram platforms.
The objective is to “make shopping seamless and empower anyone from a small business owner to a global brand to use our apps to connect with customers.”
In conjunction with this initiative, Facebook and Shopify Inc. (NYSE: SHOP) announced the formation of a new partnership intended to help businesses create Facebook Shops. The combination will make it easier for businesses to create a unique online store for customers to access on both Facebook and Instagram.
This initiative will be a free service for Facebook’s users. Businesses will be able to choose products they want featured from their catalog and then customize their Shop page to showcase their brand. What this means, according to Facebook, is that regardless of the size of a company or seller, businesses will be able to connect with customers online “wherever and whenever it’s convenient for them.”
Separately, Instagram is a hugely popular platform in and of itself, and Facebook is looking to capitalize on that. This summer the social media giant is rolling out its Instagram Shop. Considering Instagram has an average of over 500 million daily active users this may be the best place for an online marketplace.
On this platform, users will be able to browse their favorite brands and creators, while filtering through different categories. Obviously, Home and Beauty will be big hits. It’s very possible that Instagram influencers will become even more like salespeople than before when Live Shopping Features are released.
Later this fall or winter, Instagram will be adding a new Shop tab in its navigation bar, so users will be able to go directly to Shop with just one tap.
Although there is some stiff competition in e-commerce, Facebook has the war chest to go to battle against the big dogs. If anything, this will help grow its platform and potentially draw more users and businesses into the mix.