Will E-Commerce Shops Deliver a Boost for Facebook Stock?

By Chris Lange Published May 22, 1:39PM EDT

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Will E-Commerce Shops Deliver a Boost for Facebook Stock? — © stockcatalog / Flickr

Facebook (NASDAQ: FB) has become a universal hub for congregating online during the COVID-19 pandemic. Although people are separated by distance, they are still able to interact through the largest social network on the planet. Now the social media giant is rolling out more features to help out small businesses that have been affected by the pandemic.

The Dow Jones industrial average and S&P 500 have yet to make a full recovery from the pandemic. In comparison, Facebook stock is vastly outpacing the markets and reaching all-time highs.

Perhaps the biggest problem faced by most businesses during this pandemic has been the inability to operate their brick and mortar locations. As a result, we’ve seen a huge push towards e-commerce, and Amazon (NASDAQ: AMZN | AMZN Price Prediction) has been the biggest winner from this. Now Facebook is throwing its hat in the ring with a new initiative dubbed Facebook Shops.

Facebook Shops

Facebook’s goal with this initiative 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.” The company announced the plan earlier this week and it will take shape over the Facebook and Instagram platforms.

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Shopify Inc. (NYSE: SHOP) and Facebook announced earlier this week the formation of a new partnership intended to help businesses create Facebook Shops. The goal is to make it easy for businesses to create a unique online store for customers to access on both Facebook and Instagram.

Facebook Shops 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, no matter what size a company or seller, businesses will be able to connect with customers online “wherever and whenever it’s convenient for them.”

For customers with questions, Facebook Shops allows them to message the business via WhatsApp, Messenger, or Instagram Direct. In the future, customers will be able to make purchases through these channels as well.

Instagram Shop

Apart from the Facebook platform, Instagram is wildly popular. This summer the social media giant is rolling out its Instagram Shop. Considering Instagram sees an average of over 500 million daily active users, and the platform is all about vanity, this may be the best place for an online marketplace.

Essentially, 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 in the year, Instagram will be adding a new Shop tab in its navigation bar, so users will be able to get that sweet serotonin from Instagram Shop in just one tap.

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Other Features

Live Shopping is another feature that Facebook is looking to roll out. If you’ve ever been on the platform before, there are already loads of videos looking to sell anything from shoes to lipsticks. However, Live Shopping will take a somewhat different approach.

Soon, sellers, brands and creators will be able to tag products from their Facebook Shop or catalog before going live. As a result, these products will be displayed at the bottom of the video so consumers can easily tap the product and learn more about it.

Live Shopping is currently in the testing phase on both Facebook and Instagram, and it will be rolled out more broadly in the coming months.

Separately, Facebook is testing ways to connect loyalty programs to its users accounts. When this comes to fruition, users will be able to earn rewards for businesses they patronize. Also the rewards will all be tied to the Facebook account for ease of visibility and access.

While Amazon might come off as the biggest and baddest e-commerce company, Facebook is finding a niche with its massive user base. If Facebook continues to expand this platform and roll it out to small businesses successfully, there could be another e-commerce giant to contend with.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.