Facebook Wants Retailers to Set Up Shop on Its Site: Pros and Cons

Facebook Is Testing Adding E-Commerce Microsites to Brands' Pages

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Facebook CEO Mark Zuckerberg.
Facebook CEO Mark Zuckerberg. Credit: David Paul Morris/Bloomberg

Facebook already helps retailers push product through the ads it sells, but now it wants to sell the actual products without taking consumers outside the social network.

Facebook is testing the ability for companies to set up e-commerce shops within their Facebook pages, the company told BuzzFeed. The company has already tested the ability for people to buy things within Facebook posts and ads; these shops appear to be the logical extension of that test.

Facebook told BuzzFeed that it is testing at least 10 shops and isn't taking a cut from sales completed within retailers' Facebook shops during the test. It's unclear whether Facebook would eventually tax those transactions to make money or would instead use shops to lure retailers into buying more ads to drive sales.

Facebook's shops test appears to be the retail equivalent of the Instant Articles it rolled out in May for publishers to host articles directly on Facebook. And it carries similar potential pros and cons.

Pro: Facebook could give merchants a lot of new customers.

Con: Those customers would actually belong to Facebook; merchants would just rent them, so to speak, like food brands borrowing shelf space in someone else's grocery store.

Pro: Facebook's news-feed algorithm will probably favor retailers' posts that link to their Facebook shops, meaning that those brands could make it back into people's news feeds without paying, as they were able to before Facebook cut brands' organic reach late last year.

Con: Facebook could alternately compel retailers to buy ads if they want their product-promoting posts to make it into people's news feeds. It could also follow Google's example and turn each product listing into an ad, charging the brand each time someone clicks to check out the product, even if they don't end up buying it.

Pro: Facebook could certainly give retailers a better idea of who the people buying their products are, by sharing -- likely aggregated and anonymized -- profile data about those customers' locations, ages, interests and most common purchases.

Con: Facebook could use levels of customer information as lures to get more ad money or take a cut of sales after all.

Pro: Facebook shops might give a people a reason to once again check out brands' Facebook pages, which have become less-visited after Facebook cut the reach of organic posts to those pages.

Con: Conditioned to not check out Facebook pages after the reach cuts, people could also have trouble motivating to check out the new shops housed on those pages.

Pro: Facebook would be creating competition with Amazon and Google, giving merchants the upper hand when it comes to deciding on whose platform to sell their wares and under what terms.

Con: If people become used to buying stuff on Facebook, Amazon and Google, retailers' own e-commerce sites could wither, and their negotiating power along with it.

Pro: Facebook could give brands and individuals lacking their own e-commerce sites an easy way to sell products to a potential customer base of Facebook's 1.4 billion monthly active users. New businesses might sprout and flourish with lower overhead costs; hobbyists could to turn their part-time crafts into full-time businesses; everyone loves life.

Con: Facebook could become such a crucial part of brands' e-commerce strategies that it effectively becomes the landlord of their virtual storefronts, able to make or break individual merchants' businesses on a whim, as happened with social gaming companies. And social news readers. And clickbait sites.

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