Facebook takes on Amazon with online shopping, to introduce ‘facebook shops’ that will allow businesses to set up digital stores and sell directly to users

Facebook is hoping that its 2.6bn users will begin shopping on its platform, as it unveiled a service that puts it in direct competition with Amazon and eBay.

“Facebook Shops” will allow sellers to create digital storefronts on Facebook or Instagram, the company said on Tuesday, adding that it would benefit by gathering valuable data on what shoppers want.

Users will be able to browse products, message businesses to arrange purchases, and in some cases buy them directly via a recently introduced online checkout feature

Mark Zuckerberg, Facebook’s chief executive, said in an interview with the FT that he had accelerated plans for Shops to take advantage of the boom in online shopping during the coronavirus crisis.

He added that the social media giant would be able to use the data to improve its advertising service and charge more for it.

“If you browse a shop inside of our app or if you buy something, we will see that and we’ll be able to hopefully use that to show you better recommendations for other things that you’d be interested in in the future,” he said.

Shops will help businesses “complete the conversion and the transaction [of a sale] more frequently with less drop-off”, he added. This will, in turn, translate into higher bids for advertising.

In the US, where Facebook has rolled out a checkout service from Instagram, the company will also collect a small fee to cover credit card processing costs and fraud monitoring.

The venture, which is Facebook’s most significant foray into ecommerce to date, represents a challenge to Amazon because of the huge number of users that Facebook can channel to storefronts.

It may eventually also present a challenge to food delivery platforms such as Grubhub. Mr Zuckerberg suggested that, in the longer term, it “would be good” to host restaurant and food ordering services.

The Facebook founder said, however, that he was not trying to replicate Amazon’s “end-to-end experience” and instead would work with existing ecommerce services such as Shopify, which helps small businesses create online shops and takes care of analytics and payments. Mr Zuckerberg added that Facebook would also integrate with shipping and logistics services.

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