Facebook is adding 'Shops' to let businesses sell products through the social network

• Facebook and Instagram are adding a big new e-commerce feature: Shops.
• Businesses will be able to list the goods they have for sale on the social networks.
• It's part of a major push by Facebook in recent years to move into ecommerce, taking it up against the likes of Amazon and Etsy.

Facebook is adding "Shops" to its social network and Instagram in its biggest move into e-commerce yet.

The Silicon Valley-headquartered social networking firm announced on Tuesday it is adding shopfronts for businesses to list their wares, along with a host of other e-commerce functionality across its apps. The new features move Facebook further than ever from its roots as a purely advertising-focused business — and also take it more squarely into competition with far more established online shopping platforms like Amazon, eBay, and Etsy.

In an interview with Business Insider, Facebook VP of Ads and Business Platform Dan Levy said the company had sped up its work on its shopping tool to help support businesses that might make use of it and are currently under immense strain because of the pandemic and associated economic crisis.

"We knew this was the future of where we were going, supporting online commerce," he said. "Now it's just happening a lot faster."

Facebook Shops allows businesses to create digital storefronts on the social network, where they can host "catalogs" of their products, and will either link out to places to buy the products or allow users to purchase them directly on Facebook.

It will live inside both Facebook and Instagram, and there are plans to add it to messaging apps WhatsApp and Messenger as well eventually. Instagram is also creating a dedicated shopping destination where users can find products to buy — and in a sign of the emphasis the company is now placing on e-commerce, Instagram Shop will be made a permanent button on users' navigation bars on the app home screen later this year.

Facebook is also letting brands and creators who use its live video streaming tools tag products in their videos, allowing for the possibility QVC-style shopping channels on Facebook and Instagram, as well as letting influencers plug their sponsors when they go live.

And the company is also exploring ways for users to link loyalty programs they have with businesses to their Facebook profiles.

In recent years, Facebook has been throwing more and more weight behind the potential of e-commerce as an area of growth for the business, with previous efforts including a checkout feature and ways for brands to tag products in posts on Instagram. In mid-2019, Deutsche Bank analysts estimated e-commerce on Instagram alone would be netting a cool $10 billion in revenue a year for the company by 2021.

With lockdowns forcing hundreds of millions of people to stay home, adding deeper shopping functionality to Facebook gives it an opportunity to benefit from the vast increase in online shopping suddenly occurring.

"We're seeing a lot of small businesses that never had online presences get online for the first time," CEO Mark Zuckerberg said in a livestream announcing Facebook Shops on Tuesday. "For a lot of small businesses in this period, this is the difference between staying afloat and going under."

Similarly, e-commerce may help to diversify Facebook's extremely advertising revenue-reliant business model. Coronavirus has caused economic devastation around the globe, and that has translated into plummeting ad spend by advertisers. Facebook has fared far better than some media businesses — its revenues in early April were roughly flat compared to the same period in 2019, rather than declining — but e-commerce offers more stability in case of future crises, as well as opportunities for growth.

Facebook has launched a flurry of new features and initiatives in response to the coronavirus, seizing the crisis as an opportunity for redemption after years of scandals and crises. It has added group chatrooms called Rooms to let isolated users video-chat with one another, promoted reliable information about the pandemic through a new Coronavirus Information Center (though falsehoods about COVID-19 and vaccines still flourish on the site), and is giving away $100 million in grants to support small businesses that have been affected.

On Monday, Facebook published a survey indicating that a third of all small businesses in the US have stopped operating due to coronavirus.

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