Facebook expands e-commerce efforts

Facebook, Inc. (FB) is constantly looking for ways to expand into new business verticals. This is clear from the company’s investments in virtual reality and artificial intelligence. Similarly, Facebook is trying to take advantage of the lucrative opportunity available in the e-commerce industry, which is expected to grow exponentially over the next decade.

On June 22, the company announced the launch of Shops on WhatsApp and Facebook Marketplace. Previously, the feature was only available on Instagram and Facebook’s main interface. This timely decision is likely to help the company penetrate the online shopping industry in the coming years, paving the way for strong revenue growth. (Check out Facebook stock charts at TipRanks)

Stores will open many new doors

Facebook is the global social networking platform with more than 2.8 billion monthly active users. The company also has Instagram, which attracts more than a billion users each month, and WhatsApp, the world’s most popular messaging platform, with more than 2 billion active users.

The company is no longer a social media platform operator trying to connect people. Today, Facebook touches every aspect of human life and the company’s goal is to become a utility without which a consumer cannot live. Launching stores on Facebook Marketplace and WhatsApp is a decision aimed at achieving this goal.

The pandemic accelerated the growth of online shopping, as mobility restrictions forced consumers from all corners of the world to buy the desired products and services online. Facebook Shops was launched in May 2020 with the goal of helping small businesses reach a larger audience on Facebook and Instagram.

Today there are more than 1.2 million active stores on the platform, with 300 million monthly store visitors. With this success, Facebook allows business owners to bring their products to WhatsApp as well as Facebook Marketplace, which has a monthly number of visitors of more than 1 billion.

Facebook also announced a new feature that allows companies to target potential customers through personalized ads, based on users ’purchasing preferences. This is only possible due to the substantial amount of data collected by Facebook over the last decade; A competitor would take several decades to reproduce this innovative feature. Facebook’s advertising revenue is likely to receive a boost once companies start using personalized ad slots.

To try to offer a high-tech shopping experience to users, Facebook is also investing in augmented reality and artificial intelligence, and shoppers will soon be able to try on new sunglasses and clothing, using AR solutions that the company will introduce. .

Prospects for the social trade industry

According to eMarketer, US social commerce sales will increase 35% to $ 36.09 million in 2021, accounting for 4.3% of total e-commerce sales. Both businesses and consumers have recognized the ease of using social media platforms to buy and sell products, which is the engine of growth in this industry.

Embracing this macroeconomic trend, many social media companies have already introduced several related features, including product listing solutions and payment solutions. These make the prospects promising for this fast-growing business segment.

Take Street from Wall Street

Wall Street analysts have an average Facebook price target of $ 390.47, an increase of 11.4% over the current market price. If Facebook successfully executes its e-commerce push, the company is likely to report better-than-expected earnings in the coming quarters, and that could lead analysts to revise its upward price targets.

Take away

Facebook is broadening its horizons to penetrate the fast-growing business segment of social commerce and the company plans to introduce innovative features such as RA experiences to capture the market share of this industry. With over 5 billion monthly active users on all platforms, the company is well positioned to become the leader in the social commerce industry.

Once Facebook is established as a market leader, the company will have the option to add new revenue streams to the company. You will be able to promote the use of Facebook Pay and charge higher fees to companies that want to advertise on the platform. The launch of stores on Facebook Marketplace and WhatsApp is the starting point of a journey that could see Facebook diversifying into new business verticals.

Disclosure: Dilantha De Silva had Facebook shares at the time of posting.

Disclaimer: The information it contains is for informational purposes only. Nothing in this article shall be construed as an application to buy or sell securities.

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