Competition for amazon: shopping via facebook

Facebook wants to become a platform for online retailers and poses as a helper in the pandemic. Of course, this is all about: Data.

Going out to shop? The big platforms want to make that increasingly unnecessary Photo: Dado Ruvic/reuters

Facebook wants to expand online commerce on its network. The U.S. group, which reaches more than a third of the world’s population through its eponymous online network, video service Instagram and messenger service Whatsapp, announced on Tuesday evening the launch of Facebook Shops. In the corona crisis, this is an important step because it allows small businesses to establish a free online presence, said Facebook founder Mark Zuckerberg.

Since Tuesday, companies in many countries around the globe – including Germany – have been able to select products they want to offer from their catalog and then present them in their Facebook Shop. If a credit card is stored, the customer can buy immediately. Chats and also access via Instagram are to be possible. The company is thus significantly expanding its e-commerce presence. Until now, there have only been limited opportunities to order goods via Whatsapp and Instagram.

For Facebook, this is more than a nice service during the Corona pandemic. Because the company will receive further advertising-relevant data about its customers via the shopping function. In addition to information about brand or product preferences, which the company already receives now, it will then receive the actual purchases made. "We’ll see which stores [customers] interact with, what products they’re interested in, what they buy and so on," Zuckerberg explained.

And the company will also be able to relate this information to purchases made by friends. With the collected data, the online network will be able to display advertising in a more targeted manner – and thus increase revenues. As is customary nowadays, online advertising on Facebook is awarded by auction. The highest bidder gets the space. And if this becomes more valuable, since an ad could lead directly to a sale, companies will foreseeably be willing to pay more for it.

Observers assume that Facebook, with its 2.6 billion users and its well-established online advertising system in the retail segment, could also become a serious competitor for large platforms such as Amazon and Ebay in the future.