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Facebook Eyes E-commerce


Image via Alex Haney on Unsplash

The rise of e-commerce is nothing new. E-commerce sales as a percentage of total retail sales has more than tripled since 2007 to 16% last year, according to the Commerce Department.

While it was likely this trend would continue regardless, e-commerce's share of the total retail spending pie seems likely to get a boost as many consumers are confined to their homes as a result of the coronavirus.


Perhaps acknowledging this, and wanting to leverage its 2.6 billion users, Facebook made a big push into e-commerce earlier this week when it introduced Shops. Shops, which will be powered by third-party providers such as Shopify, will enable businesses to create free storefronts on Facebook and Instagram.


"I think this particularly important right now because so many small businesses are moving online to deal with the economic fallout from Covid-19," Facebook co-founder and CEO Mark Zuckerberg said. "As people are being told to stay home, physical storefronts are having a hard time staying open and millions of people are losing their jobs. I've been personally working with our teams on Facebook Shops every day for the last couple of months so we could accelerate launching it to small businesses who could use tools like this now."


Despite Shops being offered as a free service, Facebook stands to generate income through advertising and payments. If customers make a purchase through Facebook's checkout option, Facebook will charge a fee.


Facebook said there's more than 160 million small businesses using its apps. With Shop, Facebook will enable users to store their payment information to create a seamless shopping experience through storefronts on Facebook and Instagram.


Storefront owners will also be able to communicate with their customers through Messenger, Instagram, and WhatsApp. Facebook will eventually integrate live video functionality into Shop, as well as a loyalty program.


Shops has been rolled out on Facebook in the U.S. and will be available on Instagram this summer. Facebook shareholders cheered the news, as the stock broke out to new all-time highs on consecutive days following the announcement.

"Hopefully this helps relieve some of the pressure that small businesses are facing right now and helps them prepare for a more online future," Zuckerberg said. "I look forward to getting Shops into the world more widely -- let us know what you think!"


With Facebook now the fifth-largest company in the S&P 500—sporting a market capitalization of more than $650 billion, will the company's entrance into e-commerce end up being the catalyst that enables Facebook to join Microsoft, Apple and Amazon in the trillion dollar club?


Leftover Crumbs

  • 38.6 million. Initial jobless claims were 2.44 million last week, bringing the total over the last nine weeks since the coronavirus lockdowns began to more than 38 million, according to the Labor Department. Despite the seventh-consecutive weekly decline in initial jobless claims, the number of continuing claims rose by more than 2.5 million to 25.07 million last week. The four-week moving average of continuing claims jumped by 2.3 million to 22 million. Georgia saw the largest drop in initial jobless claims, while California saw the largest increase.

  • Home sales collapse. Sales of existing homes dropped 17.8% in April and were 17.2% below the same period last year, according to the National Association of Realtors. The monthly decline from March marks the largest month-over-month drop since July 2010. The annualized number of 4.33 million sales marks the lowest number since September 2011. With the supply of homes falling 19.7% from the same period a year earlier, the median price of an existing home sold jumped 7.4% to $286,800, which marks a nominal record high.

  • Amazon delays Prime Day. Amazon is reportedly delaying its annual Prime Daywhich is typically held in July, to September, as the company deals with a surge in orders as a result of the coronavirus. The two-day event is one of Amazon's busiest days of the year and is typically used to attract new Prime members via promotional discounts. It was reported last month that Amazon could take a $100 million hit by delaying Prime Day as a result of having to discount excess devices.

  • Locust relief is on the way. The World Bank has approved $500 million in grants and low-interest loans for countries in the Middle East and Africa to help fight desert locusts. The locust swarm, which is the largest in 70 years and has affected 23 countries, is threatening food supplies and could cause up to $8.5 billion in damages, according to the World Bank. "The Horn of Africa finds itself at the epicenter of the worst locust outbreak we have seen in a generation, most probably in more than a generation," senior World Bank official Holger Kray said.

  • Mask manufacturer plans for IPO. Sonovia, which makes washable and reusable anti-viral masks, is planning to go public on the Nasdaq by the end of the year. Sonovia's masks destroy bacteria, fungi and viruses and can help limit the spread of COVID-19, according to the company. "We believe we will complete the (IPO) process at the end of this year," Sonovia CTO Liat Goldhammer said. "We are targeting a valuation of $50 million. We are doing the legal and accounting process now."