Facebook’s (FB) universe is getting even bigger. On Tuesday, the social media colossus unveiled Facebook Shops, elbowing its way to the front of the e-commerce queue. The platform will act as a digital shopfront where businesses of all sizes will be able to sell their products. Customers will be able to make purchases directly through either Facebook or Instagram.
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“We think Facebook Shop in a simplistic bull case could drive up to as much as a $30 billion revenue opportunity, across a combination of take-rate driven transactional and advertising revenue,” said Deutsche Bank analyst Lloyd Walmsley.
Facebook hopes the move will help alleviate some of the pressure on small businesses as a result of COVID-19.
The new platform significantly expands on last year’s rollout of Instagram Checkout. Looking specifically at Checkout, Walmsley originally estimated the 130 million users of Instagram shopping tags would increase to just under 400 million by 2021. The analyst believes the new endeavor will “drive this activity across 2.6 billion core Facebook MAUs and 3.0 billion MAU across the Family of apps,” translating to roughly three times the addressable audience initially estimated.
Adding to the good news, the new service will include numerous features like Instagram Shop, where users will be able to find and purchase products in Instagram Explore, as well as live shopping features (taking a page out of Alibaba’s playbook) and the ability to connect loyalty programs (currently in test mode).
Facebook will also work with other brands such as Shopify, BigCommerce and WooCommerce to help businesses operate online.
Walmsley expects Facebook shares to pop over the coming weeks, reminding investors that following the launch of Instagram Checkout, the stock surged by 17% over a one-month period. “FB shares could similarly outperform over the next month as investors anticipate a nice contribution from eCommerce more broadly across the platform,” he concluded.
Unsurprisingly, Facebook has widespread Street support. 3 Hold ratings are crushed by 33 Buys, presenting the social media king with a Strong Buy consensus rating. (See Facebook stock analysis on TipRanks)
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