Facebook Rolls Out Online Shopping Platform For Businesses

Facebook Inc. (FB) is rolling out Shops, a new platform that will enable businesses to offer and sell their products online using the social media giant’s network.

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Facebook Shops allows businesses or any seller to set up a single online store for customers to access their products on both Facebook and Instagram for free. Shops will be found on a business’ Facebook page or Instagram profile, or it can be promoted via stories or ads.

“Right now many small businesses are struggling, and with stores closing, more are looking to bring their business online,” Facebook said in a statement. “Our goal is to make shopping seamless and empower anyone from a small business owner to a global brand to use our apps to connect with customers.”

Shelter-in-place orders which were implemented to help contain the coronavirus pandemic have taken a big hit on businesses. A Facebook survey based on 86,000 owners, managers and workers in U.S. companies with fewer than 500 employees, showed that almost a third have shut down. Among the smallest businesses more than half are no longer operating.

Customers using Facebook Shops will be able to message a business through WhatsApp, Messenger or Instagram Direct to ask questions, get support, track deliveries and more. At a later stage, customers will also be able to view a business’ shop and make purchases right within a chat in WhatsApp, Messenger or Instagram Direct.

To preserve privacy, activity in Facebook Shops will not be shared with friends, profile or in feeds, unless the user chooses to share it. Facebook will only share information with businesses about shop performance and traffic.

The social media network added that it is also working more closely with partners like Shopify (SHOP), BigCommerce, WooCommerce, ChannelAdvisor, CedCommerce, Cafe24, Tienda Nube and Feedonomics to provide businesses with support.

Shares in Facebook rose 1.7% to $220.50 in pre-market U.S. trading.

In reaction to the launch, five-star analyst Colin Sebastian at Robert W. Baird maintained his Buy rating on the stock saying that he views the Shops announcement as a net positive for Facebook.

Sebastian added that for Shopify and other third parties, the social media giant’s “open ecosystem” now allows for direct integration into the four Facebook apps, helping to drive higher transaction volumes and generating additional platform fees.

Overall, Wall Street analysts have a bullish call on Facebook shares. A stellar 32 out of 35 analysts have a Buy rating on the stock with the rest on the sidelines.

After the stock jumped 49% over the past two months, the $238 analysts’ average price target implies a potential gain of some 9.7% in the coming 12 months. (See Facebook stock analysis on TipRanks).