Amazon has been able to quickly expand its advertising business because it is the most successful online shopping destination. Facebook will not be able to replace Amazon as the preferred site for shoppers looking for a specific item. Not in the near future, at least.
Despite this, Facebook’s Marketplace functionality is used by “hundreds of millions” of people around the world. It hasn’t changed the number since early 2018 when it reported 800 million monthly users. In the meantime, an increasing number of Instagram users see the app as a place to go virtual window shopping. Instagram has welcomed it by, among other items, adding a new Shop feature to Explore.
To put it another way, users have already shown an interest in shopping on Facebook’s apps. Shops actually make it easier for vendors to get their products in front of potential customers and transform them into buyers. Ads will play a crucial role in the process for retailers, just as they have been for any third-party retailer on Amazon. The benefit of Facebook is that retailers aren’t explicitly competing with the company with which they’re doing business.
With Shops, Facebook has the ability to boost its e-commerce advertising capabilities to those of Amazon. It should be able to increase ad sales in one of the most important verticals if it can do so. Even a minor improvement in the average ad price for e-commerce ads would produce billions of dollars in additional revenue.
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