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    Facebook Stores Have a Lot Of Potential

    Facebook Stores Have a Lot Of Potential – In recent years, Amazon has posed one of the most important threats to Facebook’s dominance in the digital advertising industry (NASDAQ: AMZN). Last year, Amazon’s digital advertising business grew exponentially, from almost zero to nearly $13 billion in ad spend. According to eMarketer, by 2022, the number could have doubled.

    Amazon’s benefits include large amounts of shopper data and its place as the top destination for online product searches. Both assist it in targeting ads on its Fire TV and Kindle computers, as well as on the search results pages of its main website. Additionally, since the transactions occur within the same ecosystem, Amazon is able to accurately link ad impressions to customer purchases. This knowledge can be used by ad buyers to determine the worth of their promotions.

    The store allows Facebook to imitate Amazon’s strengths. It can collect more shopper data and attribute ad impressions to conversions more accurately with its Checkout feature. Direct checkout from Facebook will increase ad conversion rates by removing the friction between discovery and checkout.

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    A virtuous loop — a network effect — will arise as more users use the feature and store their credit card information on Facebook, making it easier to convert inside Facebook rather than on the retailer’s website. As a result, Facebook, like Amazon, would have more shopper data to target ads and suggest products.

    Can Facebook really take on Amazon?

    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.

    This article represents the author’s personal opinion, which may vary from the “official” recommendation stance of a Motley Fool premium advisory service. We’re a jumble! Inquiring about an investment thesis, including our own, helps us to think about investing critically and make decisions that will make us smarter, happier, and wealthier.

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