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Facebook launches 'Shops' feature for small businesses as online shopping surges

Facebook's announcement comes as consumers have flocked to online shopping during the coronavirus pandemic.
Image: Outbreak of the coronavirus disease (COVID-19) in Tokyo
A man wearing a protective face mask uses his mobile phone in in Tokyo on May 8, 2020.Kim Kyung-Hoon / Reuters

Facebook has announced the launch of a new product, Facebook Shops, which gives small businesses tools to create online stores on Facebook and Instagram.

The new service, which Facebook CEO Mark Zuckerberg rolled out in a Facebook Live appearance Tuesday, is designed to improve the online shopping experience and help businesses that have suffered amid the coronavirus pandemic.

The service will also benefit Facebook by moving more online shopping inside the company's family of apps, translating to users spending more time with Facebook and sharing more data about their consumption habits.

"When you walk down the road, or I guess when you used to walk down the street, not every shop was the same," Zuckerberg said on a livestream. "We built Facebook Shops with this in mind."

Facebook's announcement comes as consumers have flocked to online shopping during the pandemic. Amazon and Walmart have each reported dramatic increases in their e-commerce businesses.

While Facebook has boasted about how many small businesses are on its platform, it has struggled to break into e-commerce despite previous efforts.

The new product will provide business owners with the ability to create a central "Shop" that is accessible from Facebook, Instagram, WhatsApp and company’s other apps. This will reduce much of the friction that comes with online shopping, such as being redirected to a store's website and being asked to enter payment and shipping information.

On Facebook Shops, users' payment methods and shipping addresses will already be stored. Facebook will partner with e-commerce companies Shopify and BigCommerce to handle logistics.

Zuckerberg said he believes Facebook Shops could become the primary online presence for many small businesses, including some of the 160 million small businesses that already use Facebook to market their products.

Later this summer, Facebook will launch Instagram Shop, a service that will allow the platform’s users to browse products from their favorite brands and creators in one tab.

Eventually, Facebook plans to leverage its WhatsApp, Messenger and Instagram Direct apps to let consumers shop and make purchases while chatting directly with the businesses.

Zuckerberg also said that the company is looking to tap artificial intelligence to help companies set up their shops.

"Shops are going to be able to use our AI to create better more personalized experiences than you’re going to have almost anywhere else," Zuckerberg said.

The launch of Facebook Shops comes one day after the company released a survey in partnership with the Small Business Roundtable that showed one-third of U.S. small businesses have stopped operating, and 11 percent are likely to fail within the next three months.

"The numbers are devastating," Sheryl Sandberg, Facebook's chief operating officer, told Bloomberg.