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Explained: What Facebook Shops mean for the future of (hyper-local) retail

Facebook has announced the launch of Facebook Shops. Why are big tech companies trying to get into the hyper-local space by getting small stores online?

Written by Aashish Aryan | New Delhi | Updated: May 21, 2020 2:07:52 pm
Facebook Oversight Panel, Facebook Oversight Board, Mark Zuckerberg, Facebook, Facebook Oversight, Facebook data leak, Facebook data The launch of this platform could mean easy access to the large customer base of the social media giant, Facebook. (File Photo)

Facebook founder Mark Zuckerberg on Tuesday announced the launch of Facebook Shops, a platform that small mom-and-pop stores across the world could leverage to sell things directly across its apps, such as WhatsApp, Instagram and Facebook too.

The launch of this platform coincides with the plans of many other global conglomerates to launch themselves in the Medium, Small and Micro Enterprises (MSME) segment, by providing some kind of platform or training space. While it is unclear if Facebook Shops would be launched in India as well, it does raise a few questions.

Why are big tech companies trying to get into the hyper-local space by getting small stores online?

The answer could lie in these companies wanting to explore newer opportunities by expanding their footprint. With a huge chunk of population in developing countries still joining the mainstream internet bandwagon, the smaller unorganised sector could be the new revenue and traffic generator for the big tech companies.

For example, in December last year, US-based retailers Walmart and Amazon stepped up efforts to boost their image of being MSME-friendly, by launching similar, albeit different, training programmes for India. Similarly, about a month ago, Facebook announced it had bought about 10 per cent stake in Reliance Industries’ Jio Platforms.

What does the launch of Facebook Shops mean for small store owners?

For small store owners in developing countries in Asia, Africa, and Latin America, the launch of this platform could mean easy access to the large customer base of the social media giant, Facebook.  With WhatsApp and Instagram, the trio makes a formidable presence on the internet.

The three apps together also have a large captive user base that could be used by small mom-and-pop stores to expand their presence in their local markets. For example, Facebook-owned WhatsApp’s ability to offer consumers easy access to the nearest kiranas, or grocery stores, which can provide products and services to their homes, can help the latter increase their revenue multi-fold.

Does launch of Facebook Shops impact the Facebook-Jio deal announced a month ago?

Though it is unclear whether Facebook Shops would be launched in India as well, the model adopted by Facebook for its own platform appears to be very similar to the one in the JioMart-WhatsApp deal. Though experts say there is a chance of cannibalisation of platforms if Facebook Shops launches in India, they also say that the platform could just be a replication of JioMart-WhatsApp arrangement.

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