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Meta announced in April plans to phase out shops on its platforms that don’t use the checkout feature, spurring people to make more in-app purchases and limiting the traffic Facebook and Instagram send directly to commerce sites. While convenient for people, the move will give the platform more visibility over attribution, historically hampered by Apple’s crackdown on user privacy.
Brands like Walmart and Rothy’s use Shops on Instagram and Facebook to send people to their commerce sites. Starting next April, they will be mandated to use the checkout feature on Meta instead, letting people directly purchase on Instagram or Facebook instead of redirecting them to an ecommerce website in the U.S.
Social commerce, or browsing and shopping directly on social media platforms, is rapidly gaining pace in the U.S., surpassing $30 billion in 2021, according to Insider Intelligence. That figure is expected to grow to nearly $80 billion by 2025, making 5% of total U.S. ecommerce. Meta’s move is expected, four ad buyers told Adweek, and while people may welcome it, there are questions about the data capturing and operational limitations potentially impacting traffic and sales.
“This really feels like a push from Meta to close the loop on measurement within their system,” said Brett Fischer, performance media manager, at marketing agency Collective Measures. “They lost a ton of visibility and attribution capabilities with iOS 14 update. And if they’re able to bring that transaction data in-house, that’s only going to benefit marketers. Now Facebook has that full 360-view of the consumer purchase process.”
To enable checkout on Meta Shops, brands need to have a product catalog and Shop set up within Meta platforms. This involves defining shipping and return methods, along with providing Meta with financial information for payouts and tax collection.
As of 2021, 73% of retail and e-commerce brands have set up Shop, according to Sprout Social. In the first quarter of 2021, Facebook Shops reported an average of 1 million monthly global users and around 250 million active stores globally, according to Statista. Meanwhile, more than 25 million businesses are active on Instagram, and 2 million of them utilize Instagram Shop features as of 2023, according to Gitnux.
Data capturing, traffic driving and operational limitations
Clients at VaynerMedia see single to low-double-digit traffic to sites from Shops, according to Jon Morgenstern, evp and head of investment at VaynerMedia. Morgenstern did not share brand names.
Nearly all of VaynerMedia’s ecommerce brands have set up Shop across Instagram and Facebook and only 40% of those brands have enabled the checkout feature. Typically, brands can capture more consumer behavior on Instagram.
About half of Collective Measures’ clients have adopted Meta Shops, and most use the existing checkout feature that directs people to brands’ websites.
However, this mandate by Meta will push marketers to treat Facebook and Instagram Shops as their own conversion touch points, putting more thought into what products they feature in their Shops.
“Shops is more of a discovery channel right now,” Fischer said.
Brands could take a hit on conversions plus encounter logistical challenges.
“The deepest impact will be for brands that are not direct-to-consumer and use Shops as a way to drive website traffic,” said Briana Finelli, head of commerce, U.S, Wavemaker.
Meanwhile, brands could also be limited by operational capabilities. If, hypothetically, Meta plans to work with a certain platform, like Shopify, for the new feature and a brand’s website is not built on that platform, it wouldn’t be able to enable the Shop feature.
“It’ll warrant conversations within brands to determine whether making that shift is worthwhile to enable social commerce,” Finelli added.
A spokesperson from Meta said that Shops with check out enabled are not dependent on using Shopify.
Marketers won’t be able to replicate a brand’s website experience within Shops, such as people cashing in on loyalty program points or managing customer experience. Another pain point could be capturing limited user data.
“Meta will be more user protective and may not share as much of that data back to the advertisers,” said Morgenstern.
Changing shopping behavior
Marketers are optimistic that Meta’s move to bring shopping and purchasing within the platform will be convenient for people.
“Because the idea that you can pre-populate all of your shipping, billing, and credit card information in one click as opposed to needing to go and fill out an entire farm is really attractive,” said Finelli.
Still, the tech giant has come under fire from regulators over privacy concerns, as recently as last week, over allegedly violating a suite of child privacy protections such as the Children’s Online Privacy Protection Act (COPPA).
“There’s just an overall level of distrust with privacy and data stewardship,” said Fischer. “Will people give up their credit card information to Facebook? I’ll be very interested to see if [Meta] is able to essentially change consumer behavior and get people to start using Shops.”
This article has been updated to clarify that Shops with check out enabled are not dependent on using Shopify.