Facebook’s e-commerce bet stumbles as Meta seeks to revamp its advertising business

Facebook

Facebook 0.72%

relative

Metaplatforms Inc.

Facebook 0.72%

expanded e-commerce services in 2020 as people shopped more from home and the company faced an evolving digital advertising market. Two years later, employees, former executives and retailers say the split remains a work in progress.

Some retailers say they are frustrated with

Metait is

e-commerce rollout, noting that the service lacks basic components such as the ability to display products in different colors and sizes if not sold directly through Facebook and Instagram, limiting where a merchant can ship items and provide next day or same day deliveries. Other stores, however, see the promise of connecting with shoppers through Facebook and Instagram’s large user bases.

At least five senior executives have left in the past six months, according to a former senior executive at the division. Facebook is confident in its e-commerce business.

“Building a full-fledged commerce platform is a multi-year journey, one that became a company priority less than two years ago,” said Meta spokesperson Joe Osborne. “We are proud of our progress and the teams working to create these experiences. »

Meta began ramping up its e-commerce efforts at the start of the pandemic, launching features called Facebook and Instagram Shops in May 2020.

Shops allow brands to post their catalogs directly to Facebook and Instagram. Some brands use Shops to entice users to buy from their websites while others choose to sell items to users through Meta services.

Meta has also started to prepare for the impact of privacy changes

Apple Inc.

announced in June 2020 for its iPhone and iPad devices. These changes, which deployed in April 2021, allowed users to opt out of having their activity on their devices tracked by companies like Meta. This tracking data was essential to how Meta measures the effectiveness of advertisements. The loss of this data leads advertisers elsewhereputting a significant dent in the company’s earnings over the past two quarters.

Apple iPhone and iPad users can choose not to have their activity tracked on their devices by companies like Meta.


Photo:

Gabby Jones/Bloomberg News

Since February, when Meta reported disappointing user and revenue growth and said Apple’s new policy would cost more than $10 billion in lost sales for 2022, the company’s shares have fallen more than 34%. . This equates to a loss of $307.8 billion in market value. About 97% of Meta’s revenue comes from advertising, according to its first-quarter results. Meta also said it will spend more as the company pivots to the Metaverse, a virtual world where people work, play and interact.

Online shopping offers a way to lessen the impact of Apple’s changes. By developing commerce channels within its apps, Meta can measure the effectiveness of advertisements within its own services and recover some of the data it has lost. The potential is great:

Amazon.co.uk Inc.,

which dominates e-commerce, saw $7.88 billion in ad sales in its most recent quarter, up 23% from the same period a year ago.

Meta does not reveal the results of its shopping activity, but the CEO

Mark Zuckerberg

said last week that the company had recently seen a decline in e-commerce usage. Other online retailers, like Amazon, have also talked about a slowdown in e-commerce as more Covid-19 restrictions are lifted and people are returning to in-person shopping in recent months.

“Other challenges are broader macroeconomic trends, like the weakness in e-commerce after the acceleration we’ve seen during the pandemic,” Zuckerberg said.

Among the commerce’s most notable departures is Vice President of Commerce and Operations Gene Alston, who recently announced in Meta’s Workplace that he would be leaving the company, according to people familiar with the matter. Mr. Alston was responsible for all strategy and teams for the commercial products of the Meta family of applications. King Tiger, vice president of engineering for commerce at the company, also announced his departure on Workplace, according to a person familiar with the matter. Eddie Garcia, who was previously product manager for Sam’s Club and was appointed last June to lead the company’s Marketplace feature, left the company in March and was recently announced as

eBay Inc.

Product manager.

Chris Olaniran is a user who wanted to create an Instagram store for his clothing brand, Vital Clothing. This process required setups on Facebook and Instagram, and in Mr. Olaniran’s case, on

Shopify Inc.,

a Canadian e-commerce company he uses to host his online store. “That’s when I realized for the first time, OK, it’s a lot more complicated than I thought,” he said.

After making the necessary changes to his Instagram and Facebook accounts, linking them to his product catalog in Shopify, and getting permission to sell, Olaniran struggled to get all of his items to appear in the store. He said he never figured out how to make changes to his product catalog appear. “You’d think there would be some sort of support method available, but after trying to fix the problem myself, it really became apparent that it’s really the opposite,” he said. . Meta said businesses can get help in a number of ways and pointed out an online help center.

Mr. Olaniran eventually gave up on the idea of ​​having an Instagram store. “I started the process of creating a

Etsy

store to have in combination with my website,” he said. “It really comes down to, is it worth my time?”

Meta recently started showing a promotion to Instagram users, giving them 20% off when they place their first e-commerce order through the social network. Most notably, the company is set to expand the availability of ads in the Facebook and Instagram Shops feature, a format it announced in June 2021, in which ads send users to curated collections from store or company website.

According to a Meta employee, around 200 sellers are conducting preliminary tests of Shops ads.

For many well-established retailers and brands, Facebook and Instagram Shops represent a tantalizing glimpse into the future. Michael Karanikolas, co-founder and co-CEO of an influencer-focused clothing brand

revolution group,

told investors last May that Instagram Shops is a “very small” contributor to the company’s bottom line. “We think long term [Instagram shopping] is part of the overall suite of options we have for our client,” he said.

Kevin Gould, founder and CEO of Kombo Ventures, a holding company with brands that sell products on Instagram, said he’d like to see Meta do a big outreach campaign introducing Facebook and Instagram Shops to users. Better integration with Shopify and adding features such as support for coupon codes would make shopping offers more attractive, he said. Facebook says it added discount features in late 2020.

SHARE YOUR THOUGHTS

What future for Meta’s e-commerce business? Join the conversation below.

Some merchants are seeing sales growth through Facebook and Instagram Shops.

Facebook and Instagram generate about 50% of revenue for BlendJet Inc., a portable blender company, CEO Ryan Pamplin said, but most of that revenue comes from ads that direct consumers to BlendJet’s website. In recent months, the company has seen an increase in sales directly to its Facebook and Instagram Shops, Pamplin said. This year through April, BlendJet’s sales on Meta commerce features were up about 300% over the prior year period, he said.

Pamplin attributed the increase to a number of shopping features Meta recently added, including product reviews and expanded product descriptions. Pamplin said some important features were still missing, including the ability to add multiple photos for each color of a product or the ability to include videos for products, but he said he trusted the teams Meta trading.

“I’ve been involved as an advertiser for a very long time and embraced everything they came up with,” Mr. Pamplin said. “And, you know, I’m true to the results.”

Write to Salvador Rodriguez at salvador.rodriguez@wsj.com and Charity L. Scott at Charity.Scott@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8

.

Leave a Reply

Your email address will not be published.