Facebook FB 0.15% parent Meta Platforms Inc. FB 0.15% developed e-commerce services in 2020 as people shopped more from home and the company faced a changing digital ad market. Two years later, employees, former executives and retailers say the division remains a work in progress.
Some retailers say they are frustrated by Meta’s e-commerce rollout, noting that the service is missing basic components such as the ability to display products in different colors and sizes if they aren’t sold directly through Facebook and Instagram, limit where a merchant can ship items and provide next-day or same-day deliveries. Other stores, though, see the promise of connecting with shoppers through the large user bases of Facebook and Instagram.
At least five senior executives have left in the past six months, according to a former senior executive in the division. Facebook is confident in its e-commerce business.
“Building a full-fledged commerce platform is a multiyear journey—one that became a company priority less than two years ago,” said Joe Osborne, a spokesperson for Meta. “We’re proud of our progress and in the teams working to build out these experiences.”
Meta began ramping up its efforts in e-commerce during the early days of the pandemic, launching features called Facebook and Instagram Shops in May 2020.
The shops let brands post their catalogs directly on Facebook and Instagram. Some brands use the shops to direct users to purchase on their websites while others choose to sell the items to users via Meta’s services.
Meta also started bracing for the impact of privacy changes Apple Inc. announced in June 2020 for its iPhone and iPad devices. Those changes, which rolled out in April 2021, allowed users to opt out of having their activity on their devices tracked by companies like Meta. That tracking data was critical to how Meta measures the effectiveness of advertisements. The loss of that data drove advertisers elsewhere, putting a major dent in the company’s earnings for the past two quarters.
Apple iPhone and iPad users can opt out of having their activity on their devices tracked by companies like Meta.
Photo: Gabby Jones/Bloomberg News
Since February, when Meta posted disappointing user growth and revenue and said Apple’s new policy would cost more than $10 billion in lost sales for 2022, the company’s shares have dropped more than 34%. That is equivalent 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 would be spending more as the company pivots to the metaverse, a virtual world where people work, play and interact.
Online shopping offers a way to ease the impact from the Apple changes. By developing channels of commerce within its apps, Meta can measure the effectiveness of ads within its own services and reclaim some of the data it lost. The potential is significant: Amazon.com Inc., which dominates in e-commerce, reported $7.88 billion in ad sales in its most recent quarter, a 23% increase from the same period a year ago.
Meta doesn’t break out results from its shopping business, but CEO Mark Zuckerberg said last week that the company recently saw a pullback in e-commerce usage. Other online retailers, like Amazon, have also talked about an e-commerce slowdown as more Covid-19 restrictions are lifted and people return to in-person shopping in recent months.
“Other challenges are broader macro trends, like the softness in e-commerce after the acceleration we saw during the pandemic,” Mr. Zuckerberg said.
Among commerce’s most notable departures are Vice President of Commerce Business and Operations Gene Alston, who announced in Meta’s Workplace recently that he would be leaving the company, according to people familiar with the matter. Mr. Alston had been responsible for all strategy and teams for commerce products across Meta’s family of apps. Roi Tiger, vice president of engineering for commerce across the company, also announced his departure on Workplace, according to a person familiar with the matter. Eddie Garcia, who previously served as chief product officer for Sam’s Club and was brought in last June to run the company’s Marketplace feature, left the company in March and was recently announced as eBay Inc.’s chief product officer.
Chris Olaniran is a user who wanted to create an Instagram Shop for his clothing brand, Vital Clothing. That process required setups on both Facebook and Instagram, and in Mr. Olaniran’s case, on Shopify Inc., a Canadian e-commerce company that he uses to host his online store. “This is where I first realized, OK, this is a lot more complicated than I thought,” he said.
After making the necessary changes to both his Instagram and Facebook accounts, linking them to his product catalog in Shopify and getting approval to sell, Mr. Olaniran struggled to get all of his items to appear in the shop. He said he never figured out how to get changes to his product catalog to show up. “You would think that there would be some sort of accessible method of support, but after trying to solve the issue myself, it really became apparent that it’s really the exact opposite,” he said. Meta said businesses can get support in a number of ways and pointed to an online help center.
Mr. Olaniran eventually abandoned the idea of having an Instagram Shop. “I’ve started the process of setting up an Etsy store to have in combination with my website,” he said. “It just really comes down to, is it worth my time?”
Meta recently began showing a promotion to Instagram users, offering them 20% off when they make their first e-commerce order through the social network. More notably, the company is set to expand the availability of ads within the Facebook and Instagram Shops feature, a format it announced in June 2021, in which ads send users to curated collections from a shop or a business’s website.
There are approximately 200 sellers doing early testing of Shops ads, according to a Meta employee.
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 influencer-driven apparel brand Revolve 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 a part of the overall suite of options that we have for our customer,” he said.
Kevin Gould, founder and CEO of Kombo Ventures, a holding company with brands that sell products on Instagram, said he would like to see Meta do a large awareness campaign introducing Facebook and Instagram Shops to users. Better integration with Shopify, and adding features like discount code support, would make the commerce offerings more compelling, he said. Facebook says it added some discount features in late 2020.
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Some merchants are seeing sales growth through Facebook and Instagram Shops.
Facebook and Instagram drive about 50% of revenue for BlendJet Inc., a portable blender company, said CEO Ryan Pamplin, but most of that comes from ads that point consumers to BlendJet’s website. In recent months, the company has seen an uptick in sales directly on its Facebook and Instagram Shops, Mr. Pamplin said. This year through April, BlendJet’s sales on Meta’s commerce features are up about 300% compared with the year-earlier period, he said.
Mr. Pamplin attributed the uptick to a number of shopping features Meta has recently added, including product reviews and expanded product descriptions. Mr. Pamplin said some important features are still missing—most notably the ability to add more than one photo for each color of a product or the ability to include videos for products—but he said he has faith in Meta’s commerce teams.
“I’ve been involved as an advertiser for a very long time, and I’ve adopted everything that they’ve come out with,” Mr. Pamplin said. “And, you know, I’m loyal to the results.”
Write to Salvador Rodriguez at [email protected] and Charity L. Scott at [email protected]
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