Facebook stock rose 5% on Wednesday to a new high of $228.20 after the company announced a new feature called Shops, a virtual mall designed to help businesses suffering during COVID-19.
Shops, announced Tuesday, will “make it easy for businesses to set up a single online store for customers to access on both Facebook and Instagram,” the tech giant said. After setting up a free shop account, merchants can customize the look and feel of their virtual storefront. “This means any seller, no matter their size or budget, can bring their business online and connect with customers wherever and whenever it’s convenient for them,” the company said. Orders can then go through the website run by the business or without leaving the app if they have enabled a payment setup on Facebook.
“We’re seeing a lot of small businesses that never had online presences get online for the first time, and we’re seeing small businesses that had online presences now make them their primary way of doing business,” Facebook CEO Mark Zuckerberg said Tuesday during a livestreamed appearance promoting the new initiative. “For lots of small businesses during this period, this is the difference between staying afloat and going under.”
While COVID-19 has decimated businesses of all sizes, curtailing consumer spending and confidence and boosting unemployment to Great Depression levels, the value of small and medium-sized businesses (SMBs) is considerable. Morgan Stanley analyst Brian Nowak said the roughly $20 billion spent each year on advertising by SMBs is probably “only scratching the surface” given their estimated $3 trillion in total revenue.
Stay-at-home orders in many parts of the world have boosted social commerce, Nowak added, making digital platforms even more crucial to the fortunes of businesses. “We see a multi-billion dollar annual opportunity for Facebook here,” he wrote Wednesday in a note to clients.
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