By Ann-Marie Alcántara
Shopify Inc., a commerce platform for businesses, is bringing
its checkout and payment processing system, Shop Pay, to some
Facebook Inc. platforms.
The Shop Pay option will first be available to Instagram users
on Tuesday and will roll out on Facebook Shops, the social-media
company's platform for small businesses, in the next few weeks.
Consumers will be able to use Shop Pay to complete purchases,
expanding on existing options to use PayPal Holdings Inc.'s PayPal
or manually enter credit or debit card information. All these
methods are offered via the Facebook Pay payment system.
Shop Pay, which stores credit card and shipping information to
speed online checkout, hasn't previously been available outside the
e-commerce stores of Shopify clients.
Facebook and Instagram have been working to become venues for
people to discover products and easily buy them -- part of a
growing area known as social commerce.
Social commerce spending is expected to rise 34.8% in the U.S.
this year to $36.09 billion, counting purchases made on a social
platform or by clicking directly on an advertisement or other
content in social media, according to a report from eMarketer, a
But only 9% of consumers buying through social platforms did so
on a regular basis, according to an eMarketer survey conducted last
August. And only 18.7% of consumers who purchased items via social
commerce used the available checkout features, while 57.8% clicked
away and bought directly on a retailer's website, according to a
different eMarketer survey in June. Social-media companies would
rather keep users on their platforms.
Shop Pay is designed to reduce purchase friction and make it
easier to buy something without entering credit card or shipping
information for every order.
Registered users would select Shop Pay at checkout, enter the
email address and phone number associated with the account, and
receive a code to verify it is them the first time they use it on
Facebook Shops or Instagram. Shop Pay also helps users track a
package via the Shop app, offers the option to pay in installments
and promises to offset the carbon emissions associated with each
delivery, said Carl Rivera, general manager of Shop. The company
protects "an equivalent number of trees" to offset emissions,
according to its website.
Shopify continually tries to improve each aspect of the Shop Pay
experience, Mr. Rivera said. The company is striving to "create
more transparency about how we're doing carbon emissions, show that
to the user; make the checkout even faster; work on tiny tweaks and
improvements that are slowly driving the conversion up and up," he
"We believe there's a lot of merit and a lot of value to taking
something small and perhaps, underappreciated and turn it into
something akin to a magical experience," he added.
Giving social-media users more ways to easily pay without having
to click might encourage impulse purchases and more frequent
buying, industry experts said.
But Shop Pay isn't well known enough or different enough to
quickly boost sales, said Jason Goldberg, chief commerce strategy
officer at Publicis Groupe SA, the advertising holding company.
"Shopify Pay has some momentum and it's growing and it's smart
to support, but it's unlikely to dramatically increase the pool of
shoppers on Facebook that are able to pay with a digital wallet,"
Mr. Goldberg said.
"Consumers aren't likely to pick what they want to buy and how
they want to pay for it based on their ability to track those
purchases in some third-party app," Mr. Goldberg added.
Shop Pay has 60 million global users, Shopify said in its latest
quarterly earnings report.
PayPal, which also offers features such as installment payment
plans, reported 377 million active accounts, adding 16 million new
ones, in the most recent quarter.
The payment experience, of course, is only one part of the
equation for shoppers.
While social commerce will become a more common consumer
behavior over time, it works best for impulse purchases in
categories such as beauty, fashion and home décor, said Andrew
Lipsman, principal analyst at eMarketer.
"People need to be highly engaged, they have to have a really
strong brand affinity, they have to have a high level of desire,
and they have to almost feel that impulse to want to purchase in
the moment in a lot of cases in order for that checkout to happen,"
Mr. Lipsman said.
Write to Ann-Marie Alcántara at email@example.com
(END) Dow Jones Newswires
February 09, 2021 09:14 ET (14:14 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.