Facebook has introduced the “Facebook Shop” service, enabling users to engage in digital commerce directly through the social network. Ayxan Qadashev, manager of the Azexport.az portal under the Center for Analysis of Economic Reforms and Communication (CAERC) of the Republic of Azerbaijan, answered questions regarding the advantages of this new service and its potential application in our country.

How do you evaluate the introduction of product sales within Facebook?

Small and medium-sized businesses were significantly affected by the restrictive measures introduced to prevent the spread of the COVID-19 pandemic. One of the main reasons is that businesses in this category often lack a “financial cushion,” meaning sufficient funds to manage potential future crises. Even when some financial resources exist, they are usually limited to the short term.

The new service developed by Facebook allows manufacturers to offer their products and services directly to customers through a digital sales channel without incurring additional costs. Thus, Facebook Shop can also be considered a significant support tool for small businesses to help them reduce losses during financial crises.

Can Facebook Shop compete with Amazon?

Before answering, it is worth considering several statistics. Facebook had 2.6 billion active users in March 2020 alone. On a daily basis, 1.7 billion people visit the platform. In the first quarter of the same year, the company reported advertising revenue of 17.4 billion USD.

As for Amazon, according to data provided by Oberlo, a record 150 million people used Amazon’s mobile application for online shopping in September 2019. According to Statista.com, Amazon receives around 213 million monthly visits. The company also reported 75.5 billion USD in sales and 2.5 billion USD in net profit in the first quarter of 2020. In addition, it is known that small and medium-sized businesses in the United States sell more than 4,000 products per minute on Amazon, and 67% of all products sold on the platform belong to SMEs. According to a survey by BigCommerce, 90% of respondents stated that they prefer to purchase a product from Amazon even if it is also available on competing platforms.

According to Facebook, the new service was not created for profit generation but to support SMEs during the pandemic period. Therefore, users are initially only charged minimal banking commission fees during payment transactions. On Amazon, however, a commission of 14–20% per item or a fixed monthly subscription fee is charged.

Considering these factors, it is possible that Facebook may achieve some initial success. However, it should also be noted that people develop habits over time. One of these habits is perceiving Facebook primarily as a platform for communication and discussion rather than a commercial marketplace. Although there are differences in visitor numbers and commission structures, unless Facebook offers significantly stronger advantages against Amazon, sustaining long-term competition may not be easy.

How interested will Azerbaijani companies be in Facebook’s new opportunities? Is widespread adoption expected in the country?

The service launched by Facebook is currently in a testing phase and is fully functional only in the United States. In the next stage, it is planned to expand all features to Western European countries. This includes online payment processing through Facebook and home delivery services.

In other countries, Facebook Shop currently functions mainly as a product showcase. At present, I do not expect the service to gain widespread popularity or usage. However, if it successfully completes testing in the U.S. market and becomes fully functional in other countries, I believe it will also see broader adoption in our country.

Is integration of Azexport.az with Facebook Shop on the agenda?

Currently, the Azexport.az portal is integrated with major global digital trade platforms such as Amazon.com, Alibaba.com, Agroserver.ru, All.biz, and Go4WorldBusiness.com to promote “Made in Azerbaijan” products in international markets.

As a result of these integrations, from January 2017 to April 30, 2020 (over 40 months), export orders worth 1.8 billion USD have been received from 141 countries. The portal’s successful operations have expanded our export geography, increasing exports to regions such as Arab countries, Oceania, and the Americas, where food and pharmaceutical exports were previously limited or impossible.

The portal operates on the principle of achieving maximum efficiency with minimal costs through effective resource utilization. In this regard, after Facebook Shop completes its testing phase in the United States and becomes fully functional, detailed analyses will be conducted. Based on the results of these analyses, a decision will be made regarding future integration with the platform.