Facebook : Tries to Friend Small Businesses Crippled by Coronavirus

By Jeff Horwitz

Enrique Marquez stopped advertising his dog-obedience classes on Facebook during the pandemic, and instead started using the platform to live-stream sessions and conduct training via chat.

That is a trade Facebook Inc. is increasingly willing to make as it tries to turn itself into a go-to e-commerce and communication platform for small businesses crippled by the coronavirus.

After years of moving tentatively on e-commerce, the social-media giant in recent months has announced new services aimed at helping smaller businesses such as DogWorx, Mr. Marquez's Savannah, Ga.-based company. It hopes that making it easier for such companies to use its platform will fuel new growth in its core advertising business.

"Our business model here is ads," Chief Executive Mark Zuckerberg said last month when he launched Facebook Shops, which will allow sellers to offer personalized virtual storefronts. "We'll eventually make money that way."

Other new small-business focused products Facebook has recently launched include a click-for-delivery feature for restaurants, gift-card options and fundraisers for coronavirus-stricken businesses. The company says businesses will be able to sample from the tools a la carte, to ease concerns among owners about becoming overly reliant on the social network.

Facebook has moved slowly on commerce in the past. After letting a group of major brands experiment with in-app purchases on Instagram more than a year ago, Facebook still hasn't made those features available to businesses platform-wide.

"Especially for small businesses, these tools are tied to people's livelihoods, and we have to get it right," Facebook Chief Operating Officer Sheryl Sandberg told The Wall Street Journal this week, describing Facebook's pace as "deliberate."

"Commerce is something they've been nibbling around the edges of for so long," said Debra Aho Williamson, principal analyst at eMarketer. "The fact that Facebook is pushing this forward with small business in its sights could make social commerce much bigger than it is now."

Within a few weeks of Mr. Marquez's pivot, as many as 800 people were watching his videos, many peppering him with questions. His efforts brought in about $9,000 in digital sales in April, about a fifth of what he says his in-person business garnered in a pre-coronavirus month. Mr. Marquez said that even when customers return to in-person training, paid video will likely remain part of his business.

"There's a high demand for online courses that I was not aware of," said Mr. Marquez, who has hired a videographer to help him make more professional content. Mr. Marquez is one of about 60 small-business owners that Facebook consults with about its product offerings on an unpaid basis.

Facebook has largely couched its efforts less as a corporate opportunity than as a chance to aid suffering businesses.

"There's an expectation that small businesses will be under extreme duress for quite a while," Ms. Sandberg said. Facebook has promoted applications to government-relief programs, paid for surveys showing that nearly a third of small businesses aren't operating and pledged $100 million in grants and ad credits to small businesses in cities world-wide where Facebook has physical operations.

Some of Facebook's new products might seem familiar. Facebook Shops functions similarly to existing online marketplaces such as Etsy Inc. Meanwhile, other new features may be more familiar to users in developing markets such as India, including tools that allow users to sell items via live streams in a sort of one-user home-shopping network.

Facebook's e-commerce efforts could benefit from its other business lines. Its shops, which will be the same on Facebook and Instagram, will eventually be customized according to user data such as gender, demographics and interests, allowing businesses to piggyback on some of the data the social-media giant collects. Facebook's direct-messaging services also could be better customized for selling.

"Businesses around the world were already using WhatsApp and Messenger to reach customers," Ms. Sandberg said, adding that the company would likely build out more e-commerce messaging features.

To what degree businesses are embracing Facebook's product blitz isn't clear, and Facebook wouldn't provide numbers for its gift-card sales, fundraisers or other recently launched small-business promotion tools.

Most of the tools Facebook has announced are free to use. Its only charge for sales through Facebook Shops is a 5% payment-processing fee, lower than many online-shopping platforms.

"The historical precedent I'd look to is the earliest days, where Facebook invited businesses of all sizes to build a page and build out those services for free," said Ms. Williamson of eMarketer. "A few years after that, Facebook started to reduce the reach of organic posts so not as many people who followed those pages would actually see them unless the companies bought advertising."

The prospect that using Facebook's new tools could leave businesses more dependent on the company's platforms concerns Travis Laurendine, a New Orleans-based tech entrepreneur and manager for 15 musicians. But the platform's advantages as a forum for paid events are obvious, he said.

Early in the pandemic he built a live-streaming platform for musicians to perform for tips from homebound audiences. Sofa King Fest has drawn more than a million users and raised $200,000 in tips for musicians delivered independently through services such as PayPal, Venmo and Cash App.

"It's inefficient," he said of the payment options, which require viewers to leave the live stream to donate.

Facebook paid live streams could do away with that problem, he said. Despite his concerns about Facebook, he said the benefits might be overwhelming.

"Do the artists want to have Facebook in the middle of their money? The answer's probably 'no,'" he said. "But you have to go where your customers are. I'm here for it."

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