Facebook is helping small and mid-sized businesses access consumer demand in a global digital marketplace…
Currently, Facebook is among a number of catalysts behind the breakdown of supply chains and the mass digitization of consumer and brand interactions – i.e., traditional supply and demand dynamics. Prior to the Internet Revolution, manufacturers teamed up with distributors and retailers to introduce products to consumers with long lead times and equally long supply chains. Today, the internet has made distribution of all kinds – digital media content, consumer products, and ondemand services – a cheap commodity or free. In this world, markets have increasingly become demand driven. Consumers pull products and services that they desire immediately and advertisers aggressively target groups that fit their ideal customer profiles.
Facebook is a driving force behind this transformation of the supply chain and the platform is particularly good at enabling small- and midsize businesses to participate in the digital global economy. This is a focal point of Facebook’s strategy to date, as Sheryl Sandberg, Facebook’s COO, further emphasized in the Q3 2017 earnings call: “Today, we’re announcing that Facebook has over 6 million active advertisers…the vast majority of these are small- and medium-sized businesses, which are a major source of innovation and create more than half of all new jobs globally. These businesses often have small ad budgets, so the ability to reach people more effectively is really valuable to them.” Facebook began as a social network and has become so much more as it adapts to the changing realities of an internet-centric economy.
The below charts illustrate the impact on the global supply chain of the Internet Revolution. The advent of a platform like Facebook allows consumers to indicate interest in certain products and services and for companies to respond directly to those preferences, rather than the other way around. 
…and the transformative impacts of Facebook’s platform for small- and midsize businesses include targeted advertising and the ability to participate in a globalized marketplace…
Facebook’s platform enables small and midsize businesses with limited advertising budgets to reach customers directly and efficiently. Businesses can target customers through business pages and audience targeting tools that can be segmented by geography, demographics, lifestyle, and purchase behavior. For instance, Pair of Thieves, an eCommerce company that sells an array of socks, shirts, and underwear, ran a highly successful 3-part holiday campaign that resulted in an 8.3x increase in online sales and a 12.2x increase in website traffic. The 3-part campaign consisted first of identifying the best performing creative advertisement through Facebook’s analytics and serving this ad to more Facebook users, second of running Holiday specific ads on Black Friday, Cyber Monday, and Christmas, and finally of retargeting website visitors. This campaign utilized dynamic ads, video ads, customer audiences, and lookalike audiences.
Additionally, Facebook’s platform enables brands to expand with ease internationally and utilize the Company’s dynamic language optimization technology to advertise across 6 different languages with one advertisement. For instance, if a business wants to advertise across the European continent they can do so cost efficiently. Employing Facebook’s Lookalike Audience tool, businesses are able to provide a source set of customers to target and Facebook can clone those across countries and geographies. As an example, west elm, the home brand subsidiary of Williams-Sonoma expanded to the UK and targeted a UK audience most likely to buy its products. It utilized the Lookalike Audience targeting tool resulting in 3.3x increase in website traffic, a 40% increase in purchase rate, and reached 1.6 million prospective new customers.
…but in the future, Facebook should take a more active role in eCommerce: become a comprehensive online marketplace where brands and customers come together to solve each person’s unique preferences…
Today, Facebook primarily serves as a platform for advertisers to push traffic towards their dedicated eCommerce sites that are often owned and manned by individual businesses. Expanding services that mirror marketplaces in Amazon, for instance, would put Facebook in a position to capitalize on its massive active user base and advertisers. As the world becomes increasingly customizable, Facebook’s measurement and targeting tools can be utilized to set up a personalized mall for consumers. Messenger can be utilized to set up customer service chats with prospective customers as they peruse product inventory. In addition to the Facebook platform, Instagram is a perfect platform to deliver a Pinterest-esque service but with the ability to immediately purchase products. In the future, Facebook should strive to go beyond a simple social media and targeted advertising platform to truly integrate itself as a platform that brings together businesses and consumers in an incredibly unique and targeted way.
…though this strategy leaves much to contemplate.
I’m interested in hearing about my classmate’s perspectives on the future of small- and midsize businesses on the platform in the future, the feasibility of a Facebook marketplace, and Amazon/Alibaba’s reaction to such a move.
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 Facebook, Inc., Q3 2017 Earnings Call, November 1, 2017.
 Stratechery by Ben Thomson, “Manifestos and Monopolies”, February 21, 2017.
 Facebook Blueprint, “Targeting the Right Audience”, https://www.facebook.com/blueprint/courses/category/targeting?ref=fbb_raise_awareness
 Facebook Business, Success Stories, “Pair of Theives”, https://www.facebook.com/business/success/pair-of-thieves
 Facebook Business, “Lookalike Audiences”, https://www.facebook.com/business/help/1589915247700182
 Facebook Business, Success Stories, “west elm”, https://www.facebook.com/business/success/west-elm-uk