Millions of local businesses have long treated Facebook (FB) - Get Facebook, Inc. Class A Report as a valuable means of connecting with current and potential customers. Now, the social networking giant is making it possible for these businesses to conduct transactions on its site and apps.
The move arguably represents a slight threat to Yelp (YELP) - Get Yelp Inc Reportand Angie's List (ANGI) - Get ANGI Homeservices Inc Class A Report, and to Google's growing local ad business. More importantly, it could increase the appeal of Facebook's news feed ads for some businesses, provide the company with additional commerce data and give Facebook users one more reason to log in.
On Wednesday, Facebook announced users will be able to order food, book appointments and get quotes from local establishments via their business pages, as well as buy tickets for movies and other events. Some of these services are made possible via partnerships with sites such as Delivery.com, Slice, Fandango and Ticketmaster, while others are directly handled by Facebook itself.
Also, the company rolled out a feature that allows a user's friends to respond to a request for recommendations on local venues by providing suggestions that are placed on a map and come with links to Facebook pages. And Facebook's Events page has been revamped to make it easier to explore local events.
Yelp, which has often sold off in response to attempts by Facebook to encroach on its turf -- shares fell last December when Facebook launched a professional services directory -- fell 2% on Wednesday and were down another 1.8% on Thursday morning. Angie's List fell 1.4% on Wednesday and were down 0.2% on Thursday.
Facebook's new ordering/booking features do replicate some of the local commerce solutions Yelp and Alphabet's (GOOGL) - Get Alphabet Inc. Class A ReportGoogle have been baking into their platforms. On some Yelp business pages, users can book reservations, order delivery and buy vouchers. And certain Google local business searches turn up similar options, courtesy of deals with sites like OpenTable and GrubHub (GRUB) - Get Grubhub, Inc. Report.
For a user interested in patronizing a specific local business, Facebook is giving him or her another reason not to bother with Google or Yelp, and just pull up the business' Facebook page. If an order is placed, Facebook just obtained more data about that user's buying habits.
But it's worth keeping in mind that a lot of the local search activity on Yelp, Google Search and Google Maps involves queries for types of businesses -- say, Italian restaurants or barber shops -- rather than a specific one. While Facebook supports those kinds of searches as well, it's not exactly the first choice for most consumers, and its new features don't do much to change that.
Moreover, Yelp still has an edge on all rivals when it comes to the breadth and quality of its reviews. And for both Yelp and Google, inertia remains an advantage: Consumers have grown accustomed to relying on their platforms for local searches, and getting them to change their habits can be tough.
On the other hand, many of the local businesses advertising on Facebook's news feed would doubtlessly like the chance to let ad-viewers carry out transactions by clicking or tapping on a button within the ad. Much like Facebook's buy buttons, such a feature lets news feed ads go deeper into the proverbial purchase funnel, which in turn can motivate businesses to buy more ads and/or pay higher ad prices.
These ads are more complementary to Google's and Yelp's ads than competitive. Whereas Google's or Yelp's offerings are linked to what users are searching for at a given moment, Facebook's provide recommendations while a user is browsing the news feed by leveraging the large amounts of data Facebook has on the user and the likes of his/her friends'. Investing in one type of ad doesn't necessarily change the incentive to invest in another.
Either way, with Facebook claiming over four million advertisers (many of them local businesses) and the average American user spending about 45 minutes per day on Facebook's platform (much of it on the company's mobile apps), the company is pretty well positioned to be a major local commerce player. Its latest move fills in another piece to the puzzle.