E-Commerce   /   December 2, 2020

Why Facebook is investing in customer service as its commerce ambitions grow

As Facebook is seeking to become more of a commerce platform, it’s also increasingly interested in acquiring services to assist the e-commerce and retail companies it is trying to court.

That’s evidenced by Facebook’s latest acquisition, disclosed on Monday. The social media giant announced its intent to acquire Kustomer, a customer service platform that counts Birkenstock and Glossier among its customers. Kustomer purports to help companies manage customer service interactions across multiple channels — like SMS and social media — in one place, and to help automate some customer service tasks. Facebook did not disclose the price of the acquisition, which still needs to close, but the Wall Street Journal reported that the deal will allegedly value Kustomer at $1 billion.

Facebook’s acquisition of Kustomer comes at a time when the company is trying to get people to buy more through its various apps. The social media giant launched Instagram Checkout last year, for example, as well as introduced customizable online storefronts, called Shops, earlier this year. But getting people to buy more on Facebook’s apps doesn’t just depend on making it easier for people to enter their credit card number. It also depends upon convincing e-commerce companies to turn to Facebook for more of the necessary services to facilitate a transaction, including customer service.

“I think this is just further evidence that [Facebook] is committed to completing the customer conversion and retention lifecycle,” said Kyle Rees, director of research at Gartner’s marketing practice.

In the press release announcing the acquisition, Facebook did not share many details about how it plans to further integrate its apps with Kustomer once the transaction closes, only that the company “plans to support Kustomer’s operations by providing the resources it needs to scale its business.” Facebook also noted in its statement that the company would continue to support integrations for other CRM platforms besides Kustomer.

As social media usage has grown, more people have turned to platforms including Facebook to communicate with businesses. Facebook has said that 175 million people message businesses on WhatsApp each day. As Modern Retail previously reported, some small retail companies have also reported seeing an increase in customer questions received through Instagram during the pandemic, while their stores were closed.

The most prominent examples of people using social media for customer service are customers who take to Facebook or Instagram to air grievances with a company after a transaction — whether that’s a flight delay, or to complain about a product that arrived damaged. However, as more people use Instagram, Facebook or WhatsApp to buy items, it also increases the likelihood that they are going to want to use those apps to communicate with a company during a transaction.

“I think with the acquisition of Kustomer, this is planning for the continued adoption or increased frequency of using social media…for more commerce-related interactions,” said Rees. “Not necessarily just a complaint or a diatribe about why a brand is bad, but to manage more of the checkout, fulfillment or delivery experience.”

Prior to the Kustomer acquisition, the main way that Facebook tried to make it easier for companies to use its apps for customer service was through partnerships and integrations, allowing CRM services like Kustomer to integrate with its business APIs. Facebook has also for years touted the ability for developers to create chatbots through Messenger, though fully automated chatbots have yet to take off in the way that its proponents had initially hoped.

But particularly with the launch of Checkout, Facebook has started to take on more responsibility for other parts of the buying process. For example, with Checkout, Facebook sends order and shipping confirmation emails to the customer — not the company the customer is buying from.

As such, acquiring Kustomer will also give Facebook more in-house tools to communicate with Checkout customers. And, to potentially start to fulfill more complicated customer service questions for Checkout customers later down the line, like how to make exchanges. Additionally, the Kustomer acquisition will give Facebook more insight into customer service queries beyond just what it is seeing on its own platform.

Andrew Lipsman, e-commerce analyst at eMarketer said that one of the biggest factors impeding the growth of Checkout is the fact that brands have to give up some control over their relationship with the customer in the name of faster Checkout. Facebook has not disclosed how many brands in total are using Checkout, only that “hundreds” of brands are using it, including Uniqlo, H&M, Target and Zara.

Depending upon how Facebook further integrates its services with Kustomer, it could actually impede Facebook’s hope that retailers will use its apps more for customer service, if retailers feel like Facebook is driving a wedge between them and their shoppers.

“I think what [Facebook] is trying do do is put the assets in place to give retailers more reason to get on board [with commerce on Facebook],” said Lipsman. But, he said that Facebook will have to contend with the fact that “[brands] don’t want to necessarily relinquish control, they don’t want to give up their data, and they don’t want to give up the customer experience to an intermediary.”

Future Leader Awards
Jan 22, 2021

Recognizing the next generation of leaders across media and marketing, fashion, beauty and retail.

Remind Me