Users will see Shop Pay, which stores customers’ payment and shipping information, as a payment option on Facebook Pay, in addition to paying by credit card or via PayPal. Once a purchase is made, consumers can track their orders through Shop Pay.
Shopify’s stock closed up 7% with Tuesday’s news. The company’s shares nearly tripled last year.
Research firm eMarketer predicted in a report this month that sales of people who buy products on social media platforms like Instagram, TikTok, Snapchat, Pinterest and others and who buy products through social media apps will increase nearly 35% in United States this year to $ 36.4 billion.
“It’s growing rapidly, but it’s still a small percentage of retail sales,” said Andrew Lipsman, an analyst at eMarketer. It is unclear how big this will end up in the United States.
Lipsman said Shop Pay would not be a “game changer” to get more consumers to buy products on social media platforms, but it would help speed up checkouts on Facebook and Instagram.
The partnership is significant for Shopify because it is the first time Shop Pay has expanded outside the Shopify platform, giving it a wider distribution and the potential to reach more customers, said Lipsman. Shopify, which makes money mainly from selling tools to companies to help them manage their online stores, is likely to benefit from purchases made through the partnership, as well as increased brand awareness among consumers.
Shop Pay was launched in 2017 and Shopify said the checkout system was used to buy almost $ 20 billion worth of merchandise.
—CNN Business’ Kaya Yurieff contributed to this article.