Facebook (NASDAQ:FB) has long had ambitions beyond just being an advertising business. The company's 2014 acquisition of Oculus gave it a stake in virtual reality, and its launch of hardware like Portal shows its intentions in video communication products.

But the company's biggest opportunity outside of advertising, which makes up the vast majority of its revenue, appears to be e-commerce. Not only is e-commerce a fast-growing global market representing trillions of dollars in sales, but Facebook and its family of sites including Instagram, Messenger, WhatsApp also provide a crucial platform to 140 million small businesses around the world.

On the recent earnings call, management dropped a number of hints about the company's aspirations in e-commerce. COO Sheryl Sandberg asserted that the company has been a lifeline for many businesses during the coronavirus crisis as more and more businesses pivot to the online channel while brick-and-mortar storefronts are closed.

Sandberg said: "Even in the United States before the crisis, one in three companies didn't have a website because they can be expensive and difficult to set up even in the best of times. A Facebook Page or Instagram Business Profile is free and in a matter of minutes establishes a digital storefront." Facebook effectively serves as a modern-day Yellow Pages and is a valuable portal for many businesses to connect with existing customers and find new ones.

In recent weeks, Facebook made gift cards available for small businesses on Facebook and Instagram, and enabled them to hold fundraisers, functions that border on e-commerce. Sandberg also said the company had launched a Business Resource Hub in March to give small businesses help with online sales, among other things. 

Mark Zuckerberg speaking at the Facebook F8 conference

Image source: Facebook.

A big move in India

The week before its earnings report, Facebook announced a $5.7 billion investment in Jio Platforms, India's largest mobile network operator. India represents Facebook's largest user base, so it's not surprising the company would make such a large investment there.

But the social network is clearly focused on the business opportunity with Jio. In the announcement, Facebook said, "For instance, by bringing together JioMart, Jio's small business initiative, with the power of WhatsApp, we can enable people to connect with businesses, shop and ultimately purchase products in a seamless mobile experience." Facebook also said its platform was one of the biggest enablers of growth for small businesses in India, and CEO Mark Zuckerberg again touted the opportunity on the earnings call, saying: "By bringing together JioMart with WhatsApp, we think that we're going to be able to create a much better shopping experience. There's a lot more we can do here, and I'm looking forward to making progress with the team at Jio."

Facebook isn't alone in spying the online retail opportunity in India. Amazon.com has plowed at least $5 billion into building out its e-commerce business in India, while Walmart plunked down $16 billion for majority control of Flipkart, India's biggest online seller. India will soon be the biggest country in the world by population and is projected to be the world's second-biggest economy as soon as a decade from now. 

The payments puzzle

Facebook has had designs on a payments business for years. It launched Facebook Pay last November, which is available on each of its four main apps, and it's still looking for ways to build out its Libra blockchain-based payment consortium.

Payments seem like an obvious next step for the social media giant. Not only does facilitating peer-to-peer payments strengthen the value of its social network, but it also provides a basic function for businesses and helps build relationships with its advertising partners and other enterprises on its platform as well as giving it an additional revenue stream. While the company lags behind competitors like Paypal's Venmo and Square's Cash app, payments are a natural opportunity for Facebook, and its social network of nearly 3 billion users around the world gives it a built-in advantage.

Putting it all together

Facebook already has many of the pieces in place to break into e-commerce, including close-knit relationships with millions of businesses, a budding payments system, a valuable partner in India, and (perhaps most important) skyrocketing demand as brick-and-mortar storefronts are closed down and millions of businesses are looking to establish an e-commerce lifeline. The company has already tested a pilot, allowing brands like Nike to sell directly through Instagram, showing that both the infrastructure and interest are there to facilitate e-commerce.

On the call, Zuckerberg alluded to a new product launch coming soon, saying: "With so many businesses forced to close their physical storefronts, more are looking to build their digital presences, and those who already invested in their digital presences are increasingly viewing them as their primary storefronts. We're working on a number of ways to deepen this experience -- helping people buy items and services directly within our apps -- and we'll have a lot more to share soon."

Don't be surprised to see Facebook launch a new e-commerce product later this year. It could be a game-changer.