WhatsApp launches test of in-app business directory feature for first time

Facebook's messaging service WhatsApp on Wednesday launched a new feature to make it possible to search for businesses within its app for the first time, the company told Reuters.

The test in São Paulo, Brazil, which allows WhatsApp users to find shops and services through a directory in the app, is the latest feature in Facebook's drive to bolster ecommerce on its services.

"This could be ... the primary way that people start a commerce process in WhatsApp," Matt Idema, Facebook's vice president of business messaging, said in an interview this week.

WhatsApp, unlike Facebook and Instagram, does not run ads in its app. Idema said previously businesses were promoting their WhatsApp numbers on packaging or websites or using Facebook ads to bring users into chats on WhatsApp.

The messaging service has increasingly courted business users, with a specialized app for small firms and an API, or type of software interface, for larger businesses to connect their systems, which generates revenue.

As online retail has continued to boom during the COVID-19 pandemic, Facebook has pushed in-app shopping features across its apps. In June, Zuckerberg announced Facebook's Shops feature would expand to WhatsApp in several countries. In recent years, WhatsApp also has also launched shopping tools like product catalogs and shopping carts.

WhatsApp said the new test would include thousands of businesses in categories like food, retail and local services across certain São Paulo neighborhoods. Idema said India and Indonesia were good next candidates to expand the feature.

The company, which has faced user backlash amid confusion over privacy updates and was fined by the Irish data protection regulator over privacy breaches, said it will not know or store the location of people's search or results through the new directory feature.

Idema did not rule out the possibility that WhatsApp could introduce in-app ads in the future.

"There's definitely a route on ads, which is Facebook's core business model, that over the long term I think in some form or another will be part of the business model for WhatsApp," he said. WhatsApp says about one million advertisers currently use Facebook and Instagram's 'click to WhatsApp' ads to send users to the messaging app.

Idema said WhatsApp, which Facebook bought for $19 billion in a landmark 2014 deal but which has been slow to monetize its features, was also excited about non-ad models like building software to help businesses to manage their services across Facebook's apps.