Twitter Trying Social Commerce

 

Twitter has recently purchased a Buy-Now Button to demonstrate more monetization options for a company that keeps losing money. In its current form, the button routes the users to the retailer’s checkout page however, they are working towards enabling a one-click purchase button. Rumor has it that Twitter might start their own payment system where they would hold credit card and shipping details, take the payment and then pass the information over to the retailer. Facebook attempted a similar move in September 2012, when it launched the Gifts spin-off that allowed users to buy physical goods from the site. They scrapped the scheme after less than a year due to a lack of user demand. Twitter’s push into e-commerce builds on last year’s “pay by tweet” experiments in partnership with American Express and comes at a time when the company is going through massive change. Last month, Twitter’s number-two executive, Ali Rowghani, resigned as chief operating officer. Then, Twitter’s vice president of Media, Chloe Sladden, resigned. Then most recently, Anthony Noto, an ex–Goldman Sachs (GS) banker, replaced Mike Gupta as chief financial officer. These changes in senior management happened within less than a year of Twitter’s IPO.

Will they succeed?

There is plenty of room for doubt as to the immediate effectiveness of Twitter as a channel to drive sales. Not withstanding the leadership changes, Twitter hasn’t been able to scale up fast enough compared to its competitors. According to a report by Facebook, by the end of its fourth year of operation:

  • WhatsApp had 419 million users
  • Facebook had 145 million users
  • Google’s (GOOGL) Gmail had 123 million users
  • Twitter had 54 million users
  • Microsoft’s (MSFT) Skype had 52 million users

 

In addition, a notable survey in 2013 by McKinsey showed the ground social media has to make up to be taken seriously as a sales driver: Email is 40 times more effective at acquiring consumers than Facebook and Twitter combined, and the average order value prompted by email is by 17% higher than those prompted by social media. The fact is that no matter how many product enhancements are developed to encourage social commerce, people come to social channels to keep up with their friends, view funny videos, engage in conversation and so on. Consumers are not heading to social media in order to buy things. In fact, they’re not even there to consider buying things. Shopping and browsing products don’t even register as reasons for using Facebook in a recent survey from Pew. With this lack of consumer intent for shopping in social channels, it could be a long uphill battle for Twitter to be credible in the ecommerce space when up against other proven solutions. Only time will tell what happens. What are your thoughts?

 

 

Jason Peaslee

Jason Peaslee is the Managing Partner of Thrive Analytics, a marketing research and analytics consulting firm. His career spans more than 20 years in marketing, advertising, product development, research, and business management. Before founding Thrive Analytics in 2010, he held several senior leadership roles at AT&T, Reynolds & Reynolds, Berry Network, & The Berry Company.

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