The Buy Button: Why Twitter and Facebook Are Clutching Ecommerce

When Twitter and Facebook both announced they were testing new means of making impulse purchases from within their own networks, the presumption was that they wanted a larger piece of the revenue being generated.

That both systems are designed to encourage impulse purchases, eg, those that require little forethought and are most prone to promotion, if not outright manipulation, well, who could be surprised: these were hardly departures from the exploitation ethos that reigns over so much of the big data shopping interface.

But taking on Amazon is no one's idea of an intelligent strategy. So as the following article explains, in a departure from the usual linear ecommerce  progression that leads from attention to engagement to purchase, what the social networks are doing is reversing the sequence so that ecommerce is a source of validation for the other elements of their platforms. Given the broader concerns raised about valuations and effectiveness, this could be a clever tactical advance in the short term, with potential strategic implications down the road. JL

Seth Fiegerman reports in Mashable:

"The motivation has to make the whole advertising process easier, to prove the returns and the conversion rates. If it results in them being more of an acceptable platform for e-commerce... that's sort of gravy. But I don’t think the motivation here is say, 'We’re going to be Amazon.'"
Likes and retweets are fine, but the new buzz word at Facebook and Twitter seems to be “buy.”
Facebook announced on Thursday that it has begun testing a Buy button that appears on ads and Page posts from a select group of businesses in the U.S. In effect, that means users can now purchase products advertised by these businesses without leaving the social network.

Just a few hours later, Twitter announced that it had acquired CardSpring, a payments infrastructure company, to help with its goal of bringing "in-the-moment commerce experiences to our users."
The fact that both announcements were made public so close to one another may have been coincidence, but it highlights the overlapping commerce ambitions of Facebook and Twitter.
Facebook has experimented with payments in the past with mixed results. It briefly offered a virtual currency called Credits and launched a gift shop only to kill it off and re-open something similar in 2012. Facebook also accepts payments in games.
However, the Buy button may be the clearest example yet of how e-commerce could be integrated onto Facebook.
"I see it as an integral piece of what Facebook is after," says Brian Blau, a research director with Gartner. "They want to participate in that transaction. They want to facilitate it. They want to grab your credit card."

This is the checkout page you see on Facebook after clicking on the Buy button for a product.

Image: Facebook

Twitter, for its part, has been fairly outspoken about its intentions. Dick Costolo, the company's CEO, said in 2012 that Twitter was "thinking about" ways to embrace ecommerce. The next year, it hired the former president of Ticketmaster to improving the social network's shopping experience.
As it so happens, just a couple weeks before Facebook confirmed its Buy button, users spotted a "Buy now" button on Twitter.
"We have seen evidence that Twitter wants to do the same thing as Facebook — participate in that transaction," Blau says. "They're just getting started with collecting peoples' credit cards; Facebook has been there for awhile."
By introducing commerce options on site, Facebook and Twitter may help bring in additional revenue streams, assuming they eventually take a cut of sales or charge to implement the Buy buttons. But the bigger goal for both social networks, according to analysts we spoke with, may simply be to use commerce as a way to boost engagement among users by giving them more reason to stay on site as well as provide an additional selling point to advertisers.

A new Buy Now button appeared on Twitter for the first time Monday.

Image: Twitter

"Part of the motivation just has to be to make the whole advertising process easier, to prove the returns and the conversion rates," says Arvind Bhatia, an analyst with Sterne Agee. "Sure, if it results in them being more of an acceptable platform for e-commerce... that's sort of gravy. But i don’t think the motivation here is to go all out and say, 'We’re going to be Amazon.'"
Even if Facebook and Twitter did have aspirations to be like Amazon, it's unlikely they could make a full shift from social network to shopping network. Just because users spend time on a social network checking for news and personal updates doesn't mean they're in the mindset to make an impulse buy. If anything, Facebook's difficulty with commerce in the past is proof that they're not.
"They tried Facebook Gifts and that didn’t really take off," Bhatia says. "That example tells us that this is not the first place for people to look for that."
Pinterest, a social bookmarking service that is more oriented around shopping, may have better luck on that front if and when it adds more tools to shop on site.