Will Twitter, Inc. Get Into the E-Commerce Business?

Twitter headquarters. Photo by Tim Trueman. Source: Twitter.

Among Twitter's (NYSE: TWTR  ) executive team you won't find a president of advertising. Considering that the social network gets about 89% of its revenue from advertising services, this is something of a surprise -- especially considering that the rest of Twitter's current revenue stream comes from its data licensing business, which Twitter predicts to shrink as a percentage of revenue. But as Financial Times author Hannah Kuchler  pointed out, analysts believe that Twitter's president of global revenue Adam Bain doesn't have "advertising" in his title because the social network has plans beyond advertising. According to a recently leaked web page (discovered by Re/code), those plans may include e-commerce.

Twitter Commerce 
That's the name of the new program discovered by Re/code on a section of Fancy.com's website that was not password protected.

The leaked documents showed off tweets in users' feeds and their Discover section that, when expanded, included a photo of the product, a description, and a button that read, "Buy with Fancy."

Though a "source with direct knowledge of Twitter's commerce plans" told Re/code that the documents were only "mockups created by Fancy.com, which presented Twitter with a version of what its Commerce product could look like," it does suggest that Twitter may be headed in that direction, whether it's through Fancy.com or not. Indeed, Re/code's source also said that Twitter is in discussions with a number of potential partners regarding its commerce plans.

Other factors beyond the Fancy.com documents point to Twitter's interest in e-commerce. First, consider Twitter's August 2013 hire of Nathan Hubbard, the former CEO of Ticketmaster. Twitter gave him the position of head of commerce. Second, the company has already indulged in some transactional programs in its "pay-by-tweet" service by American Express that it launched in October. The service allows American Express cardholders to make purchases by including a promotional hashtag in a tweet along with a follow-up tweet to confirm the transaction.

Searching for growth
When Twitter reports earnings after market close tomorrow, analysts will be looking for signs that the social network can keep up its robust growth. Trading 140% higher than its IPO price, Twitter's valuation has priced in a rosy future -- one that will require growth beyond advertising. E-commerce could be one solution.

While it's unlikely Twitter will give an update for its future plans to broaden its revenue stream in its fourth-quarter press release or even in the prepared remarks during the earnings call, there is a good chance analysts will probe management about their commerce plans in the earnings call. For investors interested in Twitter, it would be wise to tune in.

What do you think? Could Twitter boost sales by introducing e-commerce to users' feeds?

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  • Report this Comment On February 04, 2014, at 10:09 AM, Matt8265 wrote:

    I don't think anyone has comprehension of what TWTR could become. I see a combination of the best of Google, Amazon and FB. It has only just begun. I just wished I worked there!

  • Report this Comment On February 04, 2014, at 9:07 PM, bonemarrow99 wrote:

    Twitter is the site everyone "used to use". The app is crowded and hard to read. The stock is trading at what 30x REVENUE?!?

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