Twitter (NYSE:TWTR) and Amazon.com (NASDAQ:AMZN) have created a new social shopping feature, based around the hashtag #AmazonCart (and #AmazonBasket for the U.K. site). The concept focuses on uninterrupted browsing: Users can link their Twitter and Amazon accounts, then respond to tweets that include an Amazon link, using the appropriate hashtag. The item is automatically added to their Amazon cart for future buying. It's a notable move for the sort of social monetization Facebook (NASDAQ:FB) is attempting, and for today's e-commerce world, where the lines between "social" and "business" continue to blur.
Potential behind the promotion
Both companies had positive stock responses following the news, Amazon by $1.63, to around $310 per share, and Twitter by $0.09, to around $39 a share. Further response to the social venture is likely to remain minimal. Twitter's share price was quickly overshadowed by the May 6 lifting of selling restrictions for about 480 million shares, which caused a quick price drop to around $32 (with ongoing effects). Amazon, after reporting a first-quarter net income of $108 million with a 0.5% profit margin, is dealing with larger profitability issues and a share price that has fallen by 20% since 2014 began. Meeting its average price target of $412.95 will take more than a single Twitter promotion.
However, the #AmazonCart experiment is capitalizing on a trend with far wider appeal than these two brands. Social shopping could prove a key moneymaker for e-commerce companies in the coming years. Benefits also exist for social media sites eager to monetize, notably Facebook and Pinterest, if they create promotions that allow for additional profit (Twitter's deal does not include any profit-per-purchase revenue).
Facebook, in particular, could benefit from more social shopping as part of its ongoing monetization efforts, which notably included a late-April announcement of more developer tools for its desktop and mobile sites. Programs like FB Start will soon fund small-time developers as well as growing apps, encouraging more experimentation and potentially more social shopping ventures. Ultimately, allowing buyers to make immediate purchasing decisions within a social network could fuel a new organic revenue segment.
Smaller ventures fill in the cracks
The adoption by larger companies like Amazon may also spur interest in separate social media purchasing services. These services offer similar solution to #AmazonCart for companies that cannot form such direct promotion partnerships. Chirpify, for example, creates "actiontags" that can be inserted into networks like Twitter, Facebook, and Instagram to make an automatic purchase. Soldsie is a Facebook app with a similar design that allows viewers to make a product purchase through comment selling or typing in "Sold" on a Facebook post, which sends them an email invoice.
This is a marketing technique ready to change the way that people buy online, and Amazon's latest effort has given it more steam. While this promotion has received extra media attention because of the big names involved, the feature in question is worth keeping an eye on across social media.
Tyler Lacoma has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Amazon.com and Facebook. It recommends Twitter. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.