The arms race in social commerce is heating up. Just after Facebook announced that its revamped Pages will feature a shopping tab powered by Shopify, Twitter (NYSE:TWTR) signed on with Stripe as one of the first partners for Relay. Now, Twitter is expanding its shoppable tweets with a number of partnerships that will enable retailers of all sizes and products to sell things on Twitter.
Retailers that use Shopify, DemandWare, and BigCommerce will all be able to easily integrate their product catalogs with Twitter. Larger retailers can use Stripe Relay with their existing e-commerce platforms to get the same functionality. These partnerships should open up Twitter as the widest-reaching platform for social commerce. The question is: Will retailers actually use Twitter to sell their wares?
How Twitter makes money off buy buttons
Twitter doesn't take a commission on sales generated through its buy button. Instead, it hopes that it produces results good enough for retailers to buy promoted tweets featuring the buy button.
Twitter's buy button has surfaced a few times in the past, with sports teams and bands selling event tickets directly on Twitter. Beyond that, it hasn't gotten much use. The new partnerships, however, open up the buy button to a lot more retailers, especially small retailers that rely on e-commerce platforms such as Shopify to manage sales and inventory. That could very well spur adoption on its own.
But retailers need to see Twitter users actually responding to shoppable tweets before they start to promote them. Currently, there's no indication that Twitter is a place that people go to shop. Business Insider found that Twitter drives one-fourth the amount of mobile e-commerce traffic as Pinterest despite a user base three times larger. Facebook blows both social networks out of the water, driving an estimated 64% of all social-referral revenue.
What Twitter's doing to change its position in social commerce
Expanding its buy button to a lot more retailers is just one of the efforts Twitter is making to improve its position in social commerce. Of course, the more retailers that are able to use the buy button, the more likely the buy button will be used.
But Twitter is giving retailers more ways to use the buy button beyond simply embedding it in a tweet. Earlier this year, the company introduced product pages. These pages not only feature information about the product and the ability to buy it directly on Twitter, but they collect tweets about the product as well. This allows brands to easily monitor social activity around specific products, which may help determine which ones are worth promoting.
In conjunction with product pages, Twitter also introduced collections, which allow brands and celebrities to put together a group of products on a single page and share that with their followers. Twitter hopes this feature will drive product discovery more easily.
Twitter is also working with retailers to enable them to create point-of-sale discounts. Users register their credit card with a reward, and they then receive cash back on their statement. This works equally well for online orders and in-store purchases. Retailers could use those that sign up for the offer as targets for a future ad campaign even if they never actually buy anything using the discount.
Twitter is playing the numbers game, figuring the more ways there are to promote a product, the better chance retailers will actually do so. Still, Twitter's success with its buy button is heavily reliant on its user base. But as Twitter aims to tackle more mass market users and attracts more retailers, the odds are constantly improving that it will make a bigger dent in social commerce. With the market growing 200% year over year, it's a big opportunity that Twitter is going after.
Adam Levy has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Facebook and 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.