Raise your hand if you have bought something online. Great! Now put your hand down because people are staring at you. Raise your hand again if you have purchased something from an app on your cell phone. I would bet not as many of you have your hand up right now, but big social networks are betting more and more people will be purchasing through apps downloaded on their mobile phones. You can put your hand down.
There is this company named Amazon, have you heard of it? Amazon has been in the e-commerce game for a long time now. As you know, you can buy almost anything on Amazon. If Amazon Fresh delivered to my house, I would never have to leave my house to go shopping!
Last fall, Amazon announced that they have enabled in-app purchases of physical goods within independent apps. Here is an example Amazon has used to explain this: Baby Bump is an app that provides information about pregnancy. The developers of the app have chosen to offer products that are helpful during pregnancy and after the baby is born. These products are offered through Amazon, and you can purchase them directly from the application.
This seems to be working for Amazon. Sales were up 22% in 2013 over the previous year of $74.45 billion. Amazon is #1 in Internet Retailer’s 2013 Top 500 Guide, and net income has increased from $93 million in 2012 to $239 million in the same period in 2013. Yeah, I think they are doing all right.
Other popular online companies are taking note of Amazon’s success and plan to try and create revenue through their networks. Facebook and Twitter are among the networks planning on implementing in-app purchases through their networks.
Facebook is testing a feature that would allow shoppers to simply click a “buy” button on Facebook to purchase items in ads. Businesses can create ads through Facebook and offer products that can be purchased through the ad. The consumer clicks the “buy” button, inputs his or her payment and shipping information, and BOOM! Transaction complete. The retailer is notified of the purchase and is paid through Facebook.
This is a win-win-win for Facebook. They take a cut from the sale. If the consumer elects to save their purchasing information in Facebook, it will, hopefully, prompt more frequent purchases. And the consumer stays on Facebook instead of going off-site to make a purchase.
Twitter also appears to be getting into the game. Recently, Twitter users noticed a new option in their app settings. A “payment & shipping” option has appeared for some Android phone users. Currently, the setting cannot be opened or activated, but it is a big tip that Twitter is moving to accept payments within the app.
In June of 2014, the website Re/Code noticed tweets with a “Buy Now” button included. The tweets were only from a shopping app called Fancy, and it was pretty apparent that they were mocks. The list price on one tweet was $170 million for a pair of shoes, and the “Buy Now” buttons were not clickable.
Also, in January 2014 Re/Code reported Twitter was in the final stages of purchasing a credit card payments processing company named Stripe. This would allow Twitter to potentially integrate a payment option within tweets.
It makes sense that Facebook, Twitter, and Amazon are investing so much into e-commerce and more specifically, mobile e-commerce. According to a report from Custora, United States mobile e-commerce revenue will reach $50 billion in 2014. That is up from $2.2 billion just four years ago!
Conversions are still quite a bit higher on desktop computers than on mobile phones. However, as consumers become increasingly comfortable with mobile purchasing (possibly with the help of Facebook and Twitter), mobile conversions should increase to that of desktops.
I’ve asked myself if I would buy something from an ad on Facebook or a tweet on Twitter, and I really don’t know. I don’t see myself buying directly from within an ad. Something about it just seems wrong. And the fact the ad is on Facebook doesn’t help for me either. Maybe it’s because Facebook has been trying to get me to buy stupid gifts and other junk for what seems like forever now.
But, I potentially see myself buying from a tweet. If the tweets have to be sponsored or paid ads, then probably not, but if companies can add products to tweets and Twitter takes a cut from the sale, I could get on board with that.
I know I’m weird, but I buy from Amazon’s app all the time. I’ve used Amazon’s 1-Click, too. My justification is that I am buying from Amazon (kind of). I pay Amazon, and it ships from Amazon (I only buy Prime eligible items). As we all get more comfortable with this type of purchasing, clicking “Buy Now” in a Facebook ad or a tweet won’t be out of the question.
What do you think? Would you buy something from an ad in a social network?