Twitter And Facebook Join The E-Commerce Race

  • Last year Google announced a new same-day-delivery service in collaboration with local retailers which competes with Amazon.
  • As a response, Amazon is expected to launch a new advertising platform.
  • Facebook and Twitter offer their version of an e-commerce penetration – a buy button.
  • It is early to decide whether or not these initiatives are successful; however it clearly signals the way the market is going to go.

E-commerce market analysis

In the middle of July, Facebook (NASDAQ:FBannounced a pilot for a new buy button that will enable users to purchase goods directly from the merchant without leaving the app or the website. The buy button allows small and medium sized businesses who use Facebook as their main marketing tool to sell their merchandise to consumers directly within the walls of Facebook. Facebook could monetize this new feature by charging a fee for every purchase made through it and expand its advertising portfolio to include product ads also. Advertisers gain better consumer reach using Facebook database of users’ information and Facebook gains another revenue stream that can potentially increase revenues.

Facebook’s rival Google (NASDAQ:GOOG) entered the e-commerce market in 2013 with the launch of Google Shopping Express. Google partnered with a number of local retailers in selected areas to offer same-day-delivery service of a wide variety of goods. Google Shopping Express is a complementary e-commerce platform for all companies participating in the service and Google relies on its partners’ inventory in order to deliver the goods to the end consumer. By using this unique business model, Google does not compete with the local retailers and frees itself from inventory management and associated costs. Unlike Amazon that uses a traditional commerce business model on an online platform and competes with brick-and-mortar retailers, Google cooperates with them in a partnership business model. Facebook’s e-commerce initiative is closer to Google’s model than to Amazon’s model, and it takes it one step further as it leaves all the logistics to the merchant.

Facebook’s buy button initiative uses the company’s strengths in social media and online advertising to assist small and medium businesses in their hardest task; to connect with potential clients and turn that connection into a purchase. Companies could use this feature to offer special deals to their followers in the social network and minimize the effort potential customers have to make in order to translate an ad they saw on Facebook to a purchase on Amazon or the company’s own website.

In light of Facebook’s and Google’s move into e-commerce, it might not be surprising that Amazon decided to launch an advertising platform in order to increase product ads sales on its website. Even though Amazon offers its ads on its website, it still has Google advertisements available on that can only be removed once Amazon offers advertisers a reasonable substitute. In order to block Google’s market penetration and replace Google’s ads on the website, Amazon started working on a new advertising platform.

With Google already in the e-commerce market and Facebook starting to test an e-commerce feature, it was only a matter of time before Twitter (NYSE:TWTR) joined the party. Tech website Re/Code recently reported that Twitter is working with payments startup Stripe on its commerce initiative. Twitter's e-commerce initiative is expected to be similar to Facebook’s and will allow users to purchase items directly from the merchant within the walls of Twitter without leaving the app. Both Facebook and Twitter will offer similar e-commerce solutions that allow small and medium businesses to offer their followers and potential clients special deals that they can execute within the app in a quick and easy way.


The e-commerce market is back in action with new initiatives from Google, Facebook, and Twitter. Facebook and Twitter offer similar solutions that could allow them to charge a small fee for every transaction made using their in-app buy button, while Amazon and Google are interested in becoming online product ad sellers using their dedicated e-commerce platforms. As the e-commerce market comes alive with the forces of these internet giants, it is probable that small and medium businesses will experience an increase in online sales and a drop in advertising prices. The impact of these new initiatives on the companies is still unclear, but it could lead to new revenue streams for these companies.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. Information provided in this article is for informational purposes only and should not be regarded as investment advice or a recommendation regarding any particular security or course of action. This information is the writer's personal opinion about the companies mentioned in the article. Investors should conduct their own due diligence and consult with a registered financial adviser before making any investment decision. Lior Ronen and Finro Financial Consulting and Analysis are not registered financial advisers and shall not have any liability for any damages of any kind whatsoever relating to this material. By accepting this material, you acknowledge, understand and accept the foregoing.

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