Facebook, Twitter Set to Expand e-Commerce Offerings - Analyst Blog

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Facebook ( FB ) and Twitter ( TWTR ) are gearing up to expand their e-Commerce offerings. The social network is testing a 'Buy' button that will allow users to purchase goods from merchants without leaving the core app. This is much similar to the 'Buy Now' button that Twitter is reportedly testing.

Twitter is also expanding its e-Commerce infrastructure. The company is acquiring CardSpring that facilitates connection among merchants and payment processors. However, the acquisition amount has not been disclosed.

Facebook is testing the new button with a selected few small and medium-sized merchants in the United States. Once satisfied, it will be available to both mobile and desktop users, who can use their credit cards (registered with Facebook) to purchase goods.

Facebook said that it will not pass on any user transaction details to advertisers. Users can also opt to not save any information of the payment transaction on Facebook. Currently, the company will not charge any fees on the transactions done over the network.

Earlier, Facebook had tried several options to expand its e-Commerce offerings without much success. The simplicity of the current payment process will boost conversion rate, which is the primary aim of every merchant. We believe that a higher conversion rate will enable Facebook to charge merchants in the long run.

Twitter's acquisition of CardSpring will enable it to offer deals within its tweets, which users can redeem offline later. CardSpring's e-Commerce platform links card users' account to merchants, which helps in tracking user card swipes.

Once a Twitter user swipes a card, the platform applies the available discount and provide the data to merchants. This data help merchants to know the effectiveness of online promotions on offline sales. It will also help them to offer targeted ads that will drive offline sales.

Although Twitter is not expected to launch real-time shopping any time soon, the company is well positioned to offer a service similar to Facebook in the long run. Twitter's partnership with Starbucks Corp ( SBUX ), American Express ( AXP ) and Amazon.com ( AMZN ) will help it in this regard.

Per eMarketer, global business-to-consumer (B2C) e-Commerce sales will increase 20.1% to $1.5 trillion in 2014. This is expected to hit $2.4 trillion by 2017, which presents a significant growth opportunity for both Facebook and Twitter.

However, we believe that Facebook will enjoy an upper-hand over Twitter, at least in the near term, due to its massive user base.

Currently, both Facebook and Twitter carry a Zacks Rank #4 (Sell).


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: FB , TWTR , AXP , AMZN , SBUX

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