Twitter has had a bumpy couple of weeks. First its stock price fell to an all-time low on the back of disappointing monthly active user numbers, released in its Q1 earnings report. Then, earlier this week its market value tumbled further – losing nearly 18% in one day – after the expiration of its lockup period* – OUCH!
Amid these price slumps there was news that the social media service has entered a partnership with retail giant Amazon. Through the agreement, users will be able to link their Amazon accounts to their Twitter handles. Products can be automatically added to Amazon shopping carts by tweeting a special hashtag – #amazoncart in the US and #amazonbasket in the UK – and a link to the Amazon product they wish to buy.
Integrating the product buying experience with social media is nothing new, having been successfully achieved across much of Asia. Social media kingpin Sina Weibo offers ‘Weibo Wallet’ and Tencent’s WeChat instant messaging service can also facilitate retail payments.
I tried out the #amazonbasket today and it works nicely. I nonetheless had to leave Twitter and complete the purchase on Amazon. Twitter is therefore purely entering the partnership in a bid to up engagement rates and become more attractive to advertisers – Twitter already has a $900 million-a-year advertising business – as it derives no funds from directing consumers to Amazon.
The ultimate success of the partnership hinges on consumers’ willingness to purchase based on Twitter feed promotions. Survey-based evidence from Planet Retail suggests consumer appetite for this form of engagement is somewhat limited, with just 8% of shoppers surveyed in both the UK and US stating that they made purchases sourced from Twitter all the time, very often or fairly often**.
This data doesn’t cover purchasing directly from Twitter – a capability that documents leaked at the start of the year suggest it is developing apace, as part of a new online retail venture called Twitter Commerce. But, while the Amazon tie-up is interesting and newsworthy, analysts will view the potential revenue stream for Twitter via direct e-commerce as more appealing and necessary to halt the slide its market value.