Twitter has become a massive part of the popular culture, and something that hundreds of millions of people use all around the world on a daily basis. Yet the website has yet to actually make a significant profit! While Facebook has been extremely successful at monetising its user base, Twitter is struggling to achieve a similarly viable business model.
Twitter losses mount
In February of this year, Twitter reported that its yearly functional losses were equal to no less than $645.3m. Upon hearing this news, the markets promptly battered the company, wiping $6.5 billion off the social media site’s share value.
With Twitter battling to turn a profit, the website has recently launched a “Buy Button” in what would seem to be a direct response to its rival Facebook's move to integrate commerce into social media. Facebook had originally announced the addition of a Buy Button back in July.
The aim of this particular innovation is to enable users of the social media site to quickly access commercial offers encountered on the websites. It is intended that the Buy Button will enable such offers to be accessed with one quick click; somewhat reminiscent of the retailer Amazon’s one-click ordering. It is hoped that the implementation of this new Buy Button will boost sales on both Facebook and Twitter.
Starbucks campaign success
In accordance with this new innovation, Twitter has already engaged in a campaign with the coffee chain Starbucks. This experiment in social commerce was dubbed “Tweet a coffee”, and soon reached viral proportion, performing extremely encouragingly for Twitter.
The basis of the campaign was to enable Twitter users to send $5 Starbucks Card eGifts to Twitter friends and followers via the usage of an “@tweetacoffee” Twitter address. In order to achieve this, users were required to link their Starbucks account to Twitter, and further add a credit card. According to research firm Keyhole, this particular campaign netted $180,000 in transactions, so the potential for this sort of campaign in the future would seem to be extremely good.
While Facebook is by far the biggest social media site in the world, and has been pretty successful in commercial terms, none of the major social channels have really been able to generate massive revenue through e-commerce. At least, not in the west; in China in particular social media has been much more commercially directed.
However, much though Twitter and Facebook would love to successfully integrate payment and commerce into their social media platforms, analysts are sceptical that consumers in the West are ready to embrace this. The Drum interviewed several social media and economic analysts, and the overwhelming consensus of opinion was that the Buy Button is unlikely to have a massive impact on commercial behaviour in the short-term.
China's social e-commerce explosion
As mentioned previously, the situation is completely different in China. Social commerce has already taken off in Asia generally, but in the largest economy in the region, payment and commerce is already very much an integrated part of social media.
For example, the Chinese instant messaging app WeChat - which boasts 300 million users, including 100 million overseas - offers a variety of services to its users, which range from mobile payments and e-commerce, to online taxi ordering, and recently money transfers. Users can now link their credit card to the WeChat Application in order to complete financial transactions. Additionally, its major competitor in China, Sina Weibo (143.8 million active users), is also currently implementing a wallet and money transfer function within its panoply of services.
While cultural differences may begin to explain the differing social media development between China and the West, it is clear that the so-called emerging economies will become increasingly significant in the future. Just days ago, it was predicted by Deutsche Bank that China will overtake the United States as the world's largest economy by 2024. This phenomenon has been predicted for many years, and is generally considered to be an inevitability. Thus, the Chinese social media marketplace will only become more significant and offer more opportunities in the future.
Lessons for travel companies
However, if social media e-commerce has yet to really take off in the West, it is nevertheless worth remembering that social media is already playing an important part in the planning and booking of journeys by travellers. As social commerce develops and becomes more culturally prevalent in Western society, it will by the same token become more important for travel-related businesses to integrate social media into their marketing and sales strategy.
While analysts do not expect the new Facebook and Twitter Buy Buttons to transform the world of e-commerce just yet, making a commitment to engage with social media in this respect can make good commercial sense for travel-related companies. It provides a clear opportunity to engage with potential travellers and acquire more conversion for products and services.
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