Facebook Inc (NASDAQ:FB) has impressed the street so much with its second quarter results that everyone is expecting whatever the Company is touching, including e-commerce, to turn into gold. The company announced revenues of $2.91 billion, up by 61% from the previous year, backed by the advertising revenue it generated from its mobile platform.
Facebook Inc (NASDAQ:FB) has recently started tests for its ‘Buy Button’ though it’s currently restricted to certain small and medium sized businesses in the U.S. Meanwhile tweets showing the ‘buy now’ button from Twitter Inc (NASDAQ:TWTR) also started appearing in the tweets by the online retailer, Fancy. Both the companies are trying to tap into the $304 billion e-commerce market, but it’s more about better serving the advertisers than generating retail revenues.
“You are increasingly seeing retailers, Amazon increasingly advertises on Facebook. We are seeing more and more marketing dollars flow onto Facebook than really everybody thought, including the company thought was likely to be the case three or four years ago.,” Mark Mahaney of RBC Capital Markets said on CNBC
One distinct advantage that Facebook Inc (NASDAQ:FB) provides to retailers is the humongous amount of data it has regarding who it users are and what their preferences are. Just like Facebook Inc (NASDAQ:FB) has helped small business to have their web presence without having to build up their own websites, the e-commerce tools that the company is developing can play a similar role in giving small retailers an easier way to reach online shoppers. Analysts believe that Twitter Inc (NASDAQ:TWTR) is not so well positioned for e-commerce as Facebook Inc (NASDAQ:FB) is.
“It may be harder for Twitter to pitch itself as an effective advertising vehicle even including the ‘buy it now’ functionality. It’ll be harder for them to make that pitch to advertisers, to retail advertisers than it would be, than it has been for Facebook,” Mr. Mahaney added.