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Monetising captive audiences

Nicola Mawson
By Nicola Mawson, Contributor.
Johannesburg, 22 Jul 2014
There is a dramatic move towards new electronic payment solutions.
There is a dramatic move towards new electronic payment solutions.

Facebook and Twitter are taking the next logical step towards monetising their captive user bases, moving into electronic payments at a time that the sector is going through a revolution.

The social media giants - which together can claim more than a billion users - are taking advantage of the analytical data they have captured on their users to move beyond targeted adverts to become e-commerce portals.

Right now, Facebook is playing around with a "buy" button that will allow users to purchase a product directly from a business, without leaving the site. Twitter just bought CardSpring, believing it is a "great fit with our philosophy regarding the best ways to bring in-the-moment commerce experiences to our users".

The popular social media sites join the likes of WeChat, which has enabled in-app purchases, while Apple's second-fastest growing unit is its e-commerce business, through the iTunes store.

Easy money

Liron Segev, CEO of Swift Consulting, says selling directly to their user bases is "very easy money" for the sites, and builds on what they have already accomplished, such as developing a user base, gathering intelligence on the base, and targeting adverts. "They know everything about you, like it or not."

Segev adds the sites' moves also open up additional revenue streams because they can offer the service as a portal for people who want to sell online, negating the hassle of setting up individual e-commerce sites and trying to lure customers in. He adds the solutions will also see social media go head-to-head with other e-commerce sites, such as Amazon, and are more likely to result in sales than a "banner ad on some random site".

LinkedIn may also move towards offering a payment solution, but this will be linked to services that businesses and professionals need, notes Segev.

Revolution coming

World Wide Worx MD Arthur Goldstuck says the increasing number of e-commerce payment solutions, when taken together, signifies a revolution, although none of them in isolation will change the sector. Although the market has yet to be moved en mass, there is a "dramatic" change in the number of solutions being brought to market, he notes. "It's very clear that there is something dramatic happening."

Everyone wants to catch the next wave, and companies cannot afford to miss out on experimenting in the space now, explains Goldstuck. Segev adds Web sites want to attract - and retain - as many consumers as possible in a bid to own them. "The payment sphere is the next frontier that will explode."

Goldstuck notes many e-commerce sites lack a call to action, which means people are less likely to make a purchase. He notes bids by Facebook and Twitter are worthwhile experiments that South Africans can expect to use in the future.

Locally, e-commerce is growing at around 30% each year, and spending - by about two million people - is expected to hit R6 billion this year, Goldstuck notes. Globally, this sector is worth more than $1 trillion, according to eMarketer. Statistics SA's latest figures show the entire local retail sector was worth R164 billion at the end of May.

Additional payment solutions do not mean e-commerce will explode, but they are essential because they bring a bigger pool of shoppers in, says Goldstuck. Yet, no one payment solution will be a silver bullet and, in the meantime, a range of options will work, he notes.

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