Can Social Media Firms Compete With Amazon In The E-Commerce Space?

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On Monday,
Facebook Inc.FBannounced
plans to move into the e-commerce space with ad features that will allow users to buy things directly on the site. The decision has been praised by shareholders, who see the new features attracting more advertisers to the site. However, Facebook's decision to bridge the gap between social media and e-commerce is not the first—
Twitter Inc.TWTR
and Pinterest announced similar plans earlier in the year. The real question is whether or not this method of shopping will be widely used by consumers, or if they will stick to traditional online retailers like
Amazon.com Inc.AMZN
.
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The Power Of Advertising
One of the most powerful tools for a marketer is word-of-mouth, especially from people a potential customer knows and trusts. For that reason, ‘buy now' options on social media could be a gold mine as it gives people the ability to share products and services they like with their friends and family. Seeing that others in their circle of friends ‘like' a company could be enough to sway a potential customer to make an impulse buy using Facebook. Not only that, but sites like Twitter and Facebook already have huge user bases from which they collect a great deal of data. That makes it easier for firms to target those who are most likely to buy their products.
Amazon An Online Staple
However, Amazon has taken over the online retail space in recent years, making it a force to be reckoned with. While consumers may not be referred by friends and family, the site's rating system inspires confidence in purchases and Amazon's shipping services are hard to beat. Not only that, but the firm has signed up millions of people for Prime memberships, something that will tie them in to purchasing from the site when possible to make use of the membership fees.
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