AUDIE CORNISH, HOST:
If brick-and-mortar stores are now temporary, at least our social networks are always with us. But it's not to like or follow. Those networks also now want us to spend. Twitter and Facebook have both announced new moves into the world of e-commerce. Facebook is testing out a buy button to make the most of those sponsored posts infiltrating your newsfeed. And Twitter has announced plans to buy a startup that encourages developers to create new apps for online shopping through the site. Here to talk more is Hannah Kuchler, correspondent for the Financial Times. Welcome to the program.
HANNAH KUCHLER: Thanks for having me.
CORNISH: Begin by explaining to us why these companies are moving in this direction. I mean, how big a deal would it be for any social networking site to crack the code and get us to start buying through their portals?
KUCHLER: I think it's a really important extension of their advertising business. Because as the digital advertising and mobile advertising markets grow really rapidly, these companies are taking share, and they want to be able to prove to people their adverts work. And the best way of proving that is by having a button, like Facebook is now trialing by, where you can directly buy and you can show that it's worth people taking out those adverts.
CORNISH: Didn't Facebook already try something like this? They had a kind of virtual currency that you could use to buy, I think, in-app games. What happened to that?
KUCHLER: The games purchases still work, but they're becoming a sort of decreasing part of their business as people move from the desktop to the mobile phone because people who play games apps on their mobile and they don't go to Facebook to do that. So yes, they have done purchases before, but this is about saying to e-commerce advertisers, you can get people to buy directly from Facebook.
CORNISH: So help us understand how Twitter is going about this, 'cause I gather it's very different than Facebook.
KUCHLER: Yes, I mean, Twitter has to be different because it's a lot smaller. So it's tried to promote itself as the place for in-the-moment advertising, like the Oscars or the Super Bowl or connected to TV programs. With e-commerce, it's taking the same tactic. And it recently acquired a company called CardSpring, which attaches your payment details to coupons and loyalty cards. So that will enable it to do sort of special offers. You might see hashtags which say oh, you know, if you buy something in the next five minutes, then you get 50 percent off, which will try to encourage you to buy speedily.
CORNISH: Now e-commerce is been around for ages. Who else would be considered competition for these companies?
KUCHLER: Well, I suppose the most obvious player that would come to mind is Amazon. But the important thing to note is that Facebook and Twitter are not about to open warehouses across the country and distribute their own products. That would be kind of a bit of a stupid move for them because at the moment, they have, you know, especially Facebook, very high margins and selling goods is not actually that profitable a business. But what they're kind of doing is enabling other e-commerce companies to get access to the kind of data and the kind of audience that Amazon has by shopping through Facebook.
CORNISH: Now do social media companies have to be careful here? I mean, they could create this feeling for consumers of being constantly bombarded with commercial opportunities in an environment that's supposed to be, you know, kind of social and warm and fuzzy.
KUCHLER: Yeah, I think there are two major problems that they face. One is the idea that, you know, people don't want to go to Facebook and feel like they are in a store. You know, they go there to socialize with their friends and family. And you don't want to put them off. And the other big one is privacy. You know, Facebook especially, and some of the other social networks have come under fire for the way that they've used their data about people in sort of unexpected ways. And they'll be collecting an awful lot of data on purchase history. And so they're going to have to be very cautious about how they use it, and maybe give people the option to opt into that data being used rather than to opt out.
CORNISH: Hannah Kuchler. She is a correspondent for the Financial Times in San Francisco. Hannah, thanks so much for speaking with us.
KUCHLER: Thank you. Transcript provided by NPR, Copyright NPR.
