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What’s Amazon Getting from the Snapchat Deal?

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Exposure to 188 million potential shoppers

Amazon (AMZN) has partnered with Snap (SNAP) in a program to send shoppers to Amazon’s retail platform. Snap is the parent of photo-sharing app Snapchat. The program introduces visual searches on Snapchat, whereby Snapchat users simply capture the image of a physical item using their smartphone camera to look it up on Amazon.

Shoppers sometimes have difficulty describing what they want in words. A visual search feature in Snapchat is expected to make it easier for them to find and buy items online from Amazon.

The partnership with Snap would give Amazon exposure to about 188 million potential retail customers, which is the number of people who used Snapchat every day in the second quarter.

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Snap shut down Square-backed Snapcash

The Amazon-Snap partnership comes less than a month after Snap shut down Snapcash, its peer-to-peer payment service. Snapcash was based on Square’s (SQ) platform.

Amazon competes with Square in the business of processing payments and extending loans to small businesses. In July, Square won a contract to extend small business loans to eBay (EBAY) sellers.

Race for marketplace sellers

The shopper traffic that Amazon is poised to receive from Snapchat could help it enhance the appeal of its marketplace to improve seller retention. Amazon, eBay, and Walmart (WMT) are in the race to woo sellers to join their marketplaces after a UPS Pulse study showed that most consumers begin their online shopping journeys on marketplaces.

According to Feedvisor, 52% of Amazon sellers also have listings on eBay’s marketplace. About 17% of Amazon sellers have listings on Walmart’s marketplace.

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