Facebook steps up the pressure on Amazon
From building a marketplace section within its flagship social network to bringing payment support to Messenger, Facebook (FB) has long shown a desire to challenge Amazon (AMZN) and eBay (EBAY) for e-commerce dollars. Now the company has ratcheted up its e-commerce efforts with a Checkout feature on its photo-sharing app, Instagram.
The Instagram Checkout button lets users buy items directly from within the app. The Checkout button is currently available in the United States, where Instagram users can shop from dozens of brands without leaving the app.
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The introduction of a shopping feature on Instagram comes after Snap (SNAP) entered a partnership last year to send shoppers to Amazon’s marketplace through its Snapchat app. The Instagram Checkout button, which lets people buy directly from within the app, also comes a year after eBay partnered with Mashable on shoppable images.
For Amazon and eBay, the move Facebook has made with the Instagram Checkout button will add to the pressures they’re facing to defend their market shares.
Growth opportunity in the non-advertising business
In addition to helping Facebook attract more advertisers to Instagram, the Instagram Checkout button could also open another avenue for Facebook to grow its non-advertising business. For example, the company could generate non-advertising revenue by taking a cut of the sales made through the Instagram Checkout button. This method is how e-commerce titans such as Amazon make money from their marketplaces.
Facebook’s non-advertising revenue rose 42% YoY (year-over-year) to $274 million in the fourth quarter. Twitter’s (TWTR) non-advertising revenue jumped 35% YoY in the quarter.