The Rise of Twit-Commerce

TheStreet.com

NEW YORK (MainStreet)—Your next pair of shoes or favorite album may be just a tweet away.

While the tweet-to-pay business model isn't entirely new — it's been around for a few years — the concept received a shot in the arm earlier this year when credit card giant American Express announced a new Twitter e-commerce program for cardholders.

"We loved that they did it," said Chris Teso, founder and chief executive of Chirpify — which launched in 2012 and allows consumers to purchase certain brands via Twitter using PayPal or their credit card. "It's a big player. It validates what we're doing and raises awareness."

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Teso and others see social media as the logical next step for e-commerce — allowing users to complete transactions by simply sending out a tweet, typically with a command like "buy" and the payee's handle name.

"This is a frictionless transaction that just needs a simple tweet," said Brad Lindenberg, co-founder of Australia-based BuyReply. "Obviously we see a lot of potential in it."

BuyReply allows users to tweet — or text — products seen in ads on television and in magazines along with that company's handle in order to make direct purchases. Lindenberg said the service also allows retweets of purchases — in essence allowing the purchasing of a product to go viral.

While similar, Teso said he sees his company as more of a "seamless" transaction agent, where Twitter users can buy products as they tweet with friends. Users also can use Chirpify on Facebook and Instagram.

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As with buying on websites a decade ago, both companies said they understand such a process will bring security concerns, and stress transactions are completely secure — as users' credit card and address information are kept with the company, not with social media networks.

"We're only using social media as the trigger," Teso said. "So this is as secure as any other form of payment."

Despite some business model differences, both Chirpify and BuyReply represent major players in the new social media e-commerce world, and both unsurprisingly see big opportunities for the fledgling industry.

"There are more and more people moving to social media, and that's where everyone is spending more and more time, so we think it has great potential," said Teso, whose clients include Keen, Sorel and Puma and recently secured $2 million from Voyager Capital in funding.

Lindenberg, like Teso, said he was happy to see a company like Amex venture into the Twitter-commerce universe — although Amex's program was different in that it limited what one could buy from retailers and required that an Amex card be used — and said one could see more traditional credit card companies try to get a slice of the social media buyers' market.

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Lindenberg, however, said he does not see credit card companies likely entering the sector without first teaming up with an already established provider of social media transactions.

"I do believe this is a specialized product and I think partnerships are likely more of a way to go," said Lindenberg, whose company recently closed a $1 million round of funding from Silicon Valley and Australian technology investors.

Teso said his company already was approached by Amex for such a partnership but the deal fell through. He said he agreed traditional plastic card companies would likely seek help before venturing into social media e-commerce.

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"This is pretty far outside of their core business," Teso said. "You need the infrastructure, the software, all of that. I don't think they would undertake that on their own, so partnerships seem like the way to go."

Teso, however, added he only sees this market growing, especially as it has shown itself extremely capable of selling certain kinds of products.

"The things that work best over social media, we found, are unique offerings or the newest stuff," Teso said. "It makes sense when you think about it. People using Twitter are likely looking for deals and the latest stuff."

--Written by Chris Metinko for MainStreet

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