Snap jumped to its session high on the announcement that it is partnering with Amazon.com to allow shopping directly from Snapchat. The concept of customer retention within the app is beautifully utilized by the partnership that gives the user a win-win to ‘get on, stay on’. The partnership will allow users to use visual search by pointing the app’s camera at an item, locate and buy it from Amazon without leaving the app. The search also works by pointing at a product barcode and will help in a more wholesome, personalized self-shopping experience, well-aligned with the trend that stores have moved towards.
The interesting part of the deal is the fact that the ‘in-app shopping’ feature is almost identical to what Amazon has in its own app, however, according to Pew research, 78% of internet users aged 18-24 use Snapchat, and Snap says its users are 20% more likely to make mobile purchases and 60% more likely to make impulse buys. The greater the appeal through one app, the more likely will the conversions take place. The downside for Snap seems to be the fact that Amazon presently pays out commissions of 1-10% to referrers depending on the product category.
Possible Buyout or Acquisition?
Anything is possible when the profits align. Amazon, like other giants, has a track record of putting its competitors out of business, however, it has to be noted that Snap’s recent hiring of former Amazon wizard, Tim Stone as its CFO. Tim Stone was critical in leading the integration of the online retailer’s $13.7-billion Whole Foods acquisition. The hiring does point in the direction of a long relationship between the two.
It is quoted that Snap is probably going to be below $5 a share within six months, with Facebook sucking out the room’s oxygen — and Snap’s Evan Spiegel “can’t sell to Facebook, since that would be admitting defeat. The person he most likely wants to sell to is Amazon … So this might be the two of them saying, ‘Let’s date.’ ”
Regardless of the outcome, this is a huge step forward for the online shopping experience.
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