Pinterest Is Going To Crush All Other Social Networks In Profitability


Pinterest Is Going To Crush All Other Social Networks In Profitability

Social networks are not known to make money. While Facebook makes some money, its mostly via accounting tricks and a unique growth cycle rather than cold hard cash. Ill-fated Myspace and undermonetized Twitter all have the same issue. People come for the party and ignore the ads.

But hot rival Pinterest looks set to crush them both.

The company, known for photo sharing home decor designs, hot gadgets and the latest fashion is going to become an e-commerce platform. Or rather e-commerce heavyweight.

Later this month the company will launch “buyable pins,” for its iOS app that will allow Pinterest users to complete product purchases without ever leaving the company’s app.

For anyone who has ever used pinterest, this solves a huge problem: Buying the item that looks so amazing.

Prior to this, users relied on other users to link back to the original catalog item. That's time consuming and erratic. It also doesn't make Pinterest any money.

In the new system, a new blue “buy this” button will appear next to the familiar “pin it” button.

Once a user clicks the button, they can either use their credit card or Apple Pay to complete the purchase.

The implications are massive. With over 73 million users and over 50 billion posts, nearly all of them products, the company will become the world's largest e-commerce catalog.

While other social networks spam you with ads that are sold for pathetically low rates, all while invading your privacy, Pinterest's solution to making money is elegant, user friendly and highly profitable.

The company’s initial retail partners in the United States include Macy’s, Nordstorm and Neiman Marcus, and will see more than 2 million items available to purchase at launch.

The move will put it in direct competition with e-commerce heavyweights Amazon, Ebay and Alibaba. It will be interesting to see if any of these companies attempt to buy Pinterest before the new strategy takes off.

If they don't, they're going to have to pay a huge premium once the numbers start hitting the financial statements because this addition is going to be absolutely massive.

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