Can Business Pin Their Hopes On Pinterest?
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The hottest social media phenomenon today is Pinterest. According to its mission statement the site promotes sharing of images and photos as a means to "connect everyone in the world through the 'things' they find interesting". I think all companies should have a mission statement that distinctly describes its goals like that.
From January to April this year unique visits to the site doubled from 10 million to 20 million. The increase is a record for any web service in history.
Is business taking advantage of that?
A significant part of the Pinterest user experience is to share (or "pin") images, including those of consumer goods, within the site so others can view them. Businesses are starting to attract those users. The most popular items are jewelry, flowers and cosmetics. Twelve of the top 15 Pinterest categories are connected to business e-commerce sites and the average user spends $180 per order, the highest total of any social media outlet.
However, only a small portion of business site visits originate within Pinterest today. Internet search engines generate the most traffic to business web sites, followed by direct visits to the sites themselves (by people already knowing what they want to buy). Pinterest ranks further down the list behind Facebook (NASDAQ: FB) and ahead of Twitter. So there is some work to do.
Visits to Facebook have been declining.
The "social network" had 200,000 less views in April as compared to March. Fewer visits could translate into lower revenues and earnings in the future. That wouldn't be a good harbinger for its stock price which has lost half its value after a disastrous IPO in May of this year. Facebook is also the subject of several investor lawsuits that it must deal with. In addition, it needs to address a monetization (or lack thereof) problem with its smartphone applications. It appears it has a lot on its plate right now. Is Facebook a "like"? Maybe the magic is wearing off.
The largest U.S. search engine is that of Google (NASDAQ: GOOG). As of August it had a 67% market share and since going public revenue, earnings and the stock price have gone nowhere but up. It just became the 5th largest U.S. company as measured by market cap, jumping 5 places within the last two months.
It will overtake Facebook this year in generating revenue from "display ads", increasing the total by 40%. This is just another problem for Facebook. In addition, Google's Android smartphone operating system has the largest share of that market. The company has a lot going for it.
Williams-Sonoma generates about 30% of sales from on-line ordering and it is becoming an increasingly more important part of their business. Since 1999, when the web-based system was started, revenues have almost tripled and earnings per share increased 4 1/2 times.
Nordstrom reported that the majority of sales growth over the next ten years will come from on-line sales. Its revenues have more than doubled and earnings per share increased 5 times since 1999. Along with its unequaled reputation for customer service things are looking up for them.
So it looks like Pinterest is just getting started in the e-commerce world. It has part of the equation in place with its very popular social media presence. If more traffic can be directed from users to other businesses it could be a growth niche.
Mathman6577 has no positions in the stocks mentioned above. The Motley Fool owns shares of Facebook and Google and has the following options: long JAN 2014 $20.00 calls on Facebook. Motley Fool newsletter services recommend Facebook, Google, and Williams-Sonoma. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.