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Pinterest And Social Commerce: A Match Made In Heaven

Mar. 02, 2021 9:01 AM ETPinterest, Inc. (PINS)AMZN, META, GOOG, GOOGL, SHOP, SNAP, TWTR, SHOP:CA15 Comments


  • Social Commerce is poised to grow over the next 5-10 years.
  • Pinterest is in the best position to capitalize on this trend.
  • As Social Commerce grows, so should Pinterest due to its visual and inspiring platform where ads are not distracting or annoying and users are focused on shopping.

What is Social Commerce?

Social Commerce is defined by Hootsuite as “the process of selling products directly on social media.” Unlike e-commerce, with social commerce, the entire process of finding a product and checking out takes place on a social media platform. However, social commerce can come in different forms: social media checkout capabilities, social commerce plugins and apps, shoppable ads, and chatbot checkout. Although social commerce has been around for the last 15 years or so, it has only taken off over the last 5 years. I believe social media platforms and particularly Pinterest (NYSE:PINS) are in the early innings of capitalizing on this trend.


Why Social Commerce Makes Sense

  • Reduces friction in the purchase funnel - If you see a product you like while browsing social media, you can purchase it through the social media platform or be directed to the retailer's website within the social media app. This might not seem like a big deal but it is to consumers who seek instant gratification and less clicks and advertisers looking to spend advertising dollars on social media platforms. There is no doubt the less friction involved in the purchase process, the more likely the consumer is to buy a product.

  • Advertisers already advertising on social media platforms - With advertisers already advertising on social media platforms, it makes sense to embed the purchasing process within the social media platform, a win-win situation for the advertisers looking to advertise to large audiences and consumers looking to buy products through social media.

  • Makes sense for consumers - According to data from Statista, the average daily social media usage of internet users worldwide amounted to 145 minutes per day in 2020. With consumers spending more time on social media than ever before, they are likely to buy more products over time.

This article was written by

I am a long-term investor focused on macro trends that are shaping the future of our world in the next decade. Within those macro trends, I carefully place micro bets keeping in mind patience and discipline required to fully tell the story of growing businesses.https://twitter.com/BullofStDisclosure:All contributions to Seeking Alpha are my opinion and should not be taken as investment advice. Please do your own due diligence prior to making any investment decisions.

Analyst’s Disclosure: I am/we are long PINS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (15)

What is driving the drop in prices is it just correcting and the long term outlook is bullish
The Bull of Center Street profile picture
@Canadian Securities It's hard to say the exact reason for the drop in PINS (no particular news). Overall market correction definitely has something to do with it, especially in tech stocks with the Nasdaq down ~10% at one point from its high (correction territory). In my opinion, long term (3-5 years and even longer) remains bullish for PINS as they continue to execute on the social commerce thesis using their unique platform.
Unfortunately my wife, who previously was a heavy user of pinterest, now use pins less and less, and instead Instagram more and more. This transition has happened the last weeks/months. The market learns quickly. Millions will follow here. She still use pins, but it is very clear by now that instagram have disrupted a significant part of pins business.

I have a small position in pins, and still believe in them long term.
@nick name Facebook founder is focusing on metaverse. What is it? New way of using the platform?
Very intriguing business opportunity for PIN moving forward. If they continue to execute the stock has tremendous potential moving forward
The Bull of Center Street profile picture
@jlexus Complete agree!
02 Mar. 2021
Thank you for providing us with this article, I never realized how much shopping traffic Pinecrest pulls in!
02 Mar. 2021
Great article on PINS!!!
I loves PINS as a platform as well as a stock. I plan on holding it for a long time.
Ive been looking to add more to my portfolio but have come to the conclusion to wait.
Personally I know my family used PINS a ton at the beginning of CV. Being locked indoors, pins was a great way to keep busy and improve the house.
I believe the next 3-4 quarters will not show the same growth because so much was front loaded due to CV. In turn while the numbers will still be great they will disappoint the lofty expectations of investors.
Now there is always the chance that PINS creates other opportunities to grow their business that keeps the stock price elevated, but I see some consolation happening over the next year. In turn if this happens I’ll add to my position, and if it doesn’t, well, a stock moving up is always welcome.
The Bull of Center Street profile picture
@neophyte101 Sound strategy and reasoning. Thanks for the comment!
Couldn’t agree more on the social commerce thesis. As has been voiced in the vc world lately: social is back. True on many fronts, commerce being just one of them.
riskybusinez profile picture
Finally someone who gets PINS! Great article!
@riskybusinez Agreed great article! Thanks
The Bull of Center Street profile picture
@riskybusinez Thanks for reading!
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