L2 Founder Scott Galloway recently spoke on Bloomberg TV about why Facebook is taking steps to become a retailer. Galloway said the privacy threat of a social network hack is larger than that of a credit card company, because social media companies have more information about their users than credit card companies do. However, young people are more promiscuous with their personal information and less concerned about privacy than their older counterparts.
Galloway believes Facebook’s Buy button is unlikely to be a success. Many Facebook stores opened up in 2012 only to close a year later, due to the fact that most people are not in buying mode when browsing Facebook. However, Facebook’s Buy button could be a Trojan horse for gathering users’ credit card information. And once a company has consumers’ credit card numbers, it can meet the consumers further down the purchase funnel and create a seamless shopping experience. Apple has 800 million credit card numbers and Amazon has 200 million, and both are players in the payments space. Gathering 150 to 200 million credit card numbers would be a victory for Facebook, as many consumers would default to the platform where they can make a one-click purchase. Furthermore, credit card information would enable Facebook to link offline purchases to online activity (i.e. the holy grail of marketing). See full video here.
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