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Is Twitter the Next QVC?

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Rather than waste time and money driving to a brick-and-mortar store, many shoppers prefer to make purchases with a few keystrokes and a click or two of a mouse. To keep up with customers' shopping behaviors--and the widespread demand among consumers for convenience--credit card companies are beginning to target a new area of commerce: social networks.

Some 16 percent of online adults use Twitter, according to a 2012 report by Pew Research Center's Internet & American Life Project, yet social platforms offer a region of e-commerce that's been largely untapped by credit card companies. American Express is one company that's encouraging shopping on social networks; it launched a program in February that enables its customers to buy products directly on Twitter.

The service--available to those with Amex credit cards and a public Twitter account (prepaid and corporate cards are exempt)--is a simple process. Members sync their credit card to their Twitter account, then they can tweet special hashtags for products they wish to purchase. For example, last month American Express offered $25 Amex gift cards for $15. By using #BuyAmexGiftCard25 in a tweet, customers received a reply tweet from the @AmexSync account containing a confirmation hashtag. The customers had to tweet that hashtag within 15 minutes to purchase the product, which was subsequently shipped to their billing address.

[See Skip the Store: Buy These Items Online to Save Time and Money.]

Leslie Berland, senior vice president of digital partnerships and development at Amex, says the company sees social networks as the next big market for online shopping. "From a digital innovation standpoint, we wanted to develop a program that matches what consumers and merchants have been looking for," she says, even if they didn't know they desired it in the form of a tweet-to-buy model. "We know that retailers are very engaged on the Twitter platform, as many of them are advertising promotions and building their brand on the platform, but they haven't been able to keep business transactions on the Twitter platform."

According to Berland, the strategy of tweeting links to products is flawed. She says that while links drive traffic to a merchant's website, Twitter users don't want to leave the platform to make a purchase; she thinks they'd rather stay on their news feed than miss an important tweet.

However, experts who study consumer behavior see several problems with the tweet-to-buy model. Angeline Close, a professor at the University of Texas at Austin and author of "Online Consumer Behavior: Theory and Research in Social Media, Advertising and E-tail," says one challenge will be convincing customers to overcome "consumer resistance," meaning consumers are skeptical of change--especially when it comes to mixing money and their social circle. "'Try to keep your friends and your money separate' is an old adage because, for many people, it's true," Close says.

Nonetheless, Close says some people are comfortable publicly sharing their finances. These consumers see so-called "social shopping" as an opportunity to not only snag deals but display their savings skills. "Price-prone people who want to, in a sense, show their consumer savviness, are going to be the first to embrace these sorts of programs," Close says. "It's something to brag about."

[Read Unconventional Ways to Score an Online Deal.]

So far, Amex has seen the greatest usage among customers in their 20s and 30s. Berland believes this demographic is good for reeling in other Amex cardholders to the program. "Younger people tend to have more followers and are more actively engaged on Twitter," she says, "and those are the customers who can help us spread this virally."

Another factor playing into whether tweet-to-buy shopping will succeed is how today's consumers seek to satisfy one of their fundamental needs. According to Philip Graves, author of "Consumer.ology: The Market Research Myth, the Truth About Consumers, and the Psychology of Shopping," shopping fulfills a basic psychological drive to consume. However, he says social shopping can threaten a buyer's finances. If consumers only use a hashtag to confirm their purchase, Graves worries that tweet-to-buy programs put psychological distance between customers and their credit card. "People will have less of a cue to be mindful of the consequences of their spending and, I would expect, those who struggle to keep to a budget could end up with surprising bills if they become accustomed to buying in this way," he says.

In addition, Price says a program like Amex's, with its 15-minute time limit, allots little room for the customer to abort the purchase. Amex's Berland says the company uses the window because it reserves inventory for shoppers after they tweet the hashtag; the company can only hold the product for so long.

That pressure-cooker effect isn't typically part of an in-store shopping experience, says Price. By physically being in a brick-and-mortar shop, consumers may catch employees and other customers shooting them dirty looks if they arrive at the checkout line and then decide to put products back on the shelves.

With a virtual shopping cart, there are no onlookers casting judgement. Nearly 90 percent of online shoppers have abandoned an online cart, according to a 2010 report by Forrester, a research and advisory firm. In fact, several studies show online consumers abandon their carts about 25 percent of the time. However, Twitter publicly displays a customer's tweet-to-buy purchases, so the embarrassment of canceling a purchase is still a factor.

Others worry about the security of consumers' credit cards. "I'm scratching my head on this one," says Deena Coffman, chief information security officer at IDentity Theft 911, a Scottsdale, Ariz., company that provides identity and credit protection services for families. She questions the safety of the platform, adding that Twitter is notorious for being hacked.

Twitter accounts are, indeed, vulnerable, as exhibited by recent hacks on major companies. For example, attackers broke into Burger King's account in February and tweeted the company had been purchased by McDonald's. Other compromised accounts created a more alarming stir: On July 4, 2011, Fox News's account tweeted President Obama had been assassinated; NBC News's Twitter reported on Sept. 9, 2011, a plane had crashed into "Ground Zero."

While many companies (including Amex) offer protection to customers in the event their credit card information is confiscated, Coffman fears consumers are too exposed when making tweet-to-buy purchases.

[Read: 10 Tips for Staying Safe While Shopping Online.]

Despite such concerns, consumer behavior consultant Graves thinks many people will take advantage of the program. He adds social networks also stand to benefit: "Just as any entrepreneur seeing a crowd of people walking past on the way to a ball game will wonder if there is a way of putting a hot dog or merchandising stall by the side of the road, I think it's inevitable that large social networking forums will seek to capitalize on their ability to attract large numbers of people."

The bottom line: For credit card users, these programs come with risks, but a tweet-to-buy business model satisfies the typical consumer's desire for convenience, deals and responsive customer service--and, with a simple hashtag, gives them a chance to show off their shopping smarts.

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