wersm_twitter_buy_now.png (601×616)For a long time, Twitter's revenue stream has been made up almost entirely of advertising dollars, but last week, the social media company announced that it is diversifying, by taking a step into the world of e-commerce.

The social networking company is currently trialing a system that enables businesses to embed “buy now” buttons in their tweets, so customers can purchase products directly through the site. The button is being marketed as a fun way for users to shop and find deals on exclusive merchandise, but the new offering ultimately represents the company's latest bid to claw back revenue, following a decline in user growth.

The feature is initially being tested on a small group of brands including, The Home Depot, Burberry and non-profit group (RED), but Twitter expects to roll the service out and increase the visibility of its e-commerce tweets, in the lead up to the holiday shopping season.

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Twitter has dabbled in e-commerce in the past. Earlier this year, for example, Amazon and Twitter teamed up on the #AmazonCart feature, which allows customers to add Amazon products mentioned in tweets straight to their shopping carts. But unlike their current offering, the integration did not allow a Twitter user to pay for a product directly from a tweet.

Adding purchasing functionalities seems like an obvious win for Twitter. The e-commerce market is dominated by companies such as Amazon and eBay, but consumers have been increasingly active on their mobile devices, where Twitter is a top destination.

The technology is part of a larger effort by social networking platforms to combine purchasing with social networking. Newer social networking sites such as Fancy, double as e-commerce engines, and now the older social services are moving in similar directions. Facebook announced in July that it is testing a “Buy” button on its service, and last year, the payments outfit Square rolled out a Buy” option for merchants that use its Square Market service to promote products on Twitter.

But Twitter could have one big advantage over the competition. The social network has access to a small subset of social media influencers who can drive massive sales when given the option. If merchants offer some type of influencer network for affiliates, the Buy Now button could become a huge driver of social e-commerce sales.

At its core, the Twitter Buy Now button offers the chance to increase conversions. If Twitter advertisers can purchase ad space, and then drive sales immediately, it could lead to a more sustainable ROI for e-commerce platforms and direct-to-customer merchants.

Exciting stuff. Stay Tuned.

Topics: Shopping Online, E-Commerce, Twitter, Social Media Advertising, Social Media

Tim Nichols

Written by Tim Nichols

Tim Nichols is a founding partner at ExactDrive, a digital media buying agency with white label, reseller and managed service options available. ExactDrive plans, manages, and optimizes online advertising campaigns with the objective of delivering measurable value and empowering clients to find precisely targeted audiences. ExactDrive has offices in Minneapolis, MN and Milwaukee, WI.

Tim Nichols is also a contributing author on Forbes.com.