Facebook and Amazon announced today a new partnership that integrates Facebook Connect into Amazon shopping. Facebook users will be able to purchase products for their friends on Amazon and the e-commerce site will be able to show product recommendations for Facebook friends for even easier holiday shopping — although Amazon emphasizes it will not contact Facebook friends or reveal account history.
The Amazon and Facebook partnership exemplifies how companies can leverage existing strengths to enhance products, services, and capabilities. In the case of Facebook and Amazon, Amazon is leveraging Facebook’s vast, half a billion user network and Facebook is utilizing Amazon’s powerful e-commerce capabilities.
Partnerships are a way to share risk, exchange ideas, build capital and pool resources. Here are several reasons why partnerships, like that between Amazon and Facebook, provide great opportunities for entrepreneurs to create larger impact:
Obtain a new skill set
Facebook does not have the powerful e-commerce skill set of Amazon and Amazon doesn’t have the vast, interconnected, half-billion user network of Facebook. By combining their competitive strengths, they are able to forge another skill set: web shopping 3.0.
Grow customer base
Signing on Facebook’s half a billion users, Amazon will greatly increase its user base. Although Amazon already has a large customer base (it is the #1 online retailer), Facebook will extend that reach even further.
While Amazon has significant potential to grow its user-base via Facebook, Facebook can create another revenue stream from Amazon purchases. Although details of how Facebook will monetarily benefit from the partnership have not been disclosed, referrals are certainly an incentive for the social network.
Create a leadership position
Kaboodle, MyItThings, Zebo and Woot are among numerous social shopping sites. There isn’t a clear leader in the social shopping space… until now. The merging of two digital titans, Amazon and Facebook, will surely and quite immediately create a leadership position for the two companies in the social shopping space.
Although the Amazon, Facebook partnership details have yet to surface, their sheer influence (in users, profitability, market leadership) will position the companies ahead of the curve. We bet the social shopping market will soon have a clear leader.