How Instagram became an engine of e-commerce

How Instagram got out from under Facebook's shadow.

How Instagram became an engine of e-commerce

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It is a classic tension in business: pleasing users versus making money. You’d think it would be simple. But countless enterprises compromise depending on who’s writing the check. If users aren’t always the ones paying bill, as is the case in ad-based media businesses, the commercial urge easily can lead greedy and short-term-oriented managers astray.

In her illuminating feature in the new issue of Fortune, “Confessions of an Instagram Addict,” Kristen Bellstrom explains how well the Facebook unit has walked the line so far. Begun as a photo-sharing site with no revenue whatever, Instagram under Mark Zuckerberg’s ownership has had to stay true to its aesthetic roots while bringing in cash.

As Bellstrom tells it, using her own devoted usage as an example, Instagram largely has succeeded. Its ads sparkle and show off the brands that place them. Its user-generated content has become an e-commerce engine in its own right. And together with Google’s YouTube, Instagram has created an all-new and lucrative class of influencers who’ve built their wealth on the app’s success.

Perhaps most surprisingly, Instagram has done all this without being too closely associated with Facebook. That’s quite a feat considering Facebook’s tarnished reputation and that Instagram’s technology and selling tools are intertwined with its parent.

Want more Instagram? The Wall Street Journal favorably reviewed Sarah Frier’s new book, No Filter. Want more Facebook? I highly recommend this New York Times feature about Zuckerberg’s consolidation of power. As an inside-baseball aside, the story is even more impressive because on the topic, and The Times did it anyway and advanced the story admirably.

***

I erred yesterday when I wrote that only public companies appear in the Fortune 500. In fact, 29 companies that report their finances to some governmental authority are on the list. These include mutual insurance companies that file with state regulatory bodies and privately owned companies with publicly traded debt that report to the U.S. Securities and Exchange Commission.

Adam Lashinsky

@adamlashinsky

adam.lashinsky@fortune.com

This edition of Data Sheet was curated by Aaron Pressman.

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Amazon Is Said To Be In Talks To Buy Bankrupt J.C. Penney

Amazon.Com Inc. (AMZN) is said to be interested in snapping up debt-strapped J.C. Penney Co. Inc., (JCP) in a deal that would bolster the online retailer’s apparel business, Women’s Wear Read More... The post Amazon Is Said To Be In Talks To Buy Bankrupt J.C. Penney appeared first on TipRanks Financial Blog.

Amazon Is Said To Be In Talks To Buy Bankrupt J.C. Penney

Amazon.Com Inc. () is said to be interested in snapping up debt-strapped J.C. Penney Co. Inc., () in a deal that would bolster the online retailer’s apparel business, Women’s Wear Daily reported.

Shares in J.C. Penney plunged another 23% to $0.18 before being halted on Monday. The report comes after the U.S. apparel and home retailer on Friday filed for bankruptcy protection proceedings.

As part of its “renewal” plan, the Plano-based company said it will to cut its debt, streamline operations, close stores and spin off a real estate division in a move to come back in a stronger position. It has about 850 stores across the U.S. and Puerto Rico.

“There is an Amazon team in Plano as we speak,” according to the WWD report. “There is a dialogue and I’m told it has a lot to do with Amazon eager to expand its apparel business.”

J.C. Penney has $500 million in cash on hand as of the Chapter 11 filing date, the retailer said in a SEC filing. In addition, the company received commitments for $900 million in financing from its existing first lien lenders, which includes $450 million of new money.

“This financing, combined with cash flow generated by the company’s ongoing operations, is expected to be sufficient to meet J.C. Penney’s operational and restructuring needs,” the company said. “As part of the commitment from its existing lenders, J.C. Penney will explore additional opportunities to maximize value, including a third-party sale process.”

It looks like Amazon is on a shopping spree as the economic crisis induced by the coronavirus pandemic is creating opportunities for mergers and acquisitions. The world’s largest online retailer has reportedly also held talks to buy debt-strapped theatre operator AMC Entertainment Holdings Inc. ().

Wall Street analysts are bearish about J.C. Penney’s stock with 2 Sells and 2 Holds adding up to a Moderate Sell consensus. Should the $0.36 average price target be met, investors could be looking at 98% upside potential in the shares in the coming 12 months. (See J.C. Penney stock analysis on TipRanks).

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The post Amazon Is Said To Be In Talks To Buy Bankrupt J.C. Penney appeared first on TipRanks Financial Blog.

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