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Snap Reportedly Looks to Boost E-commerce With Visual Search

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Snap Inc. (SNAP - Free Report) is reportedly working with e-commerce giant Amazon (AMZN - Free Report) to introduce Visual Search, a camera-powered search engine per TechCrunch.

The feature, designed for Android phones, lets users scan an object, song, barcode, and more using Snapchat’s camera. The scan results are then sent to Amazon, which then displays information about the product and similar products. Users can buy those products or share them with connections across the platform.

In 2016, Snap had entered into a similar partnership with Shazam. A song playing nearby could be identified with the help of Shazam’s database and then sent to a friend, and the artist followed on the platform.

New Revenue Streams in Focus?

Snap’s visual product search feature will help to create diverse offerings for its audience rather than restricting them to a messaging platform. Additionally, it may become a new revenue stream for the company if it can reach affiliate fee terms with Amazon.

Snap’s biggest weakness is lack of revenue diversification with advertising contributing the biggest chunk of revenues. The company has been adding a number of new features to boost user engagement that eventually attracts advertising dollar.

Last October, the company announced a feature called Context Cards, which allows users to view information related to the places that are geotagged in the images or videos uploaded on the application. This enables users to reserve a table at a restaurant as well as book a cab to the location.

Snap initially teamed up with nine companies namely TripAdvisor, Foursquare, Michelin, Goop, OpenTable, Uber, Lyft, Resy and Bookatable, and expects to add more partners down the road.

If Snap connects its visual product search feature to Context Cards, in-app purchases is likely to increase, thereby adding to advertising revenues. However, the company is expected to face competition from Yelp (YELP - Free Report) in this space.

Snap has also teamed up with New York-based event ticket-search engine, SeatGeek to let users buy tickets to events through Snapchat Stories. Moreover, reports state that the company is developing a platform that will allow users to play games on their application.

Snap Inc. Revenue (TTM)

Snap Inc. Revenue (TTM) | Snap Inc. Quote

Snap Faces Stiff Competition in Advertising

Competition from Facebook (FB - Free Report) poses a serious threat to Snap’s advertising revenues. Facebook has started to mimic Snapchat features on its platforms to boost user growth and engagement levels and has also succeeded in making these more popular than Snapchat.

Additionally, Facebook is entering the augmented reality (AR) advertising business where Snap is the current leader. This poses a serious threat to the company.

Snap thus has to upgrade its platform with such innovative features to increase app usage and boost user engagement in order to survive tough competition.  

Currently, Snap has a Zacks Rank#4 (Sell).

You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.

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