Pinterest Is Worth $2 Billion Because Its 25 Million Users Are Rich, Female, And Like To Spend

pinterest-man-woman-ipadAfter a tough day at work as a publicist in Minneapolis, Becca Bijoch would often indulge in a little retail therapy. She usually headed out to the stores as she did not care much for online shopping.

That changed last year when the 26-year-old joined Pinterest, a photo-sharing website that allows users to “pin” images to online bulletin boards based on their interests and to follow others. Bijoch says she has found all sorts of things that she bought after seeing them on Pinterest, from great kitchen tools on CrateandBarrel.com to clothes at Asos.com.

“I’m probably spending more now. I’m on the couch at night, after having two glasses of wine,” Bijoch says, but she has no regrets. “I tell everyone that Pinterest has changed my life.”

Pinterest, which was the fastest standalone website to hit 10 million unique visitors a month, now has 25 million members, of whom many – like Bijoch – are young, female, well-educated and have disposable income.

Retailers are hankering after these users, but it is sometimes difficult to nab them because Pinterest is an ad-free website and “pins” flourish virally. While many retailers have learned how to interact with consumers on Facebook and Twitter, they are still struggling to figure out Pinterest and the ways to make money out of reaching shoppers through it.

In that effort, many retailers have installed Pinterest buttons on their main websites, created their own Pinterest pages, and allocated marketing dollars to acquire followers. While Pinterest says it does not track metrics internally, many ancillary businesses have popped up to help companies harness the revenue-driving possibilities of the site.

“It’s a huge window-shopping platform,” says Kyla Brennan, chief executive of HelloInsights, a Santa Monica, California company that provides analyses of Pinterest use. “It helps people find what they really like. Does it encourage people to be a little impulsive? Of course.”

E-commerce experts say Pinterest generates more dollars per users than some other social media sites, even though Facebook, the world’s largest social network with more than a billion users, is a leading driver of shopping by volume.

Pinterest shoppers, on average, spend nearly $170 per session, according to a study by RichRelevance, an e-commerce consultant, which tracked 700 million shopping sessions. In comparison, Facebook shoppers spend $95 per session, while Twitter shoppers spend $70.

Major retail brands with a presence on Pinterest include L.L. Bean, with more than 5 million followers; Nordstrom Inc , with more than 4 million followers; and Lululemon Athletica Inc with close to 2 million. Other major players like Gap Inc and Urban Outfitters Inc have fewer followers on the site, but are growing.

The three-year-old Pinterest recently closed a $200 million round of financing, which raises its value to $2.5 billion.

PINNING COSTS

Most companies’ Pinterest activity is handled by their social media teams, but the efforts differ from promotions on Facebook and Twitter because Pinterest boards are interest-based and not timeline-based. Nordstrom‘s Facebook page, for example, features a couple of products daily that are on sale or seasonally interesting, but its Pinterest page is an evergreen collage of fashion lifestyle images.

As there is no direct advertising and Pinterest is still growing, the marketing cost to businesses of acquiring new users is lower than other sites, says Daniel Maloney, CEO of PinLeague, a consultancy that tracks social media usage.

“The current cost of acquiring a Pinterest follower is a penny to 50 cents, depending on type of business. That compares to 50 cents to $2.50 on Facebook,” he said.

To finish reading this post, head on over to Business Insider.
To finish reading this post, head on over to Business Insider.

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