We still have no idea how Pinterest is going to justify, its $11 billion valuation. The online bulletin board introduced a product called Buyable Pins recently, that will let merchants take advantage of the many dresses, shoes, couches, and necklaces. More than two million products will be available to buy, when it debuts on Apple devices this month, and Android later this year.
At the company’s big press conference in San Francisco, Pinterest CEO Ben Silbermann said, “There will be no fees for buyers and no fees for merchants.”
Where does Pinterest make money, when a consumer uses the service to buy something from Macy’s, Neiman Marcus or Nordstrom? Silbermann does not address that question. The idea seems to be that brands will be able to pay for placement, if they want a Buyable Pin to get noticed. In that regard, it is similar to the company’s current revenue model around Promoted Pins, which allows brands to create targeted ads.
Pinterest has raised over one billion dollars in venture funding, so it can afford to experiment. Eventually, investors need to see returns on their capital. Pinterest is going to have to become a significant player in an e-commerce market dominated by Amazon.com. It will also have to compete for ad dollars with Google, Facebook, and Twitter.
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