What Instagram Checkout means for Ecommerce
Last week saw the launch of Instagram Checkout, a new function that will allow users to buy products directly from brands without having to leave the app.
Currently, the feature is still in beta and only available in the U.S to 23 hand-picked merchants but Instagram will no doubt begin to roll the feature to other brands and markets in the coming months.
Some commentators were quick to predict that this new feature could allow Instagram – and it’s parent company Facebook – to take over online retail and render ecommerce platforms obsolete. Following the announcement, shares in Shopify fell as it was revealed that merchants will no longer be required to link their Instagram profiles to their Shopify stores in order to allow customers to shop through the app.
Is this the end of ecommerce platforms?
There’s no denying the conversion power of visual lead social media. Instagram reports that 130 million users are tapping product tags in shopping posts each month. With the new Checkout feature reducing the friction between discovery and point of sale, this number is likely to increase.
Instagram Checkout will undoubtedly be a game changer; however, declaring that it will be the end of ecommerce platforms seems a little hasty.
The social giant is yet to clarify the finer details of how the Checkout will work but based on what we know so far, the function may pose both an opportunity and a risk for retailers.
Lack of data for retailers
One of the biggest concerns is that every user who purchases on the app is a customer of Instagram, not of the brand they are buying from. Instagram has openly stated that it will only share with brands the necessary information to fulfil an order. After making a purchase, users will have to opt-in to share their email addresses with brands.
This lack of data acquisition will make it harder for brands to build relationships with customers through email marketing and getting them shopping again and again. And with shoppable tags not available for targeted ads, retailers will have to hope that the Instagram algorithm will continue to show posts to customers who have already shopped with them.
Being subject to Instagram’s whims has other potential pitfalls. At the beginning of March, Facebook and its family of apps blackout for an estimated 24 hours, it’s longest blackout to date. Users around the world were unable to access Facebook, Instagram and Whatsapp during the time, taking to Twitter to vent their frustration.
The disruption upset advertisers, who are spending large amounts of money on sponsored posts and influencers to reach potential customers on the platforms. If retailers relied solely on Instagram for selling, blackouts could not only result in a loss of marketing budget but impact sales too.
Lack of brand experience and differentiation
Despite Gen Z reputation of being social media obsessed, they still have a have an affinity for shopping brand websites. In a recent survey, 37% of Gen Z respondents said they had purchased directly from an apparel brand’s website — a 12 point increase on all other age groups surveyed.
In an age where there’s more competition than ever for customer attention, being able to stand out and offer a brand experience that differentiates from competitors is vital for retailers to stay ahead of the curve and help drive conversion.
Allowing users to buy on Instagram and without leaving the app means that the only brand customers experience is the Instagram brand. Meaning that shopping for a £200 coat is the same as shopping for a £20 one.
While this may seem more democratic, not being able to own the customer experience, as well as the relationships themselves will make it harder to stand out against other retailers and inspire customer loyalty. And with customers increasingly looking to buy experiences not just products, getting lost in a sea of different brands and influencers could result in reduced conversion rates.
Distrust of social giants
Thanks to the rise of fake news and scandals like Cambridge Analytica, even digital natives are becoming disenchanted social media.
In a recent poll, 34% of young user stated that they had deleted their social accounts and over half of those surveyed revealed they are “seeking relief from social media”.
With digital detoxes away from social media becoming increasingly popular, retailers who rely too heavily on social media to drive sales may be missing opportunities to connect to customers through their ecommerce platforms and email marketing.
What does this mean for retailers?
While Instagram Checkout may contribute to the growth of a brand’s turnover and will make a great addition to omnichannel strategies, it’s unlikely to get rid of the need for an ecommerce platform altogether.
It’s more likely that the brand’s advertising budgets will shift, alongside their creative and social strategies. As Instagram is such an aesthetically driven platform, simple PDP images won’t have the conversion power compared to creative and visually engaging content. Spending on influencer marketing and campaign imagery is likely to increase to get the kind of imagery that stands out on user’s home feeds and converts them from browsers into buyers.
Instagram Checkout shows a lot of promise when it comes to discoverable shopping, but it’s worth remembering that customers are browsing and buying from multiple retailers and websites. Investing in an omnichannel approach that includes both the ecommerce site and the Instagram Checkout option is the best strategy to ensure the most exposure to shoppers.