Instagram introduces Checkout feature
Are you a big online shopper? Well, if that’s you and if you spend a lot of time on Instagram, you’re probably ecstatic that Instagram has now released the ability to checkout directly within the app. As of this writing, around 20 or so big brands are piloting this new feature as a closed beta test in the US only. Among some of these brands are Zara, Nike, Adidas, Burberry and Warby Parker.
If you follow these brands, you may see a big blue button saying ‘Checkout on Instagram’ on some of their products. You’ll save your credit card information and seamlessly be able to purchase products right there, in the app, without ever leaving or launching a new window.
A natural evolution
This is an evolution from the current way product marketing has worked on Instagram. Instagram users have, for the past year or so, been able to see content from online retailers with a tag that shows them the item name and pricing. This is what is known as Instagram Shopping. If you tap on the post you find more details about the product as well as the shopping link. But when you click on the shopping link it takes you out of Instagram onto the retailer’s website to complete the purchase. As you can imagine, there’s quite a deal of friction in this experience, with shoppers often becoming frustrated and abandoning their carts.
Instagram reports that 130 million people a month tap on product tags to learn more about the product and that this number is growing substantially over time. Some retailers have reported as much as 1400% increases in sales and traffic after they implemented Instagram Shopping. So imagine what this new in-app checkout feature could do to those numbers!
The ‘shopping mall’ experience
Instagram already has an Explorer tab which allows users to discover products from brands that they follow, as well as to discover new brands that Instagram thinks they will like based on the rich data they have about like-minded users. This data empowers them to deliver a very customized experience. An experience akin to walking into a shopping mall that has been personalized just for you. There’s really nothing like it, not even Amazon, which is not as realistic or tangible an experience as Instagram is. Amazon is good at quickly giving you exactly what you want when you go there knowing what you want. It’s convenience shopping. Instagram is exploratory shopping, which is a form of entertainment for many consumers.
Amazon doesn’t have the ‘soft’ data about it’s visitors either. Data such as whether they’re single, what their disposable income situation is, where they like to hang out and with whom. So Instagram trumps Amazon in its ability to woo its users with surprisingly accurate but undiscovered brands and products. Because of it’s visual storytelling qualities, Instagram feels more like a pleasurable experience strolling through a shopping mall, being able to peruse, window shop and ultimately buy.
What’s in it for whom?
So how will Instagram benefit from this move? They’ll take a small percentage of the sale for the convenience, but it’s not clear at this point what that percentage is. It’s definitely a considerable new revenue stream for the tech giant. In-app checkout for the pilot brands is currently only available on organic posts, but I can see this eventually getting rolled out to Instagram ad business which would, no doubt, skyrocket their revenue.
Personally, as a marketer, I love the whole concept because it removes friction from the user experience. It’s what shopping in the Digital Age is supposed to look like. Instagram appeals to a consumer who is in a shopping mindset, so the platform is really well-suited to this kind of functionality. It doesn’t feel intrusive for now, because it’s limited to organic posts.
But if they roll this out to paid ads, I can see Instagram becoming a transactionalized platform that could be a big turn-off for many of its users.
There’s no doubt that, with this new checkout feature, Instagram will get even sharper insights into what people like to buy and that this data will be invaluable, not only for Instagram themselves to be able to deliver even more personalized experiences to their users, but also for advertisers (if this is eventually made available as paid ads) in their efforts to target in-market audiences.
Elephant in the room
So the elephant in the room with this conversation is: How will personal data be handled by Facebook (who owns Instagram) with this new feature? Given the controversies recently surrounding Facebook and its handling of private data, perhaps some people are going to be reluctant to give up their credit card information for lack of trust in Facebook?
I don’t think the fact that Instagram now has better insights into what users like to buy will anger them so much because it will allow them to be offered the chance to interact with brands and products that align with their preferences. It’s going to make their experience richer. And therein lies the dichotomy of proper use of personal data. Using people’s data to make their lives better in terms of online browsing and shopping is a good, wholesome marketing activity. Mishandling private data and using it for activities that have nothing to do with optimizing the user experience is a shady activity. Facebook will have to be very careful how they handle this.
All-in on Instagram?
How about the brands who use this in-app checkout feature? They’re going to lose some of the customer and behavior data (how their products were discovered) that they’ve been used to collecting on their own websites. With this new model, since shoppers are no longer ending up on the brand’s website, there’s a lost opportunity to capture this data as well as to allow the customer to browse other products on their website. I think brands are going to have to be careful not to become too reliant on Instagram for selling their products, and be mindful of not throwing all their eggs into the basket of Instagram checkout because, at the end of the day, it is a walled garden and nobody knows what will happen to it in the future or how their algorithm or pricing structure will change. On the flip side, brands need to do whatever they can to cater to their customers and allow them to shop on whichever channel is most convenient to them at any given time. Opening up this new channel on Instagram is a way to do just that.
Where is this headed?
From a 30,000 foot view, this looks very much like Facebook’s foray into the realms of what the WeChat app has achieved. In China, WeChat is the app of choice for messaging, voice and video calls, playing games, hailing taxis, buses and metro services, engaging with mini brand apps, engaging on social media and purchasing products. It’s all one seamless app!
WeChat is owned by the Chinese tech giant Tencent and has over 1 billion monthly active users and 79% market penetration in China.
Mark Zuckerberg has, no doubt, set his sights on achieving a similar feat and, one could argue, his acquisition of WhatsApp in 2014 for $19 billion was part of this plan to consolidate multiple platforms into a WeChat equivalent. Especially when the data had revealed that usage levels of Whatsapp were dangerously competitive with Facebook Messenger. Now, as Facebook has recently acknowledged that it is considering merging the chat app functionality of WhatsApp, Instagram and Messenger into a single product, it seems that is the direction Zuckerberg is heading in.
From a marketer’s perspective, I’m looking forward to seeing how this integrated checkout will affect sales and engagement and look forward to it being released to the general market soon!
