The recent launch of Instagram Checkout (albeit in a closed beta trial for the time being) raises some interesting questions about where the platform is heading and how it’s positioning itself for the future.
To anyone with an interest in how social and retail work hand-in-hand, it will come as no surprise that functionality like this is being rolled out. Due to its visual nature, Instagram is essentially a digital shop window and brands have been successfully using it to drive traffic to their own sites through tagged items and the “View on Website” button on posts for some time now.
But what does this new way of shopping, that keeps customers and transactions in a single app really mean for those with a vested interest in what happens on “The Gram”?
Currently only a limited number of brands in the US are able to use Instagram Checkout while it’s in beta trial. Instagram have picked some big names to trial it with including Nike, Kylie Cosmetics, H&M and Uniqlo. It’s pretty safe to say the functionality will be rolled out across the US and other territories. More retailers will soon be joining the party.
For retailers able to use it, the benefits will be relatively easy to recognise; a new channel to drive sales, quicker, frictionless transactions, and the ability to better prove the ROI of Instagram activity, to name just three.
On the flip side, there are things to be wary of. There’ll be a selling fee applied to all transactions that use Instagram Checkout which the retailer, rather than the customer, will have to shoulder. Retailers also won’t be able to gather as much data on customers who have to opt-in to share an email address with the retailer they’re purchasing from rather than register on site.
Where does this leave retailers, particularly smaller ones who aren’t yet able to use the functionality? Playing catch-up, unfortunately.
For customers, Instagram Checkout will largely be very positive. Checkouts will be used on feed posts, stories and explore content so will be everywhere that customers will see products they might like to purchase. Being able to purchase in-platform means fewer steps in the purchase journey which will translate to a slicker experience for the end user. Customers will very much be able to “see now, buy now”.
Payment and delivery info will be stored within Instagram itself (if the customer wants to store that info) meaning actual checkout can be near-instant and with no need to sign up for a user profile for each individual retailer customers can retain ownership over their personal data with greater ease. Orders can also be tracked and managed within Instagram itself, with customers receiving notifications from Instagram, rather than the retailer when orders ship.
The only downside is if a customer’s retailer of choice isn’t using Checkouts it could lead to frustration, but the onus is placed on retailers to step up and use the functionality.
It’s no secret that Mr Zuckerberg has got his eyes on the monetary prize when it comes to any moves made with Instagram or Facebook.
This next step to actual shoppable content could be the key to unlock potentially massive revenue for Instagram. This would stem from taking a cut of purchases made in platform through seller fees, but if (or maybe when) Instagram makes checkout enabled ads available that could be the holy grail of ad revenue for the platform.
What will be interesting is how this is managed amongst the integration of Facebook, Instagram and WhatsApp into a single platform. Will Checkout ads lead the charge to an amalgamated platform where anything and everything is shoppable? Time will tell.
Instagram checkout could be an absolute game-changer for Influencers.
If influencers are working with brands they can start to act as their shop window or digital storefront to drive provable purchases. With influencers and brands able to track exactly what revenue was driven by influencer activity (rather than the current prevalent “finger in the wind” approach) it enables those with engaged followings to increase their worth to brands.
On the flip side, if an influencer isn’t delivering then data leaves little room for argument. Brands will easily be able to identify who delivers what they need and switch activity to influencers who can better prove ROI. Instagram checkout and the information it will provide brands could shift more power to micro or nano influencers whilst proving an issue for “super-influencers” who just have enormous followings but can prove little other benefit.
It could cause a seismic shift in the influencer landscape.
The Shopify’s and Big Commerce’s of this world may take a hit from the introduction of Instagram Checkout, but the impact will only be slight in the short term. Instagram have said they’ll allow merchants to integrate tools with checkout feature and it’s probably safe to assume that platform providers will do the same.
It’s naïve to think that brands are going to shift all their ecommerce activity to Instagram wholesale as it is still just a single channel in a wider mix of online activity. However, if it proves to be popular it could mean a significant chunk of purchase traffic is diverted away from retailer sites.
Platform providers need to consider what this means for them in the long-term of working with retailer partners and how they fit into the ecommerce mix.
Russ Powell is head of marketing, Red Hot Penny