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Instagram live testing Checkout begins as it gears up to exploit what Deutsche Bank analysts say is a $10bn opportunity

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Slam the 'gram: Instagram goes live with checkout tests as social commerce goes up a gear
Slam the 'gram: Instagram goes live with checkout tests as social commerce goes up a gear
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Instagram begins its Checkout trials – could selling on social be worth an extra $10bn to 'Gram owner Facebook's bottom line? Deutsche Bank thinks so

Instagram, the Facebook-owned photo-sharing app, has begun testing its Instagram Checkout offering – which allows shoppers to buy direct from the social site’s feeds. And it is poised to place Facebook at the centre of a $10bn retail opportunity, research suggests.

 

In a research note published this week by Deutsche Bank, the move into social commerce looks set to be a massive money making opportunity for the social company – and could be another blow to the traditional world of retail.

 

Instagram checkout was first mooted back in March 2019when it announced plans to start letting some key brands – including Adidas, Anastasia Beverly Hills, ColourPop, Huda Beauty, KKW Beauty, Kylie Cosmetics, Nike and Ouai Hair – to start selling from their feeds in the US. It then expanded on its plans in June, when it outlined how that would work – and first mentioned Checkout.

 

Now, according to reports in Business Insider, the financial-services firm has previously estimated that shopping on Instagram could generate $10 billion a year in revenue by 2021 — and now, after a new survey of social-media users it conducted, it thinks it could be even more successful than previously anticipated.

 

"Per our survey, we found that the purchase frequency and purchase AOV [Average Order Value, or the average price of purchases] are actually higher amongst Instagram shoppers than we originally anticipated," the analysts wrote. "While it may take time to scale the product catalogue and transaction velocity on the platform, we think this can provide Facebook a powerful media- and long-term revenue and engagement opportunity," they added.

 

Deutsche Bank analysts also suggest that the move is one that could be a large revenue generator for the site and for Facebook in the coming years. It suggests that 43% of its survey respondents said they were either ’very likely’ (18%) or ’somewhat likely’ (25%) to purchase products on Instagram using the new checkout feature" — indicating a high level of general interest.

 

Furthermore, those that had used it already were even more enthusiastic: 83% said they were either ’very likely’ (60%) or ’somewhat likely’ (23%) to try again in next 6 months. A big point in favour of Instagram Checkout is its straightforwardness, with 42% pointing to "ease of use" as a reason they’re most likely to use it in the next six months.

 

Assessing the Deutsche Bank report, Kevin Murray, Managing Director at Greenlight Commerce, says: “Social media shopping through sites such as Instagram and Facebook is a natural progression as brands continue to try and reach the digital-native modern customer. With the sheer amount of time that younger generations spend on social media, the move to social commerce is inevitable. It is clear the nature of the shopping experience is changing dramatically, with consumers wanting a seamless and consistent experience across channels. Social commerce is now one of those channels.”

 

Murray concludes: “We have seen Facebook and Instagram become a key source of revenue for many of our retail clients. This has mainly been driven by a change in more engaging advertisement formats that are product focused, which works well with the younger generation. It has also helped that it is easier to track and attribute Facebook more accurately, which has led to brands being able to justify proper investment.”

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