This year Instagram will rival Amazon in terms of ecommerce disruption
Instagram to become a much more crucial commerce channel
January 30, 2020
This time last year Instagram launched Checkout in beta in the US. The feature, currently only available to a number of selected brands, points to a very near future where most of our shopping takes place on social channels.
Checkout, in a nutshell, lets users order and pay for items within the Instagram app itself. While we see other platforms in the US and UK building ecommerce functionalities into their offerings, like Pinterest’s Lens, Facebook’s shoppable tags and sales alerts, all of them currently still direct users to the retailer’s website for the final transaction. Instagram Checkout is the first in-app commerce development and is blurring the lines between social and ecommerce.
Brands beware: Instagram is about to become a much more crucial commerce channel and could potentially be as disruptive as Amazon.
Closing the gap between discovery and purchase.
Social is already a key channel for discovery and consideration. As many as 81% of us admit to having bought something after seeing it on social media, and according to GlobalWebIndex, 42% of internet users research brands and products actively using social, with 30% citing this as their primary reason for using social media. As social media usage has matured, our online behaviours are noticeably less about sharing personal information and are increasingly purpose-driven. Users are actively opening the app to take a look at the latest trends that brands are boasting on their profiles, rather than just to check their friend’s posts.
And the platforms have rushed to capitalise on this potential. Facebook, Twitter, Pinterest and Snapchat all have products for advertisers that help aid product discovery and reduce the steps to visit a retailer’s website. But the user experience to date has often been bloated and messy. Social has become a confusing and busy bazaar of advertising, personal updates, marketplace and news. Instagram’s interface meanwhile necessitates simplicity. It’s much more streamlined, and advertising feels much less unwelcome.
“Instagram is the glossy magazine of social media. Products feel incredibly native and appealing on the platform. Who hasn’t been tempted to buy something that’s come up in their Instagram ads?”
Meanwhile, Amazon has struggled to make Discovery pleasant on its platform
At the other end of the funnel, ecommerce retailers have struggled to make product discovery easy or pleasant for users. Amazon in particular excels at giving you exactly what you want and quickly. A recent study from Feedvisor found that 74 percent of online shoppers in the US go straight to Amazon when they are ready to buy a specific product. But while this is great for planned shopping, it doesn’t facilitate impulse shopping. Yes, you might stumble on brand or product you weren’t aware of, but this will only be presented to you as a direct comparison to something you’re searching for. Its shopping for a specific need. Not shopping for enjoyment.
This is where Instagram excels. With its highly visual aesthetic, Instagram is the glossy magazine of social media. Products – especially apparel, beauty and interiors – feel incredibly native and appealing on the platform, making it the perfect window shopping experience. The Facebook-owned algorithm is incredibly adept at predicting and surfacing content you want to see. Who hasn’t been tempted to buy something that’s come up in their Instagram ads? Direct commerce functionality is the obvious next step.
A glimpse into the future
When we look at other markets such as China, where social commerce is entrenched, we get a glimpse of what our ecommerce future may look like. Now-ubiquitous messaging app WeChat introduced in-app ecommerce early on, and even allows brands and influencers to livestream shoppable product content. This creates a hugely interactive digital shopping experience where shoppers can quickly discuss product benefits and queries directly with the brand, in real time. WeChat has successfully weaved in other services, like financial products, taxi hire, and food delivery making it a one stop destination for shoppers. It has quickly replaced cash as a preferred payment method and allows users to pre-pay for everyday items and easily split the bill. For the shopper, this means significant gains in terms of convenience, and for the platform it means they become more indispensable to brands and therefore advertisers.
Developed markets meanwhile have been slow to embrace the ‘Do- Everything App’. For now we prefer to keep our financial, transport and media apps as separate entities. But this might change. Instagram launching Checkout coincides with the rise of mobile payments. GlobalWebIndex report a 5% Y.O.Y increase in mobile payments globally, and while the UK is slightly behind other markets, the growth here has been steady, especially amongst younger consumers. As we become more accustomed and comfortable with buying through mobile, why shouldn’t established mobile entities like Amazon, Google and Facebook facilitate this?
What does this mean for brands?
For consumers and brands, the introduction of Instagram Checkout seems like a win win. For the time being, shopping on Instagram is a pleasant experience. This will only improve the overall experience for users, making it increasingly more convenient and seamless. For brands, this means the shopper journey from discovery to sales will be shorter and social will become a more critical channel – especially in categories that already thrive on impulse buying like beauty and fashion.
That said, all of this points to the ever-increasing power of Amazon and Facebook. As they continue to innovate, brands will be increasingly at the mercy of these ecosystems to reach consumers. If you can buy directly from Instagram, why visit a brand’s website at all?
Media in particular will be negatively affected as budgets will be increasingly diverted into Amazon Advertising and Paid Social.
Which categories are likely to be most affected?
Social commerce stands to disrupt the categories that have been revolutionised by ecommerce the most, with fashion, beauty, interiors and tech leading the charge. The Checkout function also has the biggest implications for impulse purchases. It’s easy to imagine buying something in the range of £20-£40 for example, but hard to envisage making a high consideration purchase through Instagram Checkout. Consumers are still likely to prefer an instore engagement when making purchases of this size.
What to expect in 2020
In the short term, we can expect an increased roll out of payable services through Instagram and Facebook as they seek to mimic the one-stop destination model of WeChat. This will likely take the form of tactical partnerships rather than bespoke offerings to leverage the infrastructure of other companies in order to move quickly. For instance, imagine being able to book your Uber or order your Deliveroo all through Instagram. We can also expect other social platforms to follow suit, so look out for ecommerce updates via the likes of Twitter and Snapchat. In the longer term, we can anticipate Instagram starting to mimic WeChat and other Chinese ecommerce apps, to make shopping more interactive and easy by introducing features like Shoppable Live Streams and Wallets.
Since the introduction of shoppable posts, Stories, and the expansion of its Explore page last year, brands already have a wealth of tools to engage consumers on the platform that users have been receptive to. Instagram Checkout feels like a natural extension that will please users, rather than feel superfluous. While it only exists in beta at the moment, reception has been positive. It seems highly likely we can expect to be using it in the UK by Christmas 2020… if not before.
A version of this was published in Internet Retailing.