22nd March 2019 - No Comments!

How will Instagram checkout transform e-commerce?

It was announced on Monday that Instagram will be testing out a new feature, ‘Instagram Checkout.’ Instagram checkout is a new facility that allows users to shop seamlessly through the Instagram app. Not only will this allow for faster checkouts, it should also improve the conversion rate through the channel. Facebook has generally ruled in regards to providing businesses with higher conversions. So will this new functionality now pave the way for future shopping online and stronger conversions through Instagram?

It was inevitable that the Instagram checkout feature would be implemented at some point, it seems a no brainer and a profitable solution, not to mention a more seamless approach to shopping on the platform. Whilst the new feature opens up a wave of possibilities for retailers, it also leaves the platform open to further scrutiny in regards to privacy practices and data exploitation. Why? As customers shop with Instagram, the platform will now have the ability to save the users payment data for future purchases and marketing strategies.

Without giving a biased view, let’s look at how this feature will work and how it will impact the ecommerce industry.

How this affects customers; As previously mentioned, Instagram will be able to store payment information within the app to allow users to make quicker purchases. Whilst this is great for customer journey, it now gives the platform greater control over customer data and opens up further exposure to fraud and hacking.

The main goal is to offer a better feature that will encourage users to complete a purchase, as previously the shopping process was slow causing the user to abandon cart in frustration.

How this affects retailers; Although there are many positives that can come from the new roll out including increased sales for brands, it could also limit traffic for other potential sale opportunities. For example the average shopper might be looking for a particular product on a website whilst browsing, but may also choose to browse other categories too. However, these opportunities will be limited if the user is just staying within the Instagram app and not visiting the site.

This is the same issue for any offers that may be implemented on landing pages, pop ups etc reducing visibility and CTA’s .This is just one of the challenges that the rollout faces. It also comes at a further cost to businesses, not only do they pay the platform to advertise they now have another third party payment provider to pay as Instagram will in return charge retailers a selling fee for using this feature. With margins already at record lows, can retailers afford to pay CMS platforms and now social platforms a % of their profits?

There are more than 20 brands that will use checkout to start, these include the likes of Nike, Adidas, Dior, H&m, Prada and Zara to name a few. When it comes to the payment process, payments accepted will initially include Visa, Mastercard, Discover, and Paypal. As the feature expands, brands will be able to integrate with Shopify, BigCommerce and other global CMS platforms

How this affects Instagram; Instagram will be in a stronger position than brands, as customers who purchase goods through Instagram checkout are effectively Instagram’s customers, not the brand’s. Customers will be required to fulfil certain information during an order, but not necessarily have to give their email address, meaning brands could lose vital steps in the traditional sales funnel.

With Instagram being in control of the process they will also be able to control the customer experience. For example, they have the ability to optimize the ads to Instagram’s interests rather than the interest of the brand. These are all complications that may surface, but we will not know to what extent until it rolls out. Essentially, there is potential for customer relationships to be compromised as these won’t be managed by the brand, as well as customer experience involvement. This is a big price to pay, but one which they may feel is worth it. There is a concern that the Instagram algorithm will favour brands that use Instagram checkout over ones that don’t, meaning some brands are at a disadvantage.

We don’t yet know how this will all transpire and whether the positives will outway the negatives. What we do know is that Instagram is making its mark in the ecommerce world, checkout is just one part of their long-term investment in shopping. We can expect that they will probably introduce even more ways for people to enjoy shopping on Instagram in the coming years.

Here at Vast we keep to update with the latest trends and roll out’s . Get in touch to find out more and see how we can push your brand in the right direction.

 

Published by: Vast Digital in Uncategorised

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