Breaking down Instagram's new Checkout feature

Prospective buyers can tap on the "Checkout on Instagram" button to purchase an item; they are then taken through the requisite steps of completing the transaction.

What about all the data?

Facebook’s recent announcement to synchronize its family of apps – Messenger, WhatsApp and Instagram – has been in part to push e-commerce opportunities.

An executive at one of the brands testing the checkout feature called this a natural evolution of social media, though Instagram is late compared to apps in eastern markets like WeChat and Line, which already offer more robust e-commerce opportunities.

The executive added that working with apps like WeChat and Line “feels more like a partnership” because of how much data they make accessible to brands, whereas the Instagram-brand partnership more resembles a retailer-fulfillment center relationship.

“The difference is that with a WeChat or a Line, the brand collects the data. It's great for CRM, it's great for omnichannel retargeting, and that's the real value for brands,” said the executive.

"Maybe it's going to work really well [with Instagram], maybe it's going to be really scalable, and if that's the case we'll continue. But if there's no scale and no data collection, we'll revisit it obviously. I think it's a great step forward."

A spokesperson from Instagram told The Drum that Instagram will “only pass along the necessary information for the seller to complete the fulfillment," such as contact information and the delivery address. All payment information stays within Instagram, though users can opt-in to share their email addresses.

What does this mean for the shopping experience?

Now that shoppers don’t need to migrate to a separate webpage, Instagram hopes the appeal of a more seamless experience will capture impulsive buyers.

Technology companies BigCommerce, Shopify, ChannelAdvisor and CommerceHub all partnered with Instagram on the checkout feature. BigCommerce chief product officer Jimmy Duvall said the function builds on Instagram’s ability to drive product discovery.

“As consumers, we want a quick and easy shopping experience, and merchants –pushing to increase conversion and loyalty – want to do whatever they can to simplify this experience for their customers. Removing that additional barrier to conversion is just one way to improve checkout – but one that will make a significant difference for both merchants and consumers, and result in increased sales,” said Duvall.

But Rachel Tipograph, chief executive officer of MIkMak, a social video commerce platform, said Instagram may struggle to find success with its feature because there’s too much competition in the marketplace.

“Instagram shopping features only apply to [direct-to-consumer] brands and do not integrate with a brand's overall retargeting, CRM ecosystem,” said Tipograph. “The reality is the majority of e-commerce sales online actually come from a few key third-party e-retailers… If you're a brand where the majority of your e-commerce sales come from these major third-party e-retailers, the native features within Instagram and any other social platform do not help.”

The most recent report from Similar Web found that Amazon, eBay, Walmart, Target and Etsy are the top online marketplaces by monthly traffic. Amazon is at the top at over 2bn monthly visitors with an 8.4% conversion rate; Etsy is fifth at over 128m with a 4.4% conversion rate.

A spokesperson from Instagram said that more than 130m people tap to reveal product tags in shopping posts every month, but would not share how many of those convert to buyers.

Tipograph added that this feature focuses too much on brand loyalists who are already following and buying from these brands, and that it will struggle to capture impulsive buyers as the consumer shopping journey hits too many touchpoints.

A 2018 report from Episerver found that only 17% of shoppers say buying something is their main goal when first visiting a brand’s site.

What does it mean for marketers?

The checkout feature continues Instagram’s push toward more natively integrated commerce experiences.

Both Tipograph and the brand executive testing the feature said it likely won’t move to spend away from influencer marketing, but it will put a renewed focus on creative.

Mother New York strategist Evan Carpenter said this in-app feature further cements platforms like Instagram as a necessary partner for anybody’s media plan, and its emphasis on native content will force marketers to innovate.

“Closing the gap between content and transaction almost gives us a different brief that could take people away from that hybrid creative. I'm curious about if this will result in less interesting content flooding our feeds - it's up to us as creatives and advertisers to continue to hold ourselves to the high standard set out by the platform,” said Carpenter.

One constant is the benefit checkout will have on DTC brands looking to drive customer acquisition. Blaise Grimes-Viort, chief services officer at The Social Element, said the feature will create a “rapid feedback loop” of investment to conversion.

“The excitement stems from the ability to make a clear case and demonstrate social media ROI in terms of product sales: tying advertising, advocacy and engagement spends to conversions,” said Grimes-Viort.

This was the natural evolution for Instagram. It only makes sense to streamline the buying process on an app Facebook chief executive Mark Zuckerberg has pushed to lead his company's commerce initiative. Now Instagram just needs to prove its worth as a partner to keep brands coming.