Instagram has just changed eCommerce with its latest announcement about Instagram checkout. This has been teased for a while, so while no one is surprised, the impact of this announcement cannot be overlooked.
As anyone with an Instagram account already knows, the social media platform has been a crucial channel for eCommerce sales (and retail sales) for years now, but it has always been an engagement platform rather than a direct channel. Now, Instagram isn’t just helping drive traffic to websites; it is testing a new feature that will help it become a fully-fledged sales channel for eCommerce.
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Checkout allows Instagram users to buy from select brands without having to leave the app. When users click on a product in a brand post, they’ll see a blue “Checkout on Instagram” button, as in the following example:
Once they tap the “Checkout on Instagram“, users have a similar experience to most other eCommerce apps – having to enter personal and shipping details, as well as fill up the payment criteria.
And just like most eCommerce services, users need only enter their information the first time they make a purchase; Instagram saves that information for future purchases.
It is mimicking other eCommerce apps to essentially put eCommerce services out of business – especially fashion eCommerce. Or, if we look at the positive side – businesses can now invest in a free Instagram account instead of developing an eCommerce app.
But before we explore that dark wormhole, let’s look at how else Instagram is impacting the online shopping industry.
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Before the Instagram announcement about Checkout,Facebook released a report on how Instagram boosts brands and drive sales. The report stated that 87 percent of people surveyed had said they’d taken action after seeing product information on Instagram. Forty-six percent of those people actually made a purchase online or off.
Instagram Checkout might just add fuel to that fire, as it removes the barrier or drop-off from people who don’t like to switch apps or are reluctant buyers. This could potentially even change the face of consumer marketing with budgets being allocated heavily in favour of social media platforms.
We still don’t know everything
As much as we like to speculate (we do not do that at Tech Collective), we still don’t know enough about it to judge its true impact.
So far, only 23 brands have been chosen by Instagram to trial it out in the US. This includes fan favourites like Adidas, Zara, Nike, Uniqlo, Burberry, and others.
Once these brands start rolling out their Instagram campaigns wwith the Checkout feature, we can see how US consumers react to the changes.
There are serious implications to consider
Right now, we know this. Like all platforms, Instagram will take a percentage of the sales. While this may vary by market, industry and popularity, Facebook and Instagram are not shy about being aggressive with pricing until they corner the market. This can lead to shaved margins.
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Privacy is another factor. If you value your privacy, and have your visibility on private and you don’t ‘like’ posts regularly, would you like to share your payment details with Facebook. If you are not advertisers, chances are you haven’t given them your credit card details yet.
We also need to look at the eCommerce platforms like Zalora, Lazada, Tabao, Shopee, and others – is this the end of their fashion segment and eventually all other segments? As a consumer platform, they cannot compete with the Instagram community in terms of numbers and even engagement. Are we seeing the end of third-party platforms?
On a personal note, we are also most likely going to see a lot of Southeast Asian influencers start to become fashion entrepreneurs… We have no opinion about this, other than it is very likely to happen.