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Checkout for Instagram

With the launch of Checkout for Instagram, who will it really benefit, consumers, brands or Instagram themselves?

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#e-commerce

Could check-out on Instagram be the future of online purchasing?

 

Once again Instagram is revolutionising the way we use social media, changing the customer journey and altering the way brands market to their customers.

 

Starting from a simple photo sharing site, Instagram is pushing boundaries of how social media is used with the launch of checkout on Instagram. The new feature allows users to click on the photos of their favourite brands and purchase products seen in the image without leaving Instagram’s platform. For now, the feature is in a Beta version – only being released in the US via selected brands.

 

But who will benefit from this new feature? Instagram, the brands or the customer? Before we all get carried away and excited about checkout for Instagram there are a few things that should be looked into.

 

The first and most topical concern we should have is surrounding Facebook and its use of data and storage of user data. In the last couple of weeks, it has come to light that Facebook has been storing users’ passwords in plain text for years. This might not be a concern for some, but when bank details are involved, can Facebook and Instagram be trusted? This misuse of data also has a knock on effect to the digital marketing landscape with tighter laws being considered and implications, limiting how audiences can be targeted and what data can be used to target audiences.

 

Secondly, brands using Instagram to sell their products, might face a loss of customer data. As the purchase is being made through Instagram all customer data will be owned by Instagram itself, therefore limited data may be passed onto the brand. It has already been speculated that brands will not even receive an email address of the users who have purchased. The data collected will also be used to change Instagram’s algorithms – altering user feeds and products that they are shown, changing the way we experience the app. With data being limited to brands and marketing teams, will their roles become difficult as there will there be loss of insight into audience, trends and purchasing habits. A big question is, will instagram hold onto this data and sell it on in a package format charging brands more to use their platform and gain insight into their own customer audiences?

 

Third, comes the question of financial gain for brands advertising on the platform. Brands will have to weigh up selling products via Instagram with a purchase fee, versus how they currently direct users and sell on their website. It is likely that opting to sell on Instagram will result in decreased web traffic to the brands site – meaning less up selling and reduced quantity in customers’ baskets. However if brands choose to not use Instagram checkout, they may lose potential customers to competitors, decreasing the brands market share. The new feature may also have a direct influence on Instagram ads, with brands potentially reducing the amount of ads and using the checkout feature instead will we see a drop in ad prices with instagram trying to retain their own revenue through ads. Could the new feature cannibalise instagram and facebook ads?

 

Finally, comes the potential loss of control for brands. Purchasing through the app means they have no power over the change in the customer experience, which will be dictated by Instagram’s priorities. These won’t necessarily be aligned with a brand’s, such as average order value and upselling opportunities. Brands will have to change their approach and focus on matters such as creative design, their advertising frequency and what products to prioritise. The shift may also see Instagram shifting towards becoming an outlet more than a social media platform used to share images and videos, are they paving the way to become the new Amazon? The brands will have to also be wary of becoming a catalogue of products, which in turn will affect customers behaviour towards following accounts. Will users prefer to stay away from brands due to them being constantly fed product items rather than quality content reaching past retail item? Marketing teams will have to balance out ratio outputs of goods and analyse the way customers react and respond.

 

Overall, the new feature is exciting and will bring about a lot of questions from all stakeholders involved. From a customer’s standpoint it is a world of convenience, allowing for easy and instant purchasing. This is vital in the customer journey and something brands strive for. For Instagram, what is the overarching plan? I am sure this is just a glimpse into their future. With the vast amount of data Instagram will be collecting, will they use it to help brands define targeting strategies and reach new audiences, or will they use it for their own benefit? Personally I believe they are using it for their own benefit, trying to reach maximum profitability via checkout fees, whilst branding it as a user enhancing experience. What do you think?

 

Matthew Paveley

 

If you would like to speak to one of our team about using social media for your brand please get in touch at hello-uk@artefact.com