Instagram has recently announced its new Checkout feature – Facebook’s big drive to move Instagram into the profitable world of e-commerce. With over a billion active users and a huge influencer on popular culture, Instagram Checkout will obviously have a similarly huge impact on e-commerce. In fact, it is ready to change the sector into a completely different form and experience for sellers and buyers alike.
Young people in particular spend a large part of their online time on social media. Teenage and young adult product trends are shaped by what these populations see and do on social media sites like Instagram. They follow brands and influencers, making brand and product choice decisions based on what social media tells them is ‘in’.
Why will Instagram Checkout change the face of e-commerce?
Instagram Checkout will radically change e-commerce through a variety of social-media-specific changes, making this in-app tool particularly useful for products aimed at the younger market. If your website sells services or products for this audience, now is the time to integrate Instagram into your marketing schedule. Even when your product is aimed at a slightly older market, taking advantage of this popular application is guaranteed to increase brand awareness, meaning long-running brands continue to be recognised as these younger customers move from an educational to a working climate, with more buying power as a result.
While younger audiences may not have the buying power of older ones, they are more likely to make impulsive purchases after listening to one or more of their favourite and trusted influencers, rather than scan through multiple Internet sources for reviews and lower prices. While a distributor of denture fixatives may have very little to offer this target group, knowing how Instagram works means that even brands produced for older groups can be marketed towards the young as gifts. If you want your company to continue on for decades, the potential for increased brand recognition through young social media audiences is immense.
In order to understand how best to prepare for your business’ integration with the Checkout feature of the Instagram app it is important to know how the tool will change the current e-commerce environment.
Change N°1 – Timeline or follower base equals your loyalty programme
The advantage of having an e-commerce platform is that you build up a relationship with customers and are given the opportunity to resell, cross-sell and upsell to them. In its initial and rather limited stages, Instagram Checkout does not have a greater impact on these types of sales; however, it does give certain brands the opportunity to develop follower- and timeline-content relevance. Buyers who have previously purchased your brand can be offered new products with the added incentive of a completely seamless checkout. Such a feature is guaranteed to deliver good conversion rates, making timeline-content ROI more clear-cut. This means that by integrating Instagram Checkout, it pays to build up a follower base and schedule regular posts, which lead to direct conversions via Instagram.
Change N° 2 – Follower exclusives
Having a fan base makes it easier for a company to offers exclusive rewards and deals. Give your longer-term followers discounts or the opportunity to purchase a product before it is launched. Those followers who bring in their friends might also receive incentives. This is, of course, possible on other channels, but the Instagram Checkout service makes the offering of exclusive deals and rewards to certain types of follower much simpler.
Change N° 3 – Increased influencer value
We already know that when a company links its products to influencer programs, sales increase. Popular brands already make use of influencers to promote certain products; an influencer recommends a product to his or her followers and usually advertises a link to the company’s webshop, increasing both brand recognition and sales. This works relatively well, but does not address the fact that influencer followers are more likely to buy directly from an influencer rather than through a link. By adding Instagram Checkout to the equation, sales can run directly through the influencer, significantly increasing conversion rates.
Change N° 4 – Interest-based e-commerce
The distinguishing feature of Facebook has always been interest-based marketing. Before Instagram Checkout, conversion had always taken place on Facebook’s own platforms. Instagram Checkout changes this. In terms of branding, it also changes the rules of the game.
The most effective social marketing tactic in this case is to become an integral part of a popular Instagram culture that already exists. This can be created within one’s timeline. By adding your brand to a popular Instagram culture group, outreach goes beyond an own timeline and integrates relevant influencers, numerous habits and various hashtags. Instagram Checkout gives brands the opportunity to use one particular (and already popular) trending group to service their marketing strategies with interest targeting, influencer targeting and hashtag targeting for single products as well as complete brand ranges. It also gives niche markets the opportunity to expand into a wider potentially-interested market. Add a relevant offer to an already interested sub-culture to the instant purchase feature of Instagram Checkout, and increased sales are pretty much guaranteed.
Change N° 5 – Commerce experiences
One of the world’s biggest brands – Nike – takes e-commerce to yet another level. Incorporating e-commerce innovations through Facebook Messenger and Augmented Reality (AR), Nike turns e-commerce into a tangible experience. Facebook’s developments in the field of AR in combination with Instagram Checkout will further facilitate this. It is safe to say that e-commerce experiences will become the next big thing, made even simpler with social media checkouts.
Change N° 6 – First party e-commerce sales
Custom audiences have been made possible thanks to Facebook advertising, meaning any brand can (re)target customers based on first party data. Instagram Checkout will make it simple to reach existing and new targets through traditional channels via relevant messaging and notifications.
Change N° 7 – Potential for an Instagram Marketplace
There is (as yet) no Instagram Marketplace, but this would probably be the next profitable move and is certainly worth considering for future marketing strategies. What exactly would happen should Instagram Checkout become a Marketplace model? Affiliated web stores may then also advertise and sell via Instagram Checkout, meaning brand recognition and influencer power becomes even more important when in competition with the bigger players. By getting in early and integrating Instagram Checkout before it (possibly) expands into a fully-fledged global marketplace, a company can establish market presence before its less up-to-date competitors.
Although the idea of an Instagram marketplace might seem far-fetched to many, the acceptance of a popular social media marketplace transcending any of those currently available will put into motion new revenue models for existing marketplaces. Whether Instagram Checkout can compete with Amazon remains to be seen, but one thing is sure – the world of e-commerce is changing at an accelerated rate and Instagram’s newest feature is helping to push on the gas pedal.
Change N° 8 – Potential checkout button on ads
While the closed-beta version only allows registered sellers to add a checkout button to organic posts, later versions may offer the option (at a price) to include them in ads. User experience requires the least number of clicks and actions to reach a goal, and the integration of a checkout option in the advertising phase will certainly speed things up.
Change N° 9 – A new Facebook revenue model
Instagram Checkout should also become an extremely lucrative revenue model for Facebook itself. How this will evolve is as yet unclear due to the lack of long-term data, but if Facebook takes ten percent for every conversion via Instagram Checkout (or as is usually expected in app-stores, thirty percent per conversion), its potential revenue will reach staggering proportions. Facebook is currently refusing to release information pertaining to transaction fees, but the marketing team is busy deciding what to charge. Legislation may decide to put a cap on the earning potential of Facebook as its recent unpopularity through lack of privacy has certainly damaged its reputation, but even then the combined powers of Instagram Checkout and Facebook may exceed that of any other multi-channel cooperation. For Facebook to avoid further development of Instagram Checkout would be a huge mistake on its part. A product-based business should therefore be taking steps to prepare a strategy and perhaps base any figures on the higher per-conversion fee to avoid any nasty surprises.
What the Instagram Checkout Tool means to your business today?
While, at the time of writing, the closed beta version of the in-app Instagram Checkout tool is limited to the US and implemented by only a handful of registered and well-known brands, the fact that approximately 130 million users tap on Instagram product tags on a monthly basis makes this an exciting addition for sellers as well as buyers. Created through a partnership between Facebook, PayPal and BigCommerce, there is little doubt Instagram Checkout will expand into the international market. Any simplified immersive connection between brand and Instagram shopping can only increase company turnover, and marketing departments should be keeping their fingers on the pulse of this particular checkout as its development progresses. Once the in-app tool is available for the Australian marketplace, your business should be ready and waiting to take immediate advantage of its instant interested parties. For now, it’s time to concentrate on Instagram presence, influencers, photography department and imagery (Instagram is, after all, a visual experience) and regular social media posts that will increase the eligibility of your company as an Instagram Checkout member.