Instagram Checkout: A new frontier for brands

Written by
Josep Nolla
Published
October 6th 2020
Reading time
8 minutes

Social commerce has been taking its first steps already for some years, but today the develop is so far that Forbes calls the rise of social commerce inevitable. Social media is no longer only a place to consume content and be inspired, but the digital platforms are investing heavily in enabling e-commerce transactions inside the apps. The perfect example of this is Instagram Checkout, which removes any outbound links to external e-commerce sites and allows users to checkout directly from the feed.

Unlock your potential by connecting with the sales channels of the future

Consumers today are more demanding than ever before. The main theme is that people expect to shop in the most seamless way possible. The shopping and payment processes need to be frictionless. And if it isn’t, it is likely that people will gravitate to a brand’s competitor that offers that better customer experience.

It is a simple fact that most brands’ distribution channels don’t fulfill their commercial potential. There are three main reasons. Firstly, most e-commerce platforms still offer a mobile user experience which is far from optimal. Secondly, competition is fierce in the e-commerce space and digital advertising. Apart from that, Google and Facebook are dominating the online landscape for product discovery. To stay in the game it is decisive for every online retailer, both small or big, to be looking at new ways of distributing products to reach all their potential customers. 

Advertising spends are increasing, but with everyone competing for the same real estate, it’s easy for brands’ messages to get lost in the wash and for the advertising spend to run out of control. With online ads reporting conversion rates of only 3.6% on desktop and 2.3% on mobile, it is clear that a new, more effective way of working must be embraced.

On the flip-side of this, bringing the buy button directly inside the social media platforms to an highly engaged audience seems to overcome all of the previously mentioned obstacles. Instagram Checkout has the potential to be one of the most influential commercial channels in the coming years, and brands need to evaluate this channel now.

What is the Instagram Checkout?

All of the largest social media platforms are transforming into new marketplaces, but the one with the most concrete approach is Instagram.

Instagram started some years ago a program called Instagram Shopping. This resembles traditional product URL redirects where brands can send users outbound links and where the checkout happens on the merchants own site. But the latest addition is Instagram Checkout where the entire checkout process happens inside the Instagram app with payment handled by Instagram instead.

Instagram Checkout leverages all of Instagram’s features to offer brands a whole new way of interacting with their audience. By using Instagram’s native checkout, brands can sell directly to consumers via their organic posts, selected influencers’ posts, shopping ads, and Stories.

Illustrations showing how Google and Instagram have designed the shopping flow directly from the point of inspiration. Google Shopping Actions allows the user to checkout directly from search results, while Instagram Checkout takes place inside the Instagram app.

The possibility for creativity and personalization here is endless. Those brands that best understand how to do this will be those that should make the most significant leaps over their competition once Instagram Checkout is fully rolled out all over the world.

The business model operated by Instagram Checkout is CPO (cost-per-order), with a commission being taken by Instagram. Shipping is done by the merchant, and customer support and returns are also routed back to the merchant.

Why is Instagram Checkout a good opportunity for brands?

Unlike its predecessor, Instagram Shopping, Instagram Checkout allows consumers to buy almost instantaneously at the point of inspiration with no friction. This is a massive upgrade on Instagram Shopping, which still involved the consumer leaving the page and making numerous additional clicks to complete an order.

This is an opportunity to capitalise on the audience of one of the world’s most engaged and loyal platforms. By being part of this program early on positions your brand as a pioneer in e-commerce. Because the model is based on CPO, it is much lower risk than CPC based advertising.

The best approach to implementing Instagram Checkout

Instagram Checkout works seamlessly and is a welcome delight for impatient consumers who want to buy new offerings from their favorite brands.

However, the technical and cost implications of incorporating your brand with Instagram Checkout are not insignificant.

From the consumers perspective, Instagram Checkout works smoothly on the outside, but there are a lot of moving parts below the surface when you want to enable the transactions to flow without issues.

Some brands have chosen to use their internal developer resources to build connectors that allow product data and orders to flow between Instagram and the brands own ERP system. This approach has been shown to be expensive, time consuming and prone for maintenance issues.

Tipser has approached this issue with a completely different mindset. We believe that the smartest way you can solve the integration problem between a brand and multiple distribution channels is to use specially developed tech that utilizes the brands existing webshop for harvesting all the product and price data in real time. This technology works in a touchless way, and is also capable of placing the orders directly into the existing system. Because we leverage the infrastructure that already works and is in places, this concept is maintenance free and can be scaled to any size inventory in a very short time.

What is next for Instagram Checkout?

The emergence of Instagram Checkout is only the latest step in a series of developments where the buy buttons are moving out of brands direct sales channels and into surfaces where users are consuming content and being inspired. And it is only a matter of time before the other social media powerhouses deliver their own new and improved ways of turning their dominant market share into brand new marketplaces.

At the moment (late 2020), Instagram Checkout is only available to a select number of brands in the US, but it is hoped that this will be rolled out to include France and the UK by the end of the year.

The focus of Instagram Checkout is currently on fashion, lifestyle, and cosmetics verticals, and brands must be whitelisted by Facebook and have more than 25K followers to be eligible for inclusion.

Instagram Checkout is more of an evolution – rather than a revolution – in the space of e-commerce, but it has the potential to transform consumption habits. By doing that it will spark brands to rethink their distribution strategies and develop new capacities. 

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