Instagram Shopping – A New Dawn For Social Commerce

May 27, 2020
lenakhalid
Social Media

On face value, the recent launch of Facebook Shops isn’t really that innovative. The company flirted with shopping as far back as 2007 without fanfare or notable success. This ranged from private marketplaces, through to the original incarnation of Facebook stores (2009), payments via Messenger (2015), and in 2018 a more accessible Marketplace product to compete with Amazon AMZN, Google GOOGL and Etsy.

The significance of Instagram within the Facebook portfolio gives this most recent announcement more gravitas than previous attempts. For the first time Facebook is establishing the category of Social Commerce, not just adding an e-commerce layer to their social network.

The Expected Impact Is Compelling

Estimates place the revenue upsides at $30B across transactional fees, increased advertising and a deeper customer relationship. The timing is precise. Surging online shopping figures and the extended state of the pandemic will have accelerated internal plans. Further benefit is gained from aiding the large number of small business customers at a critical time, and expanding revenue sources beyond ads.

Of course Facebook will also be hoping their investment grabs revenue and market share from e-commerce giant Amazon, and Google via its Google Shopping product. Yet Social Commerce is a far richer experience than traditional e-commerce. Social Commerce is the creation of a new online shopping experience Facebook will own, and others will struggle to challenge. This is where the Instagram platform provides unique benefits to Facebook, and acts as a key component of success.

Instagram Is Already Critical To The E-Commerce Experience

Every direct-to-consumer business is running ads on Instagram. The platform is too prolific not to. The ad experience is easy and measurable to the last cent. Instagram ads are direct-response like nearly all digital ads, however the power of the platform lies in ad content which is highly visual and aspirational, stimulating passive desires of users before functional needs arise.

Instagram knows I’m in the market for some new leather boots. It initially understands this from my browsing profile and various images and brands I’ve navigated. To this data point, it adds my age and formulates an idea of style from my circle of connections. For the next two weeks it delivers me stunning ads featuring the latest leather footwear from large retailers, through to small local businesses and up-and-coming DTCs. My decision to purchase is slower, but inspired.

Compare this to Google Adwords or Google Shopping, which cater to solving my immediate need. Search results and shopping listings are functional. The results are efficient, but unless I’m specific with my product or brand name, less inspiring. Amazon is similar, with platform results optimized to relevancy, speed, or ratings. Bland product listings rarely elicit excitement. I may still buy my leather boots via these channels, but chances are the motivation for the purchase came from other sources.

Social Commerce Owns The Entire Buyer Journey

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Brands build profiles on Instagram to introduce their products to consumers and drive awareness long before there is a need. A user on Instagram enters the platform with multiple discovery pathways. Their journey starts with the people they know, and expands to friends of friends, their favorite cafes, research for their next summer holiday, or influencers showcasing their latest purchase. Brands feature throughout this browsing experience and if the visual stimulation is successful, the buying experience often ends on Amazon, or in-store, days or weeks later. Instagram is widely regarded as a critical component of e-commerce and even bricks-and-mortar buyer journeys. It is a powerful store-front that supersedes every mall, shopping district or fashion magazine. A user’s ability to buy natively through Instagram radically shortens the buyer journey allowing businesses to easily find, inspire and convert a window shopper into a customer.

Every retailer in the world will need to take advantage of this.

Social Commerce Success Requires New Thinking

While retailers big and small will be rushing to set up their Facebook and Instagram shops, the opportunity requires more than just replicating existing online stores. Products will need to be featured in the Instagram style which means photos and videos that customers can relate to, not just items shot on a white background. Retailers will also be required to invest more into advertising as competition for organic discovery heats up.

Brands who can master live shopping will gain advantage. Live shopping in China is estimated to be worth $63B annually and commands a whopping 9% of their total e-commerce sales thanks to purpose-built events like Alibaba BABA’s Singles Day. Locally, brands like Nike NKE and Adidas have had success with live streaming limited edition shoe releases on various social platforms. The exploration of live shopping on Instagram should be seamless given the established popularity of Instagram Live and Stories functions. Through this new medium brands will be able to harness the unparalleled benefits of interactivity, speed, and closer customer relationships.

Instagram Shops will also attract micro businesses and craft shops. The current climate is expected to result in more home businesses and side hustles. Whilst Etsy has thus far owned the craft domain, Instagram is just as well suited to the medium. The simplicity of shop setup will likely see the smallest of businesses completely skip standalone e-commerce storefronts via Shopify SHOP.

Facebook’s expansion into Shops carries far more depth and industry significance than simply an e-commerce extension to their network. Instagram makes it Social Commerce. It creates new interactive sales channels that will convert passive users into paying customers well before other platforms get a chance to.