Instagram has launched an in-app checkout feature for retailers, which lets customers tap, view and purchase products from a brand’s shopping post, providing another revenue stream for the Facebook-owned company on top of advertising.
Customers can select from various options such as size or color and go to checkout right from Instagram. They can also receive order and shipment notifications.
Checkout on Instagram is in a closed beta and available to shoppers in the U.S. There are more than 20 participating launch partners including Adidas, Burberry, H&M, Nike, Revolve, Dior, Michael Kors and Warby Parker.
Payment methods include Visa, Mastercard, Discover and PayPal, according to Instagram. In future there will be direct integrations with retailers for purchases or they can use ecommerce platforms like Shopify, Magento or Bigcommerce.
A spokesperson for Instagram told TechCrunch, “We will introduce a selling fee to help to fund programs and products that help make checkout possible, as well as offset transaction-related expenses.”
The spokesperson said Instagram wouldn’t reveal the amount of the selling fee, adding it is testing a selling fee with businesses during the beta. It will not change the price of the items for consumers.
In 2016, Instagram introduced product tags in its feed so users could identify specific items for sale. Instagram says 130 million users tap these tags every month, a key intent signal.
“With the rise of brands that have used social media promotion almost exclusively to gain traction, Instagram’s new checkout ability and the use of the platform as an online marketplace has been a long time coming,” said Steve Gershik, CMO at inRiver. “Eventually – and probably sooner than marketers are ready for – we will have the ability to take this to the next level through adaptive merchandising, which will allow brands to visually show through ads how their products will fit into a particular consumer’s lifestyle.”
Gershik said with the rise of artificial intelligence, the technology will soon exist for a smartphone to track its user’s eye movement, dwell time and pupil dilation – all indicating interest. This science will allow marketers to deliver the right information at the right time, therefore solidifying marketing platforms like Instagram as one stop shops for product information.
Oz Etzioni, CEO and Co-Founder of Clinch, said the new Instagram checkout feature allows Facebook and Instagram to close a full shopping experience cycle within its walls, from product discovery to purchase.
“Instagram is changing the traditional funnel as we know it,” said Etzioni. “It is shortening the time and number of actions required in each step of the traditional funnel by providing enhanced product discovery via stores, influencers, social connections, collection and feed ad units and now even via Facebook messenger.”
Etzioni said product research is almost completely gone as it becomes an integral part of the product discovery. Users discover a product via people they follow and trust, inside their main go-to content and discovery platform.
“Now, the purchase part is solved too, unlike before, there is no need to leave the platform to the brower and go through form-filling hell, giving away credit cards to every vendor – it is all consolidated in one platform that already has all your info and you trust,” said Etzioni.
Etzioni said for direct-to-consumer and digital-savvy brands, this is a game changer and could significantly increase online sales. The big question mark is what kind of data and how much brands and retailers will get back from the Facebook/Instagram platform, which could hurt their CRM and control over their own user base data and insights.
“This may be the start of a new dependency on Instagram,” said Etzioni. “This is reminiscent of the problem CPG has with Amazon in a way, where sales may be up but all consumer data is lost.”