2020 is set to be a big year for Instagram as it continues to evolve into a bigger e-commerce platform. It’s set to be a big sales channel for direct-to-consumer companies and traditional retailers alike, but there are still a lot of questions about how it all works and when more features will be available for everyone.
“Instagram has been rolling out a lot of things that are either in beta or that the company is not really talking about that much, especially on the influencer side. There are going to be a lot more developments there in 2020,” said Mae Karwowski, founder and CEO of influencer agency and platform Obviously.
In 2016, Instagram first tested product tags in posts, allowing businesses to tag specific items in posts that directed the user directly to the brand’s website. Then in 2018, tags came to Instagram Stories. Today, about 130 million people tap a product tag to shop or see a price every month, according to Instagram. That’s up from 90 million in November. From there, Checkout rolled out early last year signifying a major push to make Instagram a shopping destination.
“Checkout allows brands without great mobile interfaces to convert customers directly through Instagram, reducing the risk of drop-off from a frustrating mobile platform, and increasing customer trust that their data is only stored on app, and not shared with risky or spam sellers,” said Tamara Gaffney, vp of decision strategy at digital intelligence platform Quantum Metric.
It seems more and more features will continue to launch for shopping within the app, especially considering competitor platform TikTok began testing in-app commerce back in July.
Considering that 1 billion people access Instagram every month and 200 million users visit a business profile every day, the opportunity for brands to grow sales through Instagram could be big. Below are some of the key features to know about and some of the big questions surrounding them.
Perhaps one of the biggest current question marks is the Checkout feature, from what it costs to when more brands will get to use it. It allows customers to buy products directly within the Instagram app, no need to link out to a brand’s e-commerce site. The tool simplifies the shopping experience for the customer, who can now shop multiple brands on one platform, without making multiple transactions on different websites.
Checkout first rolled out in March 2019 to 26 businesses across fashion and beauty. Pioneers included Nike (@niketraining, @nikewomen, @nikegolf and @nikesb), H&M, Zara, Michael Kors, Outdoor Voices, Burberry and Balmain. At the time, it was in closed beta testing for those initial 26 companies, and that’s still largely the case.
Since March, a limited number of additional companies have been granted the opportunity to test the shopping feature. They include Augustinus Bader and Dr. Barbara Strum. In addition, Instagram recently opened up the testing to roughly 20 smaller, independent companies featured on its @shop account in a move to court more indie brands to the shopping platform.
The big question marketing experts have is when this will roll out more broadly. Right now, it’s unclear why companies outside of @shop are chosen and which will get access next. One expert said permission is likely tied to which brands are spending the most advertising on the platform and which ones have the biggest buzz or following on Instagram.
When it does become more widespread, experts said it’s worth approaching the feature with caution.
“It’s important that brands do not blindly pour money into advertising on the platform. Particularly for smaller brands, this might present a challenge, as there is a selling fee charged for Instagram Checkout. Instagram charges a fee for each purchase back to the seller, making this model impractical for brands with lower profit margins,” said Eva Poureshagh, director of marketing at global e-commerce company Scalefast. Instagram charges a selling fee for companies using Checkout, but it has not specified the actual cost.
Reminders for product launches and drops
One strategy that’s building clout among fashion companies is reminding followers about product launches and drops via Instagram’s Reminders feature. It plays into the growing trend among DTC players: adopting a drop model to build buzz and grow a following.
In September, Instagram began testing Reminders with 21 businesses both in Stories (via a sticker featuring the name of the upcoming collection or product and a countdown clock) and in-feed. Most of the brands testing the tool at the time were also included in the original batch of companies using Checkout. For customers who click on one of these links, Instagram will send a push notification when the product is about to drop, or when something that is sold out and comes back in stock.
SoulCycle and Joe’s Jeans have both used the Reminders tool to drum up excitement for new drops. Both also linked with influencers, giving them access to their shop. That guarantees the influencer can place a Reminder in their own Instagram Stories or posts to drive more buzz to new products.
“We are a very fast-moving business. We develop, launch and sell quickly. New stuff is coming out all the time. We leverage our instructors through Instagram for a lot of our products, so Instagram Checkout makes sense for us,” said Caroline Gogolak, vp of retail at SoulCycle in a previous interview with Glossy.
In October, Instagram rolled out AR-enabled try-on feature for a handful of businesses already selling through the platform. In its initial stages, the feature is only available for companies in the cosmetics and eyewear space. Some initial partners include Warby Parker, Ray-Ban, Mac and Nars. With AR customers can see what an advertised lipstick or a pair of sunglasses looks like when worn.
The hope is, from there, the user will feel more comfortable making a purchase, either in-app or when clicking through to the company’s website. It’s unclear when (and if) that will roll out to a larger group anytime soon.
“Brands need to really understand exactly how [shopping on Instagram] works. There is a good amount of confusion right now around the different types of ad units that Instagram has, and there’s a real need for more clarity,” said Karwowski. Instagram does have heads of fashion and beauty partnerships to help companies navigate these new features, but it’s unclear how much of that help is going to companies paying up for Checkout versus those that are not.