MHI

Instagram Checkout: What it really means for eCommerce…

02 Jul 2019

Instagram Checkout

Instagram Checkout: What it really means for eCommerce...

The retail world was once a much simpler affair: the lines between wholesalers & retailers were clearly defined, economies of scale gave barriers to entry a real meaning - and the idea of the FMCG industry selling direct-to-consumer, over a digital platform, was an unfathomable one...

Perhaps most important of all, however, was that the consumer knew very little about the ins & outs of the retail landscape, ensuring a level of asymmetric information that invariably suited the retailer.

Brands had it all under control – or so they believed.

In 2019, the untouchable industry is a thing of the past - perfect competition reigns & the power is very much with the people:

No longer can colluding supermarket duopolies charge inordinate fees to consumers knowing there’s no alternative.

No longer can traditional clothing brands demand 14-hour days from their manufacturers without their customers catching wind.

And no longer do introverted bookworms have to brave the high street to purchase the newest bestseller.

These days, it’s all about personalization, customer experience & one-day delivery.

At MHI, we live & breathe eCommerce logistics - and our clients benefit as a result of that knowhow. In the past 12 months, we’ve processed nearly 15 million packets & parcels - from books to beauty products to baby slings - and sent them out to their international destinations.

If it’s international carrier rates, transportation efficiencies or freight consolidation – we can advise better than anyone else; but delivery is only one facet of a successful eCommerce business.

Over the coming weeks, we’ll be discussing recent & upcoming trends within eCommerce & retail, providing guidance to e-tailers as they traverse the most frenetic industry of all.

MHI eCommerce Logistics

Is Instagram Checkout too good to be true?

For years, brands have been utilizing social media platforms to boost their eCommerce sales. Facebook allows for targeted ad placement, Instagram makes use of influencer marketing - and once the customer is interested, they’re re-directed to a product page, where integrated payment functionality allows them to make the purchase.

There’s nothing new about that.

Where the innovation comes in, however, is the combination of that trio: eCommerce, payment functionality & social media apps – working together to create a frictionless buying experience.

This is called Social Commerce.

In March 2019, Instagram introduced their Checkout function to a select number of brands, including Nike, Zara & Adidas. Still in Beta stage, the option is only available in the US, but Instagram hope to roll it out to an international audience “very soon”.

Unlike Instagram Shopping, which brands have been using to direct traffic to their product pages for years, Checkout will allow the customer to purchase directly from the app itself.

With more than 25 million Instagram business profiles worldwide, 60% of users discovering new products on the platform & already-populated user information making purchasing easier - Checkout could alter consumer buying habits rather substantially.

eCommerce Parcel

Benefits of Instagram Checkout...

An oft-cited difficulty amongst smaller retailers is competing against their larger rivals with a clunkier website & fewer funds to invest in paid search. With Insta-Checkout, smart brands can focus on their social media marketing above all else. If that is strong enough, then what they lack in website UX & functionality, will be made up – and the focus will be firmly set on engaging imagery & influencers.

On top of this, rather than inputting payment & delivery details into multiple different sites – customers can simply input them into Instagram & purchase with a click. A simpler path-to-purchase should increase conversion rates & decrease check-out abandonment.

If the customer demands choice & convenience, then Instagram is giving it to them.

Finally, unlike a platform such as Amazon, Insta-Checkout will allow integration with the likes of Shopify & BigCommerce – which start-ups & drop-shippers notoriously use to begin their ventures into the online world.

Drawbacks of Instagram Checkout...

We live in an age where brand is as important as ever. With 86% of Gen Z consumers stating they think businesses should take a stance on social issues, there’s a real responsibility on e-tailers to do more than just…sell.

Whether it be written content, product information or CSR reporting - there are some things that can’t be explained over an imagery-focused social media platform.

A large part of brand identity will be lost without a visit to the website store-front, until brands are reduced to back-alley touts battling each other down on price until they just about breakeven...

Alright, it won’t be that bad.

However, it will lead to an inability to discover additional products, as well as a loss in web traffic, which could have serious knock-on effects for SEO. As stimulating brand loyalty becomes even harder, Instagram Checkout won’t do much to help.

For many start-ups, this may not be an issue; those seeking to push an in product for small margins, for example, may not need a brand identity at all. But those looking to build something bigger will still need to find ways to direct the customer towards their additional channels.

Trends fade out, after all. Strong brands do not.

There is a danger that customers will turn into mercenaries & that online price wars will drive margins down ever further. But as long as Instagram are taking a fair share of the sales, they won’t mind all that much.

Instagram Purchasing

Conclusion

Instagram functioning as a marketplace instantly alleviates customer pain points such as security, convenience & speed. And with a record number of consumers discovering products via social platforms, the feature could well signal something revolutionary.

The feature will sound alarm bells for those e-tailers not utilizing an Instagram strategy, especially if they’re spending big on paid search & website functionality – and reaping similar, or worse, returns on their marketing spend.

It may also see the introduction of retailers focusing solely on Instagram as their primary marketplace & combining it with a comprehensive influencer strategy. It’s certainly exciting times in the ever-improving world of social commerce & speculation will continue until the feature is made available to smaller retailers & we see the effects in real-time.

When to expect it:

Currently only available to selected brands & US customer bases, Instagram are reticent to give a release date for UK-based brands & users.

When quizzed about the new feature, an Instagram spokesperson claimed:

“Checkout is just one part of our long-term investment in shopping. We’re excited to introduce even more ways for people to enjoy shopping on Instagram this year.” 

As vague as that may be, it teases continued investment into social commerce & it would come as little surprise if the new checkout feature raises customer expectations on frictionless purchasing more than ever before.

What’s next…

With burgeoning middle classes in the likes of India, Indonesia & Latin America – we look at the most innovative marketplaces to partner up with in order to increase your international eCommerce orders.

Chinese Front Door
Calum - Marketplaces

Calum White

Head of Marketing at Mail Handling International

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