How will the new Instagram update impact e-commerce?

It’s arrived. Next level social media shopping. We heard recently, that Instagram was rolling out it’s new checkout feature for selected brands and it’s sparked some debate. What will the update mean for website commerce?

Ever since Instagram introduced price tagging in images with the ability to direct consumers to a mobile website, it was only a matter of time before we saw direct purchasing capabilities.

It’s an exciting development and as a Senior Account Manager, working primarily on website projects, it’s something that will no doubt impact my role and influence future projects as an agency.

But is there cause for panic? Will clients no longer be sending website briefs? Should we bid farewell to HTML, CSS & Javascript?

There have been some bold statements since the announcement. Some suggesting websites won’t exist by 2020…yes, that’s just next year. But will things really move that quickly? Will customers still want a full website experience from their favourite brands? Here’s what I think the impact of Instagram checkout will be…

 

Websites will need to extend the brand experience, offering what Instagram can’t

Instagram is visual. But is visual alone enough? While some consumers may be happy to browse feeds and purchase a product purely on the beautiful imagery shown, or because a blogger they follow has featured it in their story, others need to know more.

A website provides a platform for a brand to really come alive. Brands can craft and tell their story, something that’s unique to them. They can share detailed product information including ingredients, benefits and how products are made – something that is increasingly more important for conscious shoppers. 

Finally, a website can offer reviews, case studies and testimonials – all of which give potential consumers reasons to believe in the brand beyond the social proof of Instagram.

Without a website, a brands content is limited. With Instagram stories and IGTV, video is on the rise and although 60% of shoppers say they prefer to watch a product video vs read a product description, the existing Instagram structure doesn’t allow for easy browsing. Tapping through masses of story highlights to find the product you’re looking for can by an annoyance. It will be interesting to see if Instagram adapts it’s platform to offer catalogue functionality and open up browsing features for the user.

 

Instagram will be more attractive as new brands and start-ups look to adopt a one channel approach to sales

While I don’t expect to see existing brands suddenly ditch their websites and rely on Instagram alone, it will certainly be an attractive option for new brands entering the market.

Brands have been making use of Instagram’s low start-up costs for some time now, often launching a product before it’s available to buy in order to build an audience first – the profile page including the magic words, ‘website coming soon.’ The new Instagram checkout feature will certainly be music to a lot of entrepreneurial ears looking to launch without the added cost of a full website.

That said, this is really only a relevant factor for brands whose customers are solely on Instagram. Let’s remember, the channel is still used primarily by a demographic of 17-29-year olds. So while not investing in website commerce may be an effective strategy for some brands operating through Instagram, we can expect to see website commerce continue to rise as it has the past few years for everyone else. 

As the brands whose target audience do fit look to focus their effort on e-commerce through Instagram alone, we can expect an even more flooded marketplace selling the next best thing to Millennials and Gen Z’s. All of which will be competing to get their Instagram posts seen. But, the more reliant on one channel a brand is, the harder they’ll have to work to find and attract the required following. Without investing in a website, they can’t broaden their marketing mix and test multiple ways to convert sales.

 

Influencer campaigns will become less and less effective

The boom of influencers was a huge catalyst for start-up brands and small business using Instagram as a marketing channel. The way in which new waves of ‘brand ambassadors’ had already cultivated a loyal following that brands could tap into was a huge opportunity to achieve brand awareness at a lower cost. 

However, as higher rates are achieved for #ad or #spon posts, some influencers are resorting to purchasing followers or featuring too many #spon posts on their feed. This is having a negative impact on their followers and 47% have declared they are ‘fatigued’ by the repetitive posts and doubt the authenticity of an influencer and brand match.

If more brands choose Instagram as a one channel approach in light of the new update, that could increase the overall spend on influencer strategies, flooding our feeds with further #ads and risking a decline in consumer susceptibility. If brands want to encourage Instagram users to purchase from them direct on the platform, they may have to adopt new tactics that go beyond influencer campaigns.

 

Consumers can expect to see a lot more of sponsored posts in their Instagram feeds

The ability to sell direct on Instagram will change the role of Instagram for many brands. KPI’s will shift to that of conversion and it’s likely that budget will be pushed into Instagram advertising in order to test and push sales on the platform.

As the update gets rolled out to more and more brands and competition for space in users feeds heats up, the big ad spenders could be favoured and new brands with lower budgets hoping to take advantage of the platform’s capabilities may end up actually losing out.

 

Whatever the impact, you can bet there’ll be negatives as well as positive. It’s certainly a very exciting development but one that will inevitably increase competition amongst brands using Instagram as a marketing channel. While it’s an attractive feature for new brand launches looking for low cost solutions, it could end up costing them more as they’re forced to invest in advertising as we see organic engagement harder to achieve and influencer campaigns suffer. 

One thing is for sure, the e-commerce space is ever evolving and it will be interesting to see how the checkout rolls out – most likely making keen online shoppers wonder how they ever lived without it! 

Written by our Senior Digital Account Manager, Rachel Brown.