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Will Instagram overtake Amazon as the world’s biggest DTC marketplace?

Since launching in the summer of 2018, shopping savvy millennials have been making purchases via the world’s hub of pictorial inspiration. According to Facebook, “Instagram Shopping gives your business an immersive storefront.”

It is a convenient way for people to explore a brand’s best products, especially if that brand is direct to consumer. With Instagram Shopping, you can share featured products through organic posts and Stories, or people can discover products in Search & Explore. Instagram have figured out a way to blur the jarring line between immersive marketing, subliminal inspiration and actually closing a purchase on a product.

Despite the latest season of Stranger Things being the inspiration we all needed to revitalise the 80s shopping experience, our mall of the future is not a sprawling metropolis of stores. Instead, it’s a platform on your phone – a simple app, we already use. A collection of stores curated by you, selling only the things you’re likely to buy, based on what you’ve bought in the past or how you’ve behaved online.

In 2019, Instagram enabled in-app checkout for its shoppable posts. Meaning, you can buy that kitschy hair clip or statement bag without leaving the app. Tap on a post and you’ll find more details about the product, including price and a shopping link. According to Instagram, these tiny tags attached to the corner of your in-feed posts are tapped by over 130 million people every single month.

Even before Instagram Shopping was rolled out, over 80% of Instagram users say the app helped them make purchasing decisions. Instagram is an opportunity for extensive behind the scenes of the product being shot, the ability to see the product on real humans and in everyday settings – as opposed to hanging off models or being strategically placed in a studio somewhere. It’s not surprising there, that according to 2018 data from Adobe, social media was the fastest-growing driver of e-commerce referrals from 2016 to 2018. While people are scrolling, they’re being inspired to purchase.

INSTAGRAM SHOPPING IS ON THE UP

After its initial, paired back release in 2018, 2019 saw Instagram debut a number of shopping tools in beta, including in-app Checkout, Shopping from Creators (which means you can buy direct from an influencer’s feed!) and a drop countdown via Stories that hoped to help build hype before a product release. These shopping tools were rolled out to mostly DTC, digitally native brands like sportswear brand Outdoor Voices, iconic millennial pink makeup gurus Glossier and Shay Mitchell’s travel accessories brand, Béis. These vendors – amongst others who now have full access to told like in-app Checkout – will pay a cut of their sales to Instagram, though Instagram declined to share what that fee would be.

Although not a “service” as such, another element of Instagram’s shopping scene is their @shop page. The page is built to get up and coming brands to sell on the platform, by featuring them to a certified following of 203k. The account is also built to give smaller brands a supportive stamp of approval, or 5-star rating that means they’re not going to rip shoppers off – and they’ll also be bigging up independent business in the process. In a recent Glossy article, Eva Poureshagh (director of marketing at e-commerce management company Scalefast) said that “receiving Instagram’s stamp of approval on the @shop account gives brands the credibility that is lacking from standard paid ads on social  platforms, where users are weary of ads from illegitimate or copycat brands using fake imagery. This endorsement puts shoppers at ease and positions a brand as trendy and relevant on the platform.”

The newest and most adventurous element to Instagram’s Shopping scenario is their bold introduction of AR (Augmented Reality). Instagram’s Augmented Reality ‘Try It On’ feature, powered by Spark AR, is the social AR shopping experience we’ve all be waiting for. Some products for sale on Instagram simply cannot be adequately described or demonstrated with a photo or video. Now that AR is being integrated, customers on the search for a sleek pair of sunglasses or a new daring lipstick will be able to virtually try on products, before purchasing them. MAC Cosmetics will be the first brand using Instagram’s virtual shopping feature, closely followed by Ray-Ban and NARS. According to eMarketer forecasts, 68.7 million people used AR at least once a month in 2019, and that number could grow to 77.7 million by 2020. 5G will see an explosion in the adoption of AR across all industries and service sectors, so now is the time to think about whether this could work for your brand, and prep to be first out of the traps when it all goes fully live. Essentially, Instagram has put the magic Snow White mirror in our pockets – minus the evil witch.

COULD INSTAGRAM BE A COMPETITOR FOR AMAZON?

Along with new-fangled gizmos like AR, perhaps one of the biggest reasons that Instagram’s retail plan has been so successful (thus far), is how suited it is to Gen Z and Millennial purchase habits. The entire concept seems made for typical direct-to-consumer brands, which pride themselves on authenticity and the ability to connect with a community. This “pressure” to connect with community and give the customer exactly what they want (aka, more than just a product) forces brands to become more like influencers. More trendy, more connected, more involved and… more human! So, is the humanized element of Instagram’s shopping experience a help or hindrance to Facebook, if they want to compete with Amazon?

Amazon is the leading retailer in the world right now, both online and offline. If Instagram want to compete with Amazon, to become the personalised mall we all apparently need, there are infrastructure measures that need to be taken. Syama Meagher, CEO and founder of Scaling Retail, believes that “Instagram and Shopify could join forces to be the largest competitor to Amazon,” adding that “Shopify would need to build out infrastructure to compete with Amazon warehousing.” Given that Amazon have struggled to compete competitively selling high fashion items and more unique products (most people will log on for household items like loo roll and barbecue tongs), they leave the space wide open. If Instagram is successful in scaling up its infrastructure, they could make for the biggest platform available for fashion and DTC brands. The same goes for charities, following Instagram’s addition of the Donate button as a Stories feature. For now, however, Instagram is laying the groundwork independently, perfecting shopping features like Buyer Protection before attempting to scale them.

WATCH OUT FOR DATA…

Whilst the shiny, new Instagram Shopping features might sound like something everyone should sign up to immediately, brands should proceed with caution. As with selling through the OG marketplace, Amazon, there will be limitations that come with selling on Instagram; most notably, the lack of first-hand access to customer data. Frederic Court, managing partner and founder of VC fund Felix Capital, asks: “When someone shops on Instagram, there is the question of ‘whose customer is this?’ There is a lot of data that Instagram is not sharing with the retailer, or giving the rights to the retailer to share, making it much less attractive. Plus, Instagram is not going to ask customers to sign up for your newsletter.”

One way that brands might get around this data problem, is through the integration of chatbots on Instagram. So far, we’ve heard (unconfirmed) rumours that Instagram are thinking about integrating chatbots into Instagram Messaging, enabling brands to delve into more personalised one-on-one contact with their customers. By adding branded chatbots, Instagram can empower brands to move beyond just “hearts” and into personalized commerce, instant customer support and increased consumer engagement. The opportunity is delivering the perfect message to the right person at the right time. With Instagram bots, brands could regularly engage people around their personal preferences, first party data and purchase history. Instagram chatbots could also be a powerful way to provide customer service to consumers, instantly. Let’s say you have a question about a recent post you just saw or an existing order, why should you have to leave the app to learn more, or wait for the customer service team to catch up on their account DMs?

So, for brands to roll with the times and make the most of Instagram as a DTC shopping channel, comfortable conversation between brand and buyer is absolutely essential. Be authentic when gushing about your product, do away with formality and unless conversation comes from the heart, brands could very well appear disingenuous.