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The growth and future of commerce on Instagram

15 November 2018

By Drew Smith

Drew is the Director of Product Strategy at Volo and focuses on how technology can help brands and retailers deliver what their customers want.

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Since its launch in 2010 Instagram has seen exponential growth, reaching over 800 million users across the globe. The platform has proven that it’s not just for sharing selfies, brunch photos and cute pictures of your cat - it's a powerful tool for driving business sales. 72% of Instagram users report making a purchase based on something that they saw while browsing the app – something that brands have taken notice of.

Sheryl Sandberg reported recently that there are already 25 million Instagram business accounts, and 2 million of them are advertisers. The platform is constantly evolving and experimenting with new ways to support businesses and increase its own revenue – so what do you need to know in order to grow your ecommerce business?

The power of the influencer

Influencers have been native to Instagram for as long as it has existed. A new social form of affiliate marketing, the success of influencer marketing is well documented. As social media has become increasingly part of the fabric of everyday life, consumers look to their peers and their favourite creators to inform their purchasing decisions. 

Nowadays there are plenty of external platforms focusing on connecting influencers with businesses and enabling their success. Instagram itself has primarily remained focused on its social networking features, but the tactic has remained successful (although sometimes questionably measurable) since well before Instagram was testing its own commerce tools.

An under-appreciated aspect of the influencer marketing game is that you don’t need a huge celebrity to influence buying behaviour. Smaller-scale fans and brand advocates drive the most engagement at 8.0%, while celebrities only achieve about 1.6%.

Product tags, stories and shoppable posts

Thanks in part to the traffic and behaviours which lead to the rise of influencer marketing, Instagram debuted product tags in the US back in 2016 and has since rolled the feature out more broadly to all major regions. This feature allows retailers to tag specific products to their social audience in posts, just as they can tag people.

In the past, the only way to connect followers with products was through the link in the profile bio, or links in Stories. The still relatively new product tags feature provides a seamless experience for people to shop products directly from brands' posts. If the business meets with Instagram’s eligibility criteria, and the Instagram profile is connected to a Facebook catalogue, the brand can add the Instagram sales channel and submit an Instagram ‘store’ for approval.

Another way of linking direct to sales through the platform is by using the ‘Shop Now’ CTA on a sponsored post, also a relatively new option.  Previously, advertisers were forced to instruct users to go to their profiles and click the link in their bio, adding significant extra friction to the user journey, limiting the number of different campaigns and the measurability of their effectiveness. With the added ability to send traffic directly from Instagram posts, businesses can easily connect their audiences with the products and services they sell — and ultimately streamline the Instagram buying journey.

Just as we first published this post, news was breaking that Instagram had released further features! Now shoppable videos are available, where tapping shows products which featured in the video. These are tagged with product tags just like other shoppable media. 

Individual users can now save shopping collections, picking out products they've been shown which they want to save for later. On the other side, businesses now have a Shop tab on their profile, featuring their shoppable posts in chronological order.

shopping insta collection

Native payments

In May, Instagram allowed selected users to add debit or credit cards to their profiles, create PINs and purchase products directly through the social network. This native payments feature eliminates the need for a user to travel off Instagram to a retailer site, where they may have to log in or add payment information, adding friction to the customer journey.

However, it has yet to see wider rollout, so for now retailers are still limited to linking out to their own sites. 

The future of commerce on Instagram

It has been reported that Instagram is working on a standalone app for shopping  - that may be called IG Shopping – which would allow users to browse collections of goods from merchants that they follow and purchase them directly within the app.

So what would a standalone app mean? Divorced from the initial social networking purpose of the Instagram app, does this lose its social power? Would influencers have a role to play? These questions are impossible to answer, especially with this new shopping platform existing purely in rumour. However, these will be the questions retailers and brands will need to ask themselves should the opportunity to launch on IG Shopping come up in future.

Instagram continues to grow by adopting features from other platforms – its Snapchat-like stories and Pinterest-inspired ‘Collection’ save button. Through a standalone app Instagram would potentially be taking on ecommerce giants like Amazon as well as webstore providers like Shopify, which is mighty big competition to jump into battle with. Facebook's kid brother would need to harness its existing social userbase incredibly efficiently to find success as a standalone - but it might well be able to borrow successful elements from both of those major potential competitors, just as it has done in the social space.

Whether indeed the app is actually in development and whatever shape it takes, one thing that is for sure is that businesses need to be prepared to adopt and invest in ways of shopping that their customers are interested in, whether that is Instagram or in-store. To make that happen, brands and retailers need to collect customer data to understand what their shoppers want and deliver it to them.

To deliver that across channels, they also need high quality product data which can be adapted as efficiently as possible to the unique demands of different platforms.

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