What Does Instagram Checkout Means for the eCommerce Sector?

In the last year, Instagram has released a new feature called Instagram Checkout where brands can promote and sell their products directly via the app; removing the need for the consumer to be redirected to the merchant’s website.

At the moment, this feature is currently in the beta stage in the US. Instagram are currently testing the waters of this feature with some big household names including Adidas, Huda Beauty, MAC Cosmetics, Prada, Nike, Micheal Kors, Warby Parker and Zara - that’s just a handful of names.

But while you could already do Instagram Shoppable Posts via Facebook Store, why are Instagram releasing Instagram Checkout?

Well, the answer lies in getting your audience to spend more time on the app.

Instagram’s Very Own eCommerce Ecosystem

When we look at the eCommerce sector right now, Amazon is the most dominant force. As of 2019, according to TechCrunch, Amazon has nearly 50% of the entire eCommerce marketplace.

In response, Facebook, who owns Instagram, released Instagram Checkout to get people to spend more time on their app and take some of the market share owned by Amazon; effectively creating their own ecosystem.

The reason behind Instagram creating their ecosystem actually makes sense. 

The way Instagram and other social media platforms work and how they generate revenue is by encouraging their users to spend more time on the app. And when they achieve that, the platform is able to generate more income through ad spend.

That said, Instagram is not the first to introduce its own ecosystem.  

Google Express: Google’s Own eCommerce Ecosystem

Google has already introduced Google Express where you can list your items onto the platform and your customers can purchase them directly through Google, without having to go to the merchant’s website.

Again, the reason behind this is to get you to spend more time on Google, which in effect, increases Google’s ad revenue.

The eCommerce ecosystem is an important trend to keep in mind for 2020. 

The eCommerce Ecosystem - A Key Trend for 2020 and Beyond

In 2020, we’ll see more social media platforms creating their own ecosystems to encourage their users to stay on the app for longer so that they can generate more revenue through ad spend. As these platforms will start to create their ecosystem, there will be fewer redirects towards the merchant’s website, and more expenditure via the eCommerce ecosystem.

While merchants may be concerned about relinquishing their control to these platforms, it is imperative that you know that this is going to be the way forward in the world of eCommerce. These platforms will create their own ecosystems, and for you to tap into their extensive user base, you need to set up your eCommerce store on these platforms.

If you like to more about eCommerce ecosystems and how they will impact your online business, please send me a DM or contact us via IIEPD.com.