Instagram Takes on Amazon

Earlier this week Instagram rolled out a program that allows a select group of brands to sell products directly on the app, by adding a checkout process experience. The news didn’t come at a surprise and has been long in the making. Instagram quietly introduced payments into the app last year after enabling product image tags in 2016, which allow merchants to use the social network to drive customers to their websites.

Instagram has been very cautious to introduce commerce features into the experience to avoid alienating their users, which is their most important asset. So, why now?

There are three catalysts that caused Instagram to take the final step in becoming a full-fledged commerce platform:

  1. The Amazon threat
  2. Consumer demand
  3. Brand pressure

Amazon launched their influencer program two years ago allowing anyone with a large following on one of the main social networks to get their own storefront within amazon.com. The program has been quietly growing and becoming the de-facto link between social and commerce. The understated success of the Amazon Influencer Program proved that instagrammers are not put off by commerce in the app and highlighted the risk of Amazon eating Instagram’s commerce lunch.

Consumers are frustrated with the mobile shopping experience. Conversion rates on mobile are less than half of what they are on desktop, even though people spend more time on mobile. This creates a huge consumer-led potential that, frankly, is still up for grabs.

Finally, brands are are desperate to remain relevant in the age of Amazon. The best way for them to achieve that is by meeting their customers where they are. Be it by innovating physical retail or engaging consumers as they lead their digital lives and — for one billion people — that means Instagram.

This is a smart move by Instagram. If they can offer a seamless commerce experience on mobile, they can position themselves as the go-to-platform for consumers to discover new products and brands on any channel, rivaling Amazon with regard to brand relevance, which will make their ad business even more attractive. It will also pressure brands to deepen their differentiation efforts through smart and relevant digital experiences, to become even more customer centric.

 

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