The Instagram Shop: How Is It Changing The eCommerce Game?

Unless you’ve been living under a rock lately, you’ve probably seen the latest Instagram update: Instagram Shop.

It’s the most recent attempt for Instagram to transition towards eCommerce. 

Following the launching of their product tag feature – which would let brands and businesses tag their products in their posts, and in turn, take the consumer to the company’s website – Instagram has now streamlined their eCommerce features.

But, how do you use it? And is it any good?

If you’re looking to find out more about the new shopping service, keep on reading.

Instagram Shop is the recent update to the Instagram app, which sees users being able to purchase products in-app.

In fact, the shop tab is accessible from the very front page of the explore menu.

The new feature allows users to browse shops based on the accounts they follow and get recommended shops to check out based on their user history.

As well as this users can check out the Editors’ Picks section, where they can see several of the same products all under one category; check out the wish lists and recommended products from influencers and highly followed accounts, and even shop based on sponsored collections.

There’s a lot going on.

As well as this, Instagram has also amped up their tagging and sharing capabilities for the shop.

From your Instagram stories, you’ll be able to tag the products you’re promoting so that they show up at the bottom of your stories.

This way, your viewers can easily click on the products and learn more about them.

But what’s most important about this is how all of these purchases are carried out within the app itself.

Meaning, that Instagram isn’t merely supporting purchasing features.

They’re effectively transitioning themselves into a shopping app.

According to the Instagram and Facebook press release, Instagram is recognising the gaps in the market and is seeking to fulfill it.

As a direct result of the Covid-19 pandemic and everyone being stuck in their homes, we’re frequenting physical stores less and less.

And, for Instagram, they wanted to help out with that.

In their press release announcing both the new Instagram and Facebook shopping features, they state that:

“Right now many small businesses are struggling, and with stores closing, more are looking to bring their business online. Our goal is to make shopping seamless and empower anyone from a small business owner to a global brand to use our apps to connect with customers.”

In fact, the press release cites their own small business report to further prove their motivations.

Within the report, co-led by Small Business Roundtable, they found that a third of small businesses have closed during the pandemic.

What’s more, this number rose to 50% of businesses if they were self-owned or financed by a personal income.

So, by their own logic, Instagram has very noble intentions when it comes to launching their new shopping feature.

But, how true is this?

Whilst their claims to be championing small businesses during difficult times is certainly admirable, we would be naïve not to consider how Instagram is making money from this.

Thanks to Covid-19 and lockdown, and people being unable to go to their favourite shops as much as they would like, we are all turning to online shopping.

In fact, thanks to panic buying essential goods as well as boredom-induced purchases, the amount of online shopping has increased.

Actually, by a whopping 129%.

So, it makes a lot of sense why Instagram would branch out more concretely into this area of business.

But how exactly are they doing this?

Well, according to their Business Centre, Instagram is taking a chunk out of their featured shops’ profits.

They claim to be taking 5% of the profits per shipment for orders carried out in their store. Or, 40 cents for any shipment that is 8 USD or less.

And, given that Instagram generated 20 billion USD in 2019 from advertising revenue alone, you can certainly understand their motivations for the Shop.

Instagram Shop has the potential to make the company billions in revenue. And, if the trend in online shopping maintains, let alone increases, then their profits could be incredible.

One of the most interesting features within the Instagram Shop is their recommended products for each user.

It works in the same way as the explore page does. Collecting data from your likes, comments, and follows, the algorithm determines what you’d like to see and what you’d like to buy.

Meaning, that each individual user will have a different Instagram Shop to their friends.

And, users don’t have to worry about being recommended products that have nothing to do with them.

By doing this, Instagram is able to remove the friction within the purchasing process.

Instead of having to plow throw hundreds of different products on different websites, these products come to you. Recommendations make it easier for consumers to find the things they love.

In fact, they don’t have to find them at all.

They’re already there!

It’s the latest move in digital marketing which includes artificial intelligence. Using AI services to determine what users want to see before they even know themselves means that users remain constantly entertained, and are more likely to return.

If you’d like to know more about how artificial intelligence in marketing, check out our article here.

So, Instagram is using AI to recommend its users products.

For the majority of users, this won’t be a problem. But some people are very conservative about their privacy. For some, they don’t want apps to be gathering any more of their data than they already do.

So, how is Instagram Shop collecting our data? And, what are they doing with it?

The first thing to know is what Instagram is doing with our payment details.

If you’re shopping in the Instagram Shop, you have the option to pay with either PayPal, Visa, Mastercard, American Express, or Discover.

So far there is no option to pay with Apple or Google pay, although who knows for the future.

But if we’re paying with our bank cards, is Instagram holding this information?

You’ll be intrigued to know that Instagram doesn’t provide the shops we buy from with our payment information.

They’ll only know the necessary information pertaining to our purchases: that being our address to ship it, and our contact information.

Meaning, that our data is pretty protected. We don’t have to worry about it being given out to every shop we frequent.

What’s more, there’s also an option to protect your privacy when it comes to marketing.

According to Tech Crunch, users will have the option to share their contact information with the stores for marketing purposes.

So if you don’t want to receive any cumbersome emails, no worries!

Now we know how Instagram Shop works, and why it’s been introduced, how great is it actually to use?

On the consumer end, as mentioned earlier, it streamlines their purchasing process.

They can be more easily recommended products, and by keeping it all in-app, they don’t have to go through any unnecessary steps to buy what they want.

As well as this, Instagram Shop also has a lot of benefits for the stores it features too.

Firstly, plenty of the stores that have been featured in the Shop have recorded an increase in revenue.

Speaking to Oberlo, one children’s apparel owner Shari Lott, describes how she’s seen her revenue increase now that she’s selling through Instagram.

She claims that: “When we launched the feature [Instagram Shop], we experienced a 25 percent increase in traffic and an 8 percent increase in revenue attributable to shopping on Instagram.”

What’s more, Instagram also makes the shopping experience more user friendly. Which, in turn, means stores are experiencing higher sales.

Rather than a store posting a picture with a product, and using a call to action which directed users to one singular link in the bio which would direct them to the store, Instagram Shop has it all in one place.

Consequently, stores are experiencing higher conversion rates and lower bounce rates.

After all, people don’t want a complicated shopping experience, do they?

So far, Instagram Shop seems pretty great.

But, not all Instagram users are happy about the changes.

Since the introduction of Instagram Shop, the company has decided to change the layout of the app.

Rather than having the ‘post’ and ‘likes’ buttons in the explore menu, they’ve been moved to the corner along with the ‘messages’ feature.

In place, ‘reels’ and ‘shop’ are now center stage.

It’s a move that has received a lot of backlash.

Many Instagram influencers and creators are voicing their frustrations, claiming that the store is making it more difficult for them to promote their content.

These complaints come amidst years of frustration about the Instagram algorithm already, which has been claimed to suppress content.

What’s more, many average users have also voiced their anger. They feel that the store is prioritising the wrong features of the app.

And, many users are predicting that Instagram will see a dip in users as they move away from what used to be their primary purpose – pictures from their friends and people they follow.

Yet, despite some of the negative reception, there’s no doubt that Instagram is changing the eCommerce game.

There’s no denying that it seems that they’ve monopolised on the long since recognised truth that social media is the perfect partner for marketing.

And, they’ve now decided to take this to the next step and convert their social media platform into an eCommerce store.

It’s interesting to wonder whether or not any of the other major social media apps – Twitter, LinkedIn, Snapchat – will follow suit.

As many of them did when it came to user’s stories.

The impacts of the Instagram Shop could have the potential for changing the way we shop online.

No longer will brands need to compete for their consumer’s attention with social media.

Now, they can have users shop while being on the app at the same time.

In any way, no matter what the future of eCommerce holds, Instagram has certainly changed the social media game as of now.