Instagram Shop launches with Facebook Pay at checkout

Brief:

Instagram officially introduced an e-commerce hub called Instagram Shop in the U.S., with plans for a global rollout, according to a company blog post. The shopping section of the photo-sharing app will let merchants sell products and accept payments via Facebook Pay, which the social network introduced last year.
Instagram Shop will offer personalized recommendations, exclusive items and collections of products from brands and creators, along with a curated selection of goods from its @Shop shopping channel. Instagram users in the U.S. will see a double-arrow icon that indicates which products are available for sale without leaving the app.
Instagram plans to add a "shop" tab in the navigation bar of its app for immediate access to its shopping section. With Facebook Pay, shoppers who use Instagram Checkout have extra security features that include a personal identification number (PIN), fingerprint scanning and facial recognition. Facebook's purchase protection plan is also available on eligible products.

Insight:

Instagram in recent years has offered companies a number of ways to sell products, recognizing that consumers are growing more comfortable with making purchases through their smartphone. The introduction of Instagram Shop in the U.S. brings together those efforts in a centralized place within the photo-sharing app, while spotlighting parent company Facebook's fledging experiments in payments.

Instagram Shop can help online retailers and direct-to-consumer brands alike get discovered more easily because of the way it's set up to improve the user experience. Instagram users can open Instagram Shop as a starting point to find products and services instead of following brands, retailers or influencers that sell products through shoppable posts and stories.

By providing personalized recommendations, exclusive offers and other features, Instagram Shop can also spur a sense of immediacy among shoppers and drive repeat business for merchants. Sellers can create collections and tag products in their posts that point to a checkout function within the app, removing a friction point with the planned integration with Facebook Pay.

With the surge in online ordering and social media usage among consumers stuck at home during the coronavirus pandemic, retailers can build out a presence on Instagram Shop that reaches millions of consumers. Facebook's fee structure for selling on Instagram is listed on its website.

The introduction of Instagram Shop comes as Facebook seeks to boost e-commerce sales, a revenue diversification strategy that could somewhat lessen its dependence on mobile advertising. In the U.S., yearly growth in the digital advertising market is forecast to slow to 8% in 2024 from 21% in 2021, after being mostly flat this year because of the pandemic's economic fallout, per researcher eMarketer.

Instagram has gradually added more shopping features, and last month allowed more businesses and content creators to sell merchandise through its platform. In May, Target became the first mass retailer to sell products using Instagram checkout with updates to its @Target and @TargetStyle accounts.

Instagram's e-commerce efforts in the past few years have included a shoppable 60-second spot starring singer Celine Dion that let users buy a curated selection of clothing and accessories. During the holiday shopping season, Instagram created a curated collection of products inspired by some of the year's style trends that users could buy without leaving the app.

After debuting Checkout on Instagram in March 2019, the app launched an @Shop account that users could follow to browse and buy from emerging brands among a variety of categories. Instagram two years ago introduced a dedicated shopping channel in its Explore tab and stories, and later created a collection tab to let users save products they'd tagged in the app for later purchase.

Social media apps like Facebook and Instagram have become more popular for shopping as they seek to drive direct sales for advertisers that want to reach younger adults. Ninety-two percent of millennials and 97% of Gen Zers said social media is their top source for shopping ideas in a survey by installment payment service Afterpay.