Instagram Checkout — why alarm bells should be ringing for brands

Instagram has announced the launching of it’s new eCommerce product, Instagram Checkout, allowing brands to sell products directly via the news feed. Well-known fashion retailers, including Nike, Zara, Uniqlo and seventeen other brands, have signed up as initial launch partners to the service.

The hope

From the outside looking in this would seem to be a win-win for brands, they overcome the big hurdle in the customer journey of having to encourage potential customers to go to the brand’s external site, sign up, and then complete the purchase, typically a reason why most basket abandonment will occur. Brands can also place themselves right at the heart of the discovery process, but how much control are they giving up in the process…

The reality

These customers will be Instagram-owned. Brands might earn additional revenue and improve their conversion rate, but orders will remain virtually anonymous except for the basic information required for delivery.

Instagram will own all the data behind the sale, retaining customer and order details, including billing information, shipping address and contact details (customers will have option to share email address with brand). Additionally, Instagram’s share of sales is not yet stated, adding more uncertainty to the announcement.

While this might not seem like a big price for some to pay to generate additional revenue, the reality will be more sobering for brands. Cross-selling and upselling are big risks on a third-party marketplace where brands have little to no control. As seen by Facebook’s strategy currently, where for example they would be perfectly happy to show BMW adverts to a Mercedes audience or vice versa, for Facebook these audiences represent one singular entity, but brands are unlikely to feel the same way about their customer base.

The solution

For too long brands have been giving up control on social. The lure of mass audiences and unrestricted volume proved to be too enticing a prospect.

The solution, as in many instances, is to turn inwards.

Integrating social and eCommerce seems the natural progression in the market, but for brands this needs to be on a platform they own. The data behind a purchase can often be as valuable as the purchase itself if analysed correctly. Giving this up could be a huge risk, just look at the amount of copy-cat products Amazon have made on their own site based on purchasing data from third parties within their platform.

Brands have to take back control of their social strategy and shift focus from volume to precision and profitability.

GlobalDrum empowers brands to take back ownership of the conversation with their most valued audiences. Shifting the focus from volume to precision & profitability