Insta-Shopping Checkout: Social commerce enters a new era but are retailers ready for scale?

The launch of Instagram’s “Checkout” feature in March heralded a watershed moment for eCommerce and the entire retail world, but are retailers ready to ride this wave?

Asian social commerce giants, such as Alibaba and Wepay in recent years, led the social commerce charge despite early, unsuccessful (Source: The Guardian) ventures on the Facebook platform. However, thanks to Checkout and Libra, the Facebook-owned Instagram is stirring up the competition and increasingly close to fulfilling its goal of becoming a social commerce behemoth. In June 2019, it finally announced its long term plans to become a retail rather than social media platform.

Since Checkout’s launch, 130 million people now look at product tags each month on Instagram – a huge uptick from just 90 million last September. Also, as it shortens the customer journey to just two clicks, some brands are already reporting (Source: Big Commerce) a whopping 1,416% in traffic (Natori) and a 20% increase in revenue (Magnolia Boutique). The growth potential according to Deutsche Bank is enormous, with analysts predicting that Checkout could generate as much as $10 billion in 2021 alone (Source: Business Insider). In parallel, the 2020 launch of Libra, by parent company, Facebook could unlock the Instagram Checkout feature to a further 1.7 billion people across the globe who do not have access to a bank account.

Growth potential is further bolstered by ever-growing mobile shopping trends. For example, recent surveys (Source: Big Commerce) indicate that millennials are now regularly making online purchases anywhere, whether that’s from work, from bed and even from the bathroom (yes, 20% of shoppers have admitted to this). This segment is mobile-first, always connected and expecting transactions to be utterly seamless – something Instagram Checkout can ensure with its two click process.

There is also the influence of social media on purchases to consider. As many as 74% of consumers now rely on their social networks to make purchasing decisions. Additionally, 56% of users that follow brands on social media do so to view products. Since its creation, over half of Instagram users follow brands, meaning that it was already the default social network for purchasing decisions – even before it was ready to sell.

So what does this all mean for the average retailer?

To capitalise on Instagram Checkout and make an omnichannel future possible, companies need to a seamless flow across the customer experience which extends their supply chains.

Until now, they have had to contend with connecting many different parts: e-commerce website, order management systems, warehouse management systems, enterprise resource planning systems, in-store retail systems, social media and now, Instagram Checkout.

Giving the level of disruption and opportunity that this is already causing in the eCommerce space, retailers should use this time to prepare themselves to fully take advantage of the level of scale this new channel will bring. However to fully capture the growth potential of this new touchpoint, brands need to get extremely creative with their content but they also need to ensure that they get the basics right first.

Retailers must first start by asking themselves if there is a risk that the more practical aspects of the customer experience, such as logistics and delivery, could be neglected.

Logistics and delivery are important touchpoints and elements in the digital customer experience which are often neglected. Regardless of social spend, any loose cog in the supply chain will grind the entire process to a halt, causing customer headaches and damaged reputations. Every interaction with a customer impacts perception and thus the reputation of a brand, often it can be easy to get caught up with systems and processes so much so that companies can forget about the customer whose loyalty it depends on. With this in mind, it’s vital to create value at every step and interaction and a great way to do this is through the product delivery experience.

Brightpearl looked at 29,000 1-3 star reviews left by customers rating the service of ecommerce businesses. 77% of these were a result of typical operations failures such as poor customer service, or negative experiences related to delivery, return and refund policies. This means that if a company is having issues with its supply chain, deliveries, the potential ripple effect has the potential to do untold damage to your future sales and reputation, with poor customer experiences costing UK brands £234 billion per year (Source: Customer Service Manager) in lost sales.

For retailers selling on Instagram or elsewhere, the customer should have a memorable and personal experience, where they are given the power to decide what is best for them and this includes the shipping and delivery options. Online shoppers should be able to decide how, when and where they receive their order. Investing in every step of the digital customer experience will build customer loyalty, increase word of mouth marketing, convince customers to return to your store and increase their average spend.

Consumers having access to a checkout directly from Instagram is an exciting opportunity for retailers to exploit, however brands need to ensure they can walk before they can run. Brands will be focusing on their Insta-content strategies and use of influencers to convert Insta-sales more and more as Instagram Checkout grows in popularity. Unless they have the delivery systems that can protect the brand experience all the way through the buying process, then they risk losing customers in the long run to competitors who get this key component in the digital customer experience right.

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