Instagram took a big step on Tuesday in its evolution into an online shopping destination, and for once, Amazon finds itself looking up from a position of weakness.
Instagram announced that users of the photo-sharing app will for the first time be able to start making purchases of some products directly within the app, capping off the social network’s multi-year flirtation with becoming a real player in online shopping. Big-name retailers like Nike and Zara, as well as younger brands like Outdoor Voices and Warby Parker, are among the 20-plus companies participating in the initial rollout.
Instagram has already proven to be a platform — thanks in large part to its visual nature — where the best consumer brands can do what they do best: get new people to discover their products and inspire shoppers to covet their wares.
Now it is setting out to bridge the gap between product discovery and purchase. Along the way, it has the chance to do something no other social network — not Pinterest or Twitter — or giant online retailer, Amazon included, has done: build a big business inside a mobile app based on the kind of serendipitous impulse buying that brick-and-mortar malls have feasted on for decades.
Amazon facilitates a very different type of commerce and very, very well: It quickly gives you exactly what you want when you go to the site knowing exactly what you want. It’s utility shopping. A recent study from Feedvisor found that 74 percent of online shoppers in the US go straight to Amazon when they are ready to buy a specific product.
But Amazon has repeatedly failed at becoming a destination for discovery shopping — or the kind of shopping common in physical retail where you might uncover something you didn’t need but now covet. That type of shopping is one that many Americans still consider a form of entertainment, and one that still makes up a large chunk of total commerce transactions in the country today.
While the opportunity for Instagram is large, so is the risk. For years, Instagram executives have resisted adding purchasing functionality, in part to avoid being too “in your face” about the commercialization of an app that became hugely popular for noncommercial reasons. Now they have changed course and are moving past one form of commercialization (ads) to add another (commerce). Will that turn off some Instagram users?
The way the new shopping feature is designed, for now, may help guard against that: The brands and retailers involved in the initial rollout can’t place shoppable products into Instagram ads. That means one of the only main ways Instagram users will come across the shopping capability today is if they are already choosing to follow that brand or retailer account.
In time, though, I’d expect Instagram ads to carry the shopping capability, too. There’s just too much money at stake to say no.
Risks exist on the merchant side of the equation as well. Some brands and retailers may like the current setup where Instagram users are typically redirected to the retailer or brand’s website when clicking on a product. That allows the merchant to show a shopper more products and potentially sell them multiple products, which typically makes for a more profitable e-commerce order. For now, Instagram users can only purchase one item at a time directly in the app.
Despite the risks, Instagram has as good a shot as any company at building a massive online platform for discovery shopping. And the fact that Amazon has thus far failed in this area is a big reason why.