Amazon has enough competition as is, but looks like Instagram wants to shake matters up for the e-commerce giant.
After introducing product tags to its social media networking app, Instagram has now introduced a shopping feature, where there is now a checkout option directly on the app.
The new process takes Instagram’s ‘Shopping Tags’ to the next level – instead of a ‘View on Website’ button, users will see a ‘Checkout on Instagram’ option which will enable them to make a purchase from the app itself.
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At present, this new feature has been launched in a closed beta testing round with 23 businesses and brands participating in the test, and the process is only available to users in the US. The brands currently using this feature are: Adidas Women, Adidas Originals, Anastasia Beverly Hills, Balmain, Burberry, ColourPop, Dior, H&M, Huda Beauty , KKW, Kylie Cosmetics, MAC Cosmetics, Michael Kors, NARS, Nike Training Nike Women, NYX Cosmetics, Oscar de la Renta, Ouai Hair, Outdoor Voices, Prada, Revolve, Uniqlo, Warby Parker and Zara.
This marks an Instagram first big step towards moving into in-stream payments.
Instagram will store user’s payment data after your first in-app purchase, and use that for future shopping, so you only need to enter your details once. In the press release, the company said:
“Once your first order is complete, your information will be securely saved for convenience the next time you shop. You’ll also receive notifications about shipment and delivery right inside Instagram, so you can keep track of your purchase.”
Users will be able to track their purchases via a new ‘Orders’ tab on their profile and the merchants will only be provided with essential information. The press release read:
“Merchants will only get the details necessary to fulfill an order, including contact info and address, but not your actual payment info. Users will see an opt-in option to share their email address with the seller for marketing purposes. Checkout with Instagram could leave merchants with a little less data than if the purchase happened on their website, but Instagram says it will provide info on which sales it generates for a merchant.”
Instagram will be charging businesses with a fee for each transaction facilitated, giving it another revenue stream. As the program expands, this stream could become a significant contributor to its revenues.
Currently, Instagram has more than a billion monthly active users. Given Instagram’s growth and popularity, it’s safe to assume that a heap of brands will be very keen to get in on the new process.