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How Instagram is Taking on Amazon
(and Winning)

By Serge Albohayre

4 minute read

When Emily Weiss, founder of $100m eCommerce beauty brand Glossier was asked about whether the company would sell on Amazon, she responded with an emphatic “no, no, no”. Weiss, clearly doesn’t think that Amazon is the best marketplace for her beauty brands.

Amazon facilitates one type of commerce: utility shopping. They are known for providing ultimate convenience and low pricing - giving customers exactly what they’re looking for, at a competitive price, within one day.

They have also done little to facilitate the approach of aspirational brands; who generate value by building an emotional connection and selling the experience of owning a product. Think about Glossier beauty products - engagement inspired by their consumers’ stories of personal care issues, not by how quickly they can receive a parcel.

In a world where the ‘customer experience’ is becoming more important, eCommerce platforms are struggling to create the same sense of immersion that customers find in a physical store. Bricks-and-mortar shopping still comprises the vast majority of total UK retail transactions (over 80%), owing to their increasing distinction as a form of entertainment. Online sites have so far struggled to replicate this ‘theatre’.

Enter Instagram.

In March this year, the social platform revealed in a blog post that it was launching a beta shopping program with sixteen beauty and fashion brands. For the first time, it would test the ability to shop, check out and manage orders all within the app. Soon after their debut, Adidas announced that online sales jumped 40% year on year for the quarter, which the CEO attributed largely to sales through Instagram Checkout.

Fast forward another month, competitor Snapchat announced its own foray into eCommerce, giving consumers the ability to order items in-app from brands that are owned and run by their favourite Snapchat stars (Kim Kardashian amongst others). Instagram’s disruption of the global retail market has only just begun.

By creating a seamless journey between browsing and buying, Instagram are able to create an environment for a more emotional experience – and what feels like the eCommerce experience antithesis to Amazon’s transactional one. For users, it enables them to buy something they love at the moment of inspiration.

For brands, it allows them, on a mammoth scale, to build a sense of affiliation and tell a story through their content, whilst subtly commercialising that relationship. For Instagram, they are creating another reason for customers to remain on their digital platform, and by saving customers’ payment and shipping details, they foster loyalty to their new commission-making retail channel.

However, Instagram’s success as a purchasing platform is contingent on four things:

  1. Overcoming potential stumbling blocks around basket-building capability. For the current Beta version, the max basket size is one item - we’ll have to wait for the full version to see if this is improved.
  2. Contending with the high delivery expectations set by Amazon. Whilst customers can track, return, and cancel their orders through the app, they are still far from matching Prime’s 1-day offering.
  3. Assuring users of the security of their payment information, especially considering that Facebook (of the recent Cambridge-Analytica scandal), is Instagram’s parent company. Customers can set a PIN especially for Instagram Checkout, but offering other processes such as biometric authentication may be key to further reassuring users.
  4. Retaining their ‘aspirational image’ by choosing appropriate brands, and advising the best ranges. We can see that Adidas have set a good example, by timing a string of exclusive product launches with their debut on Instagram Checkout. And we found that all the categories Instagram have so far picked for their beta release account for more visual purchases, within clothing and cosmetics.

So, will we see Instagram cannibalising Amazon’s sales? Not massively - the leading paradigm of what an e-commerce experience gives you will still be one of efficiency and breadth of product, especially for functional items such as cleaning products or electronics.

More likely is that Instagram will have the first-mover advantage into the ‘discovery shopping’ eCommerce space that Amazon has so far failed to crack. Especially in categories where feeling inspired is a prerequisite to making a purchase, Instagram could well emerge the victor.

So… what can you learn from this?

  • Think about how your path to purchase is impacted by whether your product/service is an ‘aspirational’ or ‘functional’ purchase.
  • Having a customer-led strategy is key, one that wraps the customer and marketing around everything you do, all the way from sales to back-end operations.
  • Get in there early, watch Instagram’s movement in this space, they may yet be a key channel for you.


BIBLIOGRAPHY

TechCrunch (2018) https://techcrunch.com/2018/09/07/glossier-ceo-emily-weiss-on-why-the-company-wont-sell-on-amazon/

Office for National Statistics (2018) https://www.ons.gov.uk/businessindustryandtrade/retailindustry/articles/comparingbricksandmortarstoresalestoonlineretailsales/august2018

Digiday (2019) https://digiday.com/marketing/its-having-a-positive-impact-instagram-is-driving-adidas-online-sales/