2nd May 2019

Are we witnessing the death of e-commerce websites?

This week Facebook have hit the headlines with major announcements and promises at their F8 conference. Most of these surround the area of user privacy, with the conference theme based around how ‘the future is private’. The social platform gave details about how your news feed is going to change to ensure you are more able to connect with close friends and family – in addition to other changes soon to be rolled out across WhatsApp and Facebook Messenger. Read more about those changes here.

Another fascinating announcement was the introduction of seamless commerce coming to Instagram – rolling out next week! The feature will be available to “public figures, creators, athletes, publishers, and artists”. It will allow you to purchase items you see your favorite creators wearing in their posts directly from within Instagram. That means no more taking screenshots and asking for details in the comments section. It also means no more being sent to 3rd party websites to complete the purchase. Now all you have to do is tap the item and buy it in the moment. So, does this spell the demise of more traditional e-commerce sites? What’s the need for online stores if you can buy the items you want directly within the social platform you spend most of your time on? We’re probably some way off such a drastic shift in purchase behaviour but it does give a glimpse into the likely shopping habits we’ll all be following in the not so distant future.

The interesting question this poses is – who does this new feature actually benefit? Is it the creators? The brands? Or Instagram themselves? Well, the answer is probably a little of each. Here’s how:

Creators
This new feature gives further control to the creator community. It will enable them to maximise their own revenues by charging brands a premium for this ‘convenient commerce’ solution. After all, who doesn’t want to buy those pair of Balenciaga’s directly from Instagram after seeing their favourite creator flaunting them? *cough

Brands
Top brands understand the value attributed to convenience transactions. For a millennial audience particularly, convenience is a primary metric when considering to purchase of not. This major reduction in the path to purchase is sure to benefit conversion rates and overall revenue.

The Platform
Instagram are bound to benefit from his new feature. Whilst they too understand how vital it is to keep the platform relevant to their audience and they state that no commission is payable on each transaction, the feature does require creators to use Instagram’s Checkout beta, which involves a selling fee. That means more dollars and happy shareholders.

Whilst these benefits are actually relatively positive for most users, the major question is likely to surround how brands approach this with their own creator communities. It’s great to think that they’ll see more purchases of the items they’re paying those creators to promote, but it this new seamless commerce actually going to see the rise of creator own brands? After all, why promote another brand’s products when they could promote their own and pocket all the cash?

Like all new features, we’ll not know it’s benefit until there is sufficient data to support its continuation. One thing’s for sure, we’re already investigating what value this can bring to the brands we work with.

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