Checkout on Instagram: meet your new sales channel

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April 10, 2019
Checkout on Instagram: meet your new sales channel

In March 2019, everyone’s favorite multimedia social sharing platform Instagram unveiled an all-new “Checkout on Instagram” feature that enables users to complete purchases directly inside the app. It marks a natural progression for Instagram, which has evolved beyond an outlet for sharing photos of avocado toast or the latest memes, to the premier way for brands and retailers to reach customers.

Before, companies could always tag items in posts, but they would just end up directing users back to their e-commerce sites for checkout, adding an extra step that increases the chances of abandoned shopping carts.

Now, a user can tap a product on a post with the Checkout on Instagram button, choose from a variety of options, then proceed to enter their billing and shipping info without ever leaving Instagram. It makes for an easier, more streamlined social shopping experience, which in turn increases sales conversions. Currently, there are more than 20 brands piloting the feature, including Adidas, Burberry, Dior, MAC Cosmetics and Nike.

As adoption of Checkout on Instagram grows, it will create an opportunity for companies to reimagine how they approach demand forecasting, marketing and their overall retail experience.

Using social metrics to forecast demand and target customers

With the Checkout function, Instagram transforms into a viable sales channel. What’s more, it’s a sales channel that comes loaded with qualitative and quantitative data on consumers’ interests, tastes, location and levels of engagement from Instagram’s application programming interface (API). Companies can then take this data to inform demand forecasting and personalized marketing.

For example, a company can see if there are high levels of engagement with a post relevant to a specific product—lots of likes, reposts, sharing, etc.—and thereby plan production numbers to meet that anticipated real-time, real-world demand.

With geo-specific information on where these interested followers live, it is possible to assign nearby warehouses and distribution centers to fulfill incoming orders, streamlining delivery for a faster, better customer experience. At the same time, companies can proactively allocate inventory and replenishment to those regions to make sure they are well stocked. Such social metrics offer acute visibility into what the total demand landscape looks like today and tomorrow.

With data on user purchases and what posts they like, brands can better target their sponsored Instagram posts to individual interests and buying behaviors. For instance, user A and B might both indicate an interest in men’s shoes, with A showing a preference for traditional leather footwear and B clearly liking performance sneakers. Shoe brands from both sides of the spectrum can leverage users’ account information to target ads appropriately. So, John Lobb or Salvatore Ferragamo would clearly speak to user A, while Jordan brand or New Balance would better market to user B.

This makes for a more personalized experience, where consumers see products that they really like, which leads to a greater likelihood of purchase—and means increased profits and less wasted ad spend. According to BRP Consulting’s 2019 Real-Time Retail report, 87 percent of customers today want a personalized and consistent experience across all shopping channels.

Achieve a true omnichannel shopping experience

In the same Real-Time Retail report from BRP Consulting, 56 percent of customers report that they are likely to shop at a retailer that offers a shared cart across channels, yet only 7 percent of retailers currently offer that capability. With Instagram becoming a new channel for brands and retailers, there is a great opportunity now to deliver on that omnichannel shopping experience and remove the barriers between e-commerce, brick-and-mortar, and now social media.

In an omnichannel retail world, a customer can see an item—such as a pair of shoes—on Instagram or on an e-commerce site. The retailer can immediately see that there is interest and actually notify the customer if there is a nearby physical store for them to see the shoes in person. The customer can visit the store, try the shoes on, and then either complete the purchase from their mobile phone or with a store representative. Everything is seamless across the whole journey.

To make the omnichannel experience possible, infrastructure-wise, organizations need to be able to tie all of these different parts of their supply chains together. This includes social metrics, e-commerce, order management systems, inventories, warehouse management systems, enterprise resource planning (ERP) systems, retail-level information, and everything in between. A simple, secure way to connect everything is distributed ledger technology, which provides real-time data flow between each node in the supply chain. Companies can thus achieve transparency and visibility between all of these disparate parts to ensure that, ultimately, inventory and demand are planned for accordingly when a customer is ready to purchase—in store, online or on social media.

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