Often used by brands to showcase their wares, social network
tries out in-app buying
By Jeff Horwitz and Sarah Nassauer
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (March 20, 2019).
Instagram is going deeper into the e-commerce business, for the
first time selling to its users products they see on the
photo-heavy social network's feeds.
The move is an effort by Instagram to capitalize on its
popularity among fashion and consumer-goods companies, which have
showcased their products on the Facebook Inc.-owned platform for
years. The new initiative -- at first limited to 20 brands,
including Adidas and Prada, is a cautious step toward competing
against the likes of Amazon.com Inc. and Walmart Inc. for online
shoppers.
"From a consumer perspective, we're out to build a complete
shopping experience," said Vishal Shah, Instagram's head of
product.
As part of the trial announced Tuesday, users will be able to
click on an item featured in a post, see the price, and then click
again to bring up an order form. They can then check out with a
credit card or PayPal, saving the payment method to their Instagram
account if they choose.
Instagram previously allowed brands to link to their own
websites, where shoppers could make a purchase.
With its more than a billion monthly users, the platform is
popular among online influencers and fashion-conscious young people
coveted by many businesses.
Initially, Instagram won't collect a commission on its in-app
sales beyond recovering some costs. "As checkout grows and shopping
matures, we expect to derive revenue from this over time," a
company spokeswoman said.
In addition, by seeing what products, styles and sizes its users
purchase, Instagram could further refine the content and ads people
see on the platform -- though that could unsettle some consumers
given Facebook's stumbles in recent years regarding data
privacy.
The social network is wading into the tricky dynamics that
brands face as more shopping shifts online, away from traditional
outlets like malls. Brands want the sales potential from selling
directly through online retailers or platforms -- while also
keeping a tight hold on their relationship with shoppers. Some
brands, including Nike Inc., have started selling products online
through Amazon and Walmart but only after years of resistance.
Others starting to offer their products for sale through
Instagram include apparel brands Oscar de la Renta and Michael Kors
and Kylie Jenner's cosmetics line, which the reality-television
star promotes heavily on her popular Instagram account. Revolve
clothing and products of certain Nike divisions will also be
available for in-app purchase.
The new checkout feature builds upon elements Instagram has
added over the past year, including a personalized shopping feed
and the ability to label products in photos. Pinterest, another
visual social-media platform linked to shopping and style, also
identifies merchandise in its photos; but it sends interested users
to brands' and retailers' websites, whereas Instagram now will
allow for immediate purchase.
Instagram was cautious about inserting itself between companies
and users, Mr. Shah said, but he noted that more than 130 million
users have used the platform's product-tagging system allowing
businesses to promote their wares.
"People were already shopping on Instagram," Mr. Shah said.
"They were just having a hard time doing it."
The 20 companies participating in the initiative will pay a fee
to cover credit-card processing and other checkout-related costs,
though Instagram declined to describe the precise terms. If the
checkout option proves popular, Mr. Shah said, Instagram will
figure out how much to charge participants down the road.
Allowing for direct purchases is a natural extension of how the
social-media platform has been used, said Linz Shelton, global
social-media director for Michael Kors. "Since Instagram came out,
people have been using it as a shopping platform whether it was
conceived in that way or not," she said.
The brand, owned by Michael Kors Holdings, sells only its
smartwatches directly through Amazon, but will offer nearly all its
products for sale on Instagram at least to start, Ms. Shelton said.
After paying for a Kors jacket or bag within Instagram, shoppers
will receive a confirmation email from the platform and shipment
from a Kors warehouse, she said.
The brand doesn't expect other sellers of its products to react
negatively to having to compete more directly with Instagram for
Kors shoppers, Ms. Shelton said. They won't be surprised, she said,
because they know "how we were working with Instagram"
previously.
The apparel company declined to comment on whether it will pay
Instagram a fee or commission when shoppers buy its products
through the platform.
Write to Sarah Nassauer at sarah.nassauer@wsj.com
(END) Dow Jones Newswires
March 20, 2019 02:47 ET (06:47 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.