Instagram launched a new feature called “Checkout with Instagram” on Tuesday, March 19th, 2019 in the U.S. The 130 million people who do business on Instagram can now purchase items without leaving the app. With this feature, Instagram, with more than 1 billion users is now preventing vendors from linking to their third party sites. Top brands like Adidas, Kylie Cosmetics and Warby Parker will no longer have to direct customers to their websites to make a purchase.
However, when people decide to buy a product from a brand or retailer on Instagram, they’ll be able to pay for that product inside the app instead of leaving Instagram to finish the transaction on a retailer’s website. Instagram will keep a “selling fee” of the sale for facilitating the purchase, and it’s partnering with PayPal to process the payments.
“We will introduce a selling fee to help fund programs and products that help make checkout possible, as well as offset transaction-related expenses”, confirmed an Instagram spokesman.
The checkout feature could convince brands that social network produces better return on investment and that will, invariably boost Instagram ad businesses. Social network produces better return on investment because there are fewer steps before purchase. For now, only organic posts from the launch partner merchants will feature Checkout buttons, and ads aren’t eligible.
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When users tap the post to reveal product tags, they’ll see a Checkout with Instagram button instead of the old “View on Website” button. In the close beta stage, Instagram plans before eventually opening to more businesses, Checkout tags will appear on feed posts, Stories and Explore content from the brands.
The user will be required to enter payment information which is stored for future purpose. “With their protected payment information in one place, they can shop their favorite brands without needing to log in and enter their information multiple times,” Instagram explains. This will save merchants from abandoned shopping carts left by users frustrated with having to sign up with each different brand.
After the user make purchase on Instagram, they can track the new “Orders” section of their profile that shows the status of an order, plus options to cancel, initiate a return or contact the merchant. User also gets a notification from Instagram when the order ships. Interestingly, Instagram won’t mix receipts into its messaging product like Facebook does with Messenger.
Merchants will only get the details necessary to fulfill an order, including contact info and address, not the user’s actual payment info. There will be an opt-in option for users to share their email address with the seller for marketing purposes. ‘Checkout with Instagram’ will limit the data accessible by Merchants compared to if payments were to be made on their websites. Instagram says it will provide info on sales it generates for a merchant.
“We started using product tags to make shopping more convenient for our customers,” writes Warby Parker co-founder and co-CEO Neil Blumenthal. “Checkout takes this experience one step further, making it even more intuitive and seamless for people who have discovered products they want to purchase instantaneously.”
Users can pay on Instagram with either PayPal, Visa, Mastercard, American Express or Discover. Instagram plans to allow merchants to integrate their Shopify, BigCommerce, ChannelAdvisor, CommerceHub and other tools with the Checkout feature.
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