Retail

Instagram Drives New Social Commerce Momentum

Instagram app

Social commerce continues its pandemic-driven momentum as Instagram announced two major moves in the area and new research shows the platform will see substantial new growth across the board.

On Tuesday (June 23) Instagram announced it was opening social shopping to more businesses including its own influencer community. On Wednesday it followed that with the biggest cosmetics retailer, Sephora. The two companies are creating a new digital storefront that will enable shoppers to pay for a product with checkout directly from the shopper’s feed or stories. Sephora says it has put 80 of its brands onto Instagram checkout.

“Sephora is thrilled to work with Instagram on this unique social shopping experience,” Carolyn Bojanowski, SVP and GM of eCommerce for Sephora, said in a press release. “Our clients engage with social media in so many ways, like drawing inspiration from the community, getting tips from experts or learning about new beauty trends so we’re always looking for new ways to enhance that beauty journey. We’re excited to deliver Instagram checkout, a new, seamless, direct, and secure way to shop across our brands’ accounts, while still getting the perks of being a Sephora client.”

Instagram checkout will allow shoppers to shop and purchase directly without leaving the Instagram app. Those purchases will then be part of the company’s loyalty program, including earning Beauty Insider points, Sephora client service and the company’s return policy.

New data from Forrester and Bloomreach show that Instagram’s moves are on the right track. Its research shows that even before the current pandemic crisis, 90 percent of business decision makers said digital commerce will become their company’s most important sales channel within one to three years. The sentiment was fairly dramatic: 87 percent said that if they don’t succeed in digital, they will not have a business.

“The pandemic will accelerate these plans for many,” says Forrester. “Pre-COVID, almost half of decision makers planned to increase budget for their offline stores … The pandemic has caused businesses to quickly shift spend from offline to online. Investment in offline has been cut in half. Instead, most plan to increase their investment in online channels like web, apps, social, and third-party marketplaces. On top of that, 60% plan to increase investment in new-to-them digital channels, and 62% will invest in mobile channels, i.e., web or app.”

If the Chinese economy, which has more distance from the height of the pandemic than the U.S., is any indication, social commerce will be a force in the eCommerce space. According to eMarketer, social commerce sales in China totaled $186.04 billion (RMB1.285 trillion) in 2019 — nearly 10 times the level in the U.S., which reached $19.42 billion in 2019.

“Investment in the social commerce space by Tencent’s WeChat — particularly with the 2017 launch of its lite apps called Mini Programs — has certainly helped garner trust and bolster usage among the general public,” says eMarketer. “To date, many major online retailers and brands in China have created Mini Programs to sell their products directly within the WeChat platform. In its annual report, Tencent said that the total transaction value generated by its Mini Programs in 2019 was more than $115 billion (RMB800 billion).”

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NEW PYMNTS DATA: HOW WE SHOP – SEPTEMBER 2020 

The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

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