Anindya Ghose, a professor at NYU’s Stern School of Business who teaches a course on e-commerce and social media, said the checkout button allows users to “act on that impulse [to buy] right away.”
When people are forced to leave a platform and go to a different one to complete a task, there is typically a big drop off in user traffic, Ghose said.
“Enabling the entire transaction to occur within the same interface without going outside [the app] may not sound like a big deal, but that’s when most of the [traffic] leakage happens,” he said.
Instagram users will be able to tap a shopping product tag to see more details, and a “Checkout on Instagram” option will appear. Users then enter information, such as their payment method, shipping address, billing information and email. Instagram will save the payment information so it does not need to be reentered every time someone wants to buy something new.
Other companies have made forays into social e-commerce but with mixed success. Instagram may be better positioned to succeed as people already seek out fashion inspiration on the app. Its large user base and broader demographic appeal than other platforms could also help.
Instagram will have a “selling fee” to help fund the feature and offset related expenses, such as payment processing. The company said payments will be secure and processed in partnership with PayPal.
Some people may be wary of giving Instagram — and parent company Facebook — credit card information and home addresses amid a string of privacy and security scandals at the company. For its part, Instagram said it doesn’t share payment information with sellers, and it keeps financial information on secured servers.
Photo Credit: Vox
In its blog, the company hinted that there is still more to come on the shopping front: “Checkout is just one part of our long term investment in shopping. We’re excited to introduce even more ways for people to enjoy shopping on Instagram this year.”