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Social Commerce: The Ultimate Guide to the plethoral murk of shop, shops and shopping functions on Instagram

In the wake of Corona, more and more shops are turning to Instagram as an eCommerce outlet. Here's the official OMR primer

For many brands, Instagram has been the absolute go-to platform for communicating with existing and acquiring new customers for some time. Globally, there are over 160 million companies active on the platform. As a result, parent company Facebook has poured more and more resources into the platform, unveiling a host of new shopping features such as “Shop,” “Shops” and Shopping.” With such a muddled smorgasbord of terms, we decided to provide you with some clarity on what Instagram Shopping can do right now and how it figures to work moving forward.

“Instagram acts as a display window. However, we also want to provide merchants with the ability to sell directly through the platform,” says Daniel Verst, Strategic Business Partner at Instagram. “There are a total of 160 million companies active as sellers on the platform. 90 percent of all users follow at least one company. That makes the trend clear and the user-side demand is growing steadily.” Verst says that because of corona there was a wave of small and medium brands and merchants that have turned to Instagram to sell their wares. Parent Facebook reacted accordingly to the trend, announcing and unveiling a host of new features in the past weeks and months. As we’ll point out, the new features are not exactly easy to keep straight with similarly sounding names and overlapping functions. As a service to you, we’ll break down each of the new features and show you just exactly what each one can do and how you can use it.

Tag your products with “Instagram Shopping”

Daniel Verst von Instagram

Daniel Verst, Strategic Business Partner, Instagram

“The foundation is a business account that is filled with content. I always recommend taking inspiration from other business accounts that are successful, for example Oatsome, Coffee Circle and Westwing to name a few,” says Instagram man Verst. “If you’ve been active on Instagram for a while, you should check out and use Facebook Shops and Instagram Shopping for your Instagram account.” Okay, there’s a lot to unpack.

 

Let’s begin with Instagram Shopping. Originally launched in 2018, business accounts can upload product catalogues to it and then tag products in newsfeed posts. Whenever a user then taps the post, they can open the corresponding Instagram product page for any products linked simply by touching the image. On the product page, there is additional information about the product and brand just one more click away. According to Verst, 130 million people engage with such product links every month.

Instagram Shopping Screenshot

“Instagram Shopping” is the tagging of products in posts

Marc Garbella, Oatsome

Marc Garbella, Oatsome

“For us, tagging products directly in the Instagram feed is a no brainer. It gives end-users the chance to see what the final product looks like,” says Marc Garbella, Performance Marketing Manager at Oatsome. “We tested various channels—Instagram worked the best for us by far.” The Instagram Oatsome account lets users create a virtual mix of a smoothie bowl basis, which they can then mix. Based in Frankfurt, Germany, Oatsome has used Instagram since the beginning of 2017 and has roughly 83,000 followers on the platform. “Our content focuses on product transparency: We typically show the finished product to give consumers an idea of what the product looks like when properly prepared. Images of styled bowls work the best with our target audience,” says Garbella. “Many new customers check out our Instagram account early on in the acquisition process. That’s why it’s essential that all of our products can be found on the platform.”

Good for the goose, but not the gander?

Shopping tags work for Oatsome as a way of presenting the line of its products to new customers. Just how useful the feature is, however, largely depends on a company’s business model. Take online shop “Mit Ecken und Kanten”, for example. While it views Instagram as an essential marketing channel, it is much more critical of Instagram Shopping: “Stories are much more relevant for sales than the Feed is,” says founder Jessica Koennecke. Founded in 2017, “Mit Ecken und Kanten” (engl. rough edges) sells goods that have blemishes, that were display items and products from older collections. “We refer to ourselves as an “imperfect-shop,” since we sell goods with minor imperfections,” the founder told us. “The limited supply of the products keeps customers coming back regularly to browse the shop.”

Jessica Könnecke, Mit Ecken und Kanten

Jessica Koennecke founded “Mit Ecken und Kanten” in 2017

And that’s exactly what’s missing for her and “Mit Ecken und Kanten.” When Instagram users click a product and are redirected to the dedicated product page, there is no discovery through scrolling that takes place. Since 2019, Instagram has been testing a direct checkout function on the platform in the USA–using products linked on Instagram shopping as the foundation. “Our aim is to make the process as smooth as possible by removing several steps in the purchasing process. Thus simplifying the process for everyone to sell on the platform,” says Verst. For business operators like Koennecke, the function would be counterproductive as it would cannibalize their own shops.

New Function: “Instagram Shop”

Just a few days ago, Instagram announced its latest feature: “Instagram Shop”. As the name implies, it is closely related to “Instagram Shopping,” but also provides merchants with additional options. In the discovery section (indicated by the magnifying glass), there is now a shop tab. Click it and you’ll be redirected to the Instagram shopping section. Here you’ll see all the tagged products from merchants you follow, as well as product suggestions from other brands, which, according to Instagram, match the brands you follow. The look and feel of “Instagram Shop” is that of an online shop, with the notable difference that, in most markets at least, you will be redirected to the merchant shop to complete the purchase.

Instagram Shop

The shop icon is set to replace the heart icon in the main navigation in the near future

The new function could be the catalyst for many companies to upload their product catalogs and tag them in the feed. Verst says that they are also currently testing shop tab that’s integrated in the main dashboard. There are rumors afoot that it will replace the heart-shaped activity button. That would create a greater focus on the new function specifically and social commerce broadly. Currently, only those companies using “Instagram Shops” are being showcased in the “Instagram Shop.” Instagram Shops is an additional feature not yet available everywhere—more on that later.

For many, Stories is the tool of choice

One Instagram feature that is already in place and extremely relevant for numerous retailers is Stories. “We lean heavily on Instagram to show our community which products are new in the shop. The best tool on Instagram for that is Instagram Stories, since we can unveil new products directly and then redirect people to the shop,” says Koennecke from “Mit Ecken und Kanten.” For her shop with a limited product surplus and with a constantly rotating product offering, Stories is the perfect vehicle. She says that Stories generates a significantly higher amount of traffic than other channels on Instagram do. On average, Koennecke and her team post 10 stories a day. The swipe-up function, through which products are linked on Stories, is available for accounts with at least 10,000 followers.

“Swipe-Ups in our Stories are related to a specific campaign and because they are available for a limited time,” says Garbella from Oatsome. His team posts two to three short videos a day–especially when there is a new product to promote. “We are also currently focussing on user-generated content.” When users tag the company in their stories, Oatsome can then share posts through their account. Instagram Stories does not currently permit the tagging of products, and no such feature has yet been announced.

Influencers are key

With the variety of organic commerce possibilities on Instagram, we should not lose sight of the use of paid marketing mechanisms on IG. The retailers we spoke to further amplify their content by placing ads in Newsfeed and Stories; “Mit Ecken und Kanten,” for example, is running 62 different ads on Facebook and Instagram at the moment. Another tool for getting products in front of prospective clients is influencers. Oatsome says it engages in long-term partnerships with a variety of brand ambassadors. “We educate influencers inhouse and generally agree to longer co-ops. By doing so, we ensure that the proper awareness for our brand and products takes root,” says Garbella. “When an influencer knows everything about the product, then they can speak at greater length about the product and that is more valuable for us.”

Until recently, this has all taken place outside of Instagram. In the US, however, they are testing a way of getting a slice of the influencer pie. Stateside, companies that are taking part in the pilot to sell directly on Instagram can also tag their products on Influencer posts. This lets users purchase goods directly through an influencer’s post—without leaving the platform. In our home market of Germany, for example, that feature is only available for influencers who have their own brand and are thus able to tag their own products on their own page.

Creator Shopping bei Instagram

In the USA, select brands can tag their products in influencer posts

Shop, Shopping and soon Shops

Looking ahead: Instagram wants to ensure that users are forced to leave the platform less often to make purchases. “We are constantly taking a closer look at how merchants and consumers are using our platform and develop products accordingly,” says Verst. Another building block here figures to be “Facebook Shops,” which also made the rounds in the media as “Instagram Shops.” This feature is also being tested at the moment. It provides the option of setting up a complete shop on Facebook and Instagram, including individual design options.

By doing so, Facebook is taking the next step with social commerce as the tool could completely replace online shops for some brands. “When Facebook Shops launches, we will adjust accordingly. We are prepared to cater our offering to our customers’ needs and give them the best possible shopping experience,” says Garbella. Koennecke, on the other hand, is decidedly more skeptical: “Facebook Shops doesn’t figure to play that big of a role for us. The value for us lies in users being able to see one of our products, ending up on our site and then browsing further.” She says that “Facebook Shops” would only be a duplication of her own shop: “Maybe there’s some relevance to it for a small enterprise that is unable or unwilling to build their own shop.”

Facebook Shops Screenshot

In “Facebook Shops,” you can find entire product catalogs

Teleshopping and appointments on Instagram

Instagram also simultaneously announced the test run of shopping features in live video. “Live video is exploding as a format right now. 800 million people currently use the format on Instagram and Facebook. At the moment, we are testing ways of integrating shopping,” says Verst. The first images show how brands can tag their products in a live video which lets users redirect to a product page on Instagram. The feature would enable merchants, like “Mit Ecken und Kanten” and Oatsome, to inexpensively conduct a kind of live shopping event. Live as a format has experienced a second life on digital channels recently. During the corona crisis, smaller merchants began experimenting with Instagram Live as a place to sell their wares—but without any direct product links.

Instagram Shopping in Live-Videos

The shopping feature in Instagram live would make Instagram more like a teleshopping platform

One last tool that could soon be the focus of social commerce is direct messaging. We wrote about one nail salon in Berlin that conducts over 50% of all bookings through direct messages. Why wouldn’t it then be conceivable to further expand the feature to include an appointment feature? When we asked Verst about it he said that if Instagram views it as a fundamental function, they will explore ways of bridging the gap. The image and video platform would appear to be poised to advance to one of the largest social commerce platforms in the world. For many independent retailers that would simplify the transition to selling goods online.

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