Instagram Gets Into E-Commerce Business With Checkout Tool

By Bloomberg
March 20, 2019Science & Tech
Instagram Gets Into E-Commerce Business With Checkout Tool
An Instagram employee takes a video in Menlo Park, Calif., on June 20, 2013. (Josh Edelson/AFP/Getty Images)

After years of ogling beautiful images of food, fashion, and design on Instagram, people will now be able to buy things they see and like directly through the app—providing instant gratification for the trend-obsessed and a new source of income for parent Facebook Inc.

Starting March 19, the photo-sharing app is testing a shopping feature, called Checkout, with a handful of retailers including Nike Inc. and designer fashion platform Revolve.

“Over time, as we are creating value for people, this could be a significant part of our business,” said Vishal Shah, Instagram’s head of product.

On Checkout, people will be able to buy directly within Instagram, rather than being directed to a retailer’s website. It’s unlikely Instagram will release further details about the financial specifics until next year, although Shah said he sees it as the next big business model opportunity after advertising.

Facebook has tried many times to build e-commerce businesses, with varied success. On Instagram, the transition is happening more naturally, as people tend to follow brands and influencers for lifestyle inspiration from fashion to design to food and travel. Some of those who have large followings on Instagram have been able to launch products, from merchandise for famous pets to make up lines for well-known beauty artists.

With advertising growth in Facebook’s news feed slowing, the company is seeking new lines of business and will become more dependent on other properties it owns, like Instagram, Messenger, and WhatsApp. Instagram thinks shopping will be a significant business because it already has a feature for people to see what products are in a photo and to save and share items. It’s used by 130 million people each month, the company says.

Shoppers will be able to pay with Visa, Mastercard, Discover, and PayPal, Instagram said. As the feature expands, businesses will be able to integrate the purchasing directly or work with partners such as Shopify Inc.

Shopify shares fell the most in two weeks on the news, after RBC analysts said the Canadian company that builds online stores for businesses could be hurt by Instagram’s move since consumers could pay for their items without leaving the social platform, therefore bypassing Shopify.

By Sarah Frier

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