Getting Started with E-Commerce on Instagram

8-12 minute read: How & why your brand should be taking advantage of eCommerce opportunities on Instagram

E-commerce is the game that every business, brand, and marketer should be playing.  This industry has continued to evolve and adapt with shifting digital trends, and more and more retail businesses are breaking into the space to expand their sales, stay competitive, and lower overall costs.  In 2018, consumers spent over $517 billion online with U.S. merchants, up 15% from 2017.  Although this spending is only a percentage of total retail sales ($3.628 trillion, 2017), it is clear that eCommerce is a growing market.  If you’re the owner of a brick-and-mortar company who is considering going online, check out this piece on the benefits of e-commerce.  

Amazon is the retail and eCommerce force that seems to only get stronger.  Last year, Amazon.com reached $206.82 billion in sales, accounting for a whopping 40% of all online retail.  Besides dominating the market, Amazon also dominates Google searches, perhaps putting smaller or newer companies at a disadvantage.  But fear not, for there is a way to bypass (or at least level the playing field with) these eCommerce giants.

In the past couple of years, social media has rapidly become an invaluable tool in the eCommerce tool box.  For a while, Facebook was the dominant platform to promote online businesses. More than 800 million people use the platform each month for buying and selling products; it’s a hotspot for independent sellers/buyers, small brands, and market giants alike.  But believe it or not, regardless of how large your company is, what product you sell, or which audience you’re targeting, you can think bigger than Facebook to achieve your business and marketing goals.  As marketing and advertising migrate towards social and visual commerce, Instagram is spearheading the e-commerce movement as the top-performing social media platform.

As the social media application with the highest levels of user engagement, Instagram is a logical hub for sales.  The platform welcomes over 1 billion active users on a monthly basis and over 500 million daily story users. The platform has become a pillar for digital marketing and advertising, and for good reason: A Forrester study found that customers are 58x more likely to interact with a brand’s Instagram account than Facebook, and Instagram research shows that ad recall from Instagram ads is 2.8x higher than ad recall from other networks.  More and more businesses are taking advantage of the opportunities that the platform offers -in 2017, an estimated 71% of US Businesses utilized the app – in the hopes of converting passive shoppers and social media scrollers into active consumers.  

If the goals for your company are to grow your brand and to attract new customers, you should be taking advantage of Instagram’s shoppable features.

Why Instagram?

Compared to other social media platforms, Instagram’s aesthetic and ease of use are incomparable: in this age, visuals matter in commerce, and Instagram is built on the idea of sharing beautiful, engaging photos.  When looking at the app’s reach, user engagement, and growth side-by-side with Facebook, Instagram’s numbers are impressive: since 2012, IG’s organic marketing (percentage of adults that marketers can reach without paying for ads) has increased by over 115%.  This marketing also reaches more than 7x as many adults when compared to Facebook. An overwhelming 68% of Instagram users engage with brands regularly versus 32% on Facebook, where it appears that users are shying away from them. Finally, Facebook marketing has becoming increasingly overcrowded: 93% of marketers are using Facebook for their advertising needs, whereas less than 40% of them are taking advantage of Instagram.  These numbers can be viewed in an infographic by Ecommerce CEO here.

Perhaps most impressively, impressions are guaranteed on Instagram: brands on Instagram reach 100% of their followers compared to a shocking 6% on Facebook.  Instagram’s advanced targeting is built off of Facebook’s targeting, but is different – and arguably more effective – because there is no filter on who can see what post; in other words, if a customer follows a brand, then the brand’s post will always be published on their timeline.  Real-time metrics on post and story performances are available to Instagram Business Profiles, offering insights into how followers are engaging with content. Similarly, starting or converting to a Business Profile unlocks features that can make a profile stand out and drive sales.

Besides the appeal of reaching a large audience, Instagram also gives consumers an easy, mobile, and nearly fool-proof access to shopping your products.  On a smartphone – and especially on social media – users are engaged; having direct access to products on their timeline not only improves your company’s brand positioning, but also facilitates a fluid decision-making and purchasing process.    

Brand Success Stories with Instagram Advertisements

From heightened levels of engagement, to increased sales, to impressive brand awareness and engagement, companies around the world are using Instagram to reach their goals.  Industry giants and mom-and-pop businesses drive proven results through Instagram ad campaigns. We have featured some of our favorite stories below. More information about these brands and a huge collection of other success stories – organized by industry, goal, product, region, and business size – can be found here.

1) NUXE

  • Industry: Consumer Goods
  • Business Size: Small
  • Goal: Boost end-of-year sales
  • Product: Instagram Stories
  • Result: 6.2x return on ad spend, 46% lower cost per acquisition, 62% lower cost-per-click

2) Portland Trail Blazers

  • Industry: Sports
  • Business Size: Brand
  • Goal: Increase ticket sales & attendance numbers
  • Product: Instagram Stories, carousel ads, in-feed photo and video ads, lead ads
  • Result: 56x return on ad spend for peak Instagram feed campaign, 33x return on ad spend for peak Instagram Stories campaign, 14.3x return on ad spend for all Instagram campaigns

3) Land Rover

  • Industry: Automotive
  • Business Size: Agency & Partners
  • Goal: Create interest and demand for its vehicles; Own the theme of winter driving and adventure
  • Product: Photo Ad
  • Result: 88.8% share of voice amongst target audience, 21-point increase in ad recall amongst males

4) Dairy Queen

  • Industry: Restaurant  
  • Business Size: Brand
  • Goal: Increase awareness of “Upside Down or Free” promotion; increase sales of Blizzards; create “lifelong fans”
  • Product: Photo Ad
  • Result: 20M people reached, 18 pt. lift in ad recall (among 25-34 year olds), 8 pt. Lift in awareness of promotion, 3 pt. lift in purchase intent

5) World Vision USA

  • Industry: Nonprofits and Organizations
  • Business Size: Small
  • Goal: Motivate people to support disaster-relief efforts following Hurricanes Harvy and Maria and the Mexico earthquake
  • Product: Photo Ad
  • Result: 21x return on ad spend, 8.2% lift in ad recall on Instagram, 75 truckloads of supplies delivered in Texas and Florida, over 100,000 people served by organization-wide relief efforts

Choose the Ad Campaign That Works for You

There are three different types of Instagram advertisements that you can choose from based on your business’ needs.  Although organic marketing is an option, investing in ad campaigns will expedite your company’s growth and success. Before deciding which ad(s) will work for you, the first step -as in any digital marketing strategy-is to define your budget, decide where you want the ad to be seen, and set the running time of the ad.  Then you can select a photo ad, an ad on Instagram Stories, and/or shoppable posts:

Photo ads are created once a photo has been posted.  “Boosting” or promoting a photo is the easiest way to optimize Instagram ads.  The capability is only available to Instagram Business Profiles and is offered via a “promote” button on a posted photo’s settings.  Once the photo is boosted, Instagram will take over and will pull a relevant or similar audience whom the post will be shared to. Or, you can create your own audience by selecting the age range, gender, or interests of your desired audience.

Instagram Stories are quickly becoming a more widely utilized tool for social media marketing – and for good reason!  For example, in 2018 30% of businesses said that they were planning to create Instagram Story ads, whereas in the year prior, only 8% reported the same.  Story ads pop up in between stories from accounts a user follows, and they give brands the opportunity to make deeper connections with their audience and to show off more personality.  If you have over 10k followers, Story posts can feature a call-to-action (e.g. “See More”) with a swipe-up link that directs a user directly to the company’s website or product. If you’re using this ad option to drive traffic, we recommend using a third-party website tool to track your clicks, as doing so is not yet a capability on Instagram.      

The third option to boost brand and product awareness and engagement on Instagram is to create a shoppable feed.  Shopify – the cloud-based, multichannel commerce platform – integrates a shopping feature directly into Instagram posts, allowing businesses to tag products that are available for sale in a photo and giving users the option to purchase them directly within the app.  These product tags not only eliminate the need for round-trip shopping (e.g. being directed to another app or website), but they also convert organic engagement into sales by making any post a shopping experience. According to Shopify, this ad campaign is an opportunity to “be where your shoppers and customers already are.”

3 Steps to Creating a Shoppable Feed

A critical piece of advice that we will offer in regards to conducting eCommerce on Instagram is to take advantage of the features available only to Business Profiles on the app.  If you already have an Instagram account but it is private, here are step-by-step instructions on how to convert your profile: Set Up a Business Profile on Instagram.  If you are just now setting up an account on Instagram, the first step is to download and launch Instagram from either the App Store, the Google Play store, or Windows Phone Store.  You will then be guided through the process of setting up your account, during which you’ll be able to select the free Business Profile option. With this account, you can add in business information (e.g. store hours, business address, phone number, link to website, etc).  After this easy set-up process, you can start posting content and following people! Make sure to use relevant hashtags in your posts and to follow accounts that are similar to yours in order to boost your following and to gain some content inspiration.

After establishing your Business Profile, the next step to make your Instagram feed shoppable is to connect your account to a catalog.  There are a few options by which you can do so, all of which are relatively quick and comprehensible: you can 1) create a shop on Facebook (how-to here), 2) create a catalog in Facebook Business Manager (how-to here), or 3) set up a shop for Facebook in Shopify (how-to here) or BigCommerce (how-to here).  Different catalogs will work for different businesses, so make sure that you choose the one that checks all the boxes for your company.  

Before you can start creating shoppable posts, the catalog that you link must first be approved by Instagram.  However, once you receive that approval, the final step is easy! In Instagram Settings, choose “Shopping,” and then “Products”; you will be directed to your product catalog, where you’ll be able to select the products you want to sell on your profile.  Then, those products will be able to be tagged on posts, and customers will be able to purchase them right there on the app.

The Future of eCommerce on Instagram

Very recently, Instagram has entered the eCommerce market with its own service created by Paypal Inc. and Facebook.  On March 19th of this year, Instagram launched a closed beta test with its in-platform shopping feature called “Checkout with Instagram.” Similar to Shopify’s integration with Instagram, this new revenue stream will allow users to buy tagged products without leaving the app; they’ll be able to select the size and/or color in the product, fill in billing and shipping information (only once, though, because the app stores this info!), and track shipment and delivery.  However, this feature directly bypasses Shopify, and some experts are predicting that Instagram will become a rival for the eCommerce giant.

Currently, “Checkout with Instagram” is only available to select businesses and is in testing with brands such as Adidas, Kylie Cosmetics, Revolve, and Zara.  It might be too early to say how this evolution will affect Instagram’s partnership with Shopify, but the initial consequence of the news was a fall in market value.  A very possible effect is that the new Instagram service could continue to take market shares away from Shopify. With that being said, some analysts, like Ross MacMillan from RBC, believe that the backlash will be inconsequential because “Shopify’s gross payments volume from Instagram purchases are very small today.”  Others, such as Samad Samana from Jeffries, think that the Instagram service could be beneficial to Shopify because “improving the Instagram and online shopping experience could result in more eCommerce activity and give a lift to Shopify, too.”  He also said that it’s possible, though unlikely, that smaller companies could start to favor “Checkout with Instagram” rather than spending the time and effort building an online storefront with Shopify.

Although the service is still in closed beta with select fashion and beauty brands, we predict that the negative impact on Shopify will be very limited, if not inconsequential, and that both platforms will continue to benefit from their partnership with the other.  But it is still relatively early in the testing process, so who knows how “Checkout with Instagram” will continue to evolve! Do you have a different idea? If so, please feel free to share it with us on any of our social media platforms:

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Payton Lawton

Payton's roles and responsibilities for Fifth Tribe are intersectional: she works in content strategy, market analysis, content marketing, and copywriting. She is a graduate of Georgetown University, where she received her degree in English and Government and developed her competencies in writing, editing, analysis, and problem solving. Her favorite parts about working at Fifth Tribe are collaborating with a diverse and creative team, having the opportunity to work in multiple different industries, serving social impact causes, and facing new challenges and developing new skills. Some of her passions and interests include: issue advocacy, public health, policy, social justice research, business development, fitness and health.