Instagram is now Facebook’s answer to Amazon. Whereas before Intagrammers interested in buying a product would be taken to a retailer’s site, they will now be able to shop directly from the app. But how will this move alter the social strategies of direct-to-consumer brands, one of the main groups relying on Instragram for amplification, and can they afford to not be taking advantage of this latest feature?
Instagram has long been a lure for DTCs. Offering huge reach and a ready-made customer-acquisition platform, it’s not hard to see why this is the place where many startups begin advertising their business. Then shoppable Instagram comes along. Jackpot. Intagrammers don’t even have to close down the app to get to my site and buy my stuff. In just a couple of clicks, they go from seeing my ad, to being on my site, to buying my product. I get the money, and – perhaps more importantly as a startup – the data on my customer. Some of that money I then plough back into Instagram ads, and a cycle begins to build up, which leaves DTC brands richer, both in terms of money and data.
So this latest development, allowing users to buy from brands within the Instagram app, can be seen as the end of the honeymoon period. As a DTC brand, I’ll still be making money from the app, but the level of granularity I’ll be getting back in terms of customer data has dropped significantly, with Instagram keeping that under wraps. DTCs are without doubt in a worse position than they were before this news. So what type of brands will be going in on the new feature?
Data is great, but having a complete understanding of who your customer is, is a luxury that many smaller brands cannot always afford. Instagram’s new feature gives these brands a choice between selling on Instagram, and taking the financial rewards that come with it, or not selling on Instagram, and having more data, but less money. As a small brand looking to scale, data is important, but it is money that pays the bills, so they will persevere with Instagram as a sales platform. Larger DTCs, however, looking to develop their product further by understanding exactly who their audience is, may value data over extra sales, and so look to sell through their owned channels, such as apps and websites, instead.
DTCs with a millennial target audience
Even for more established DTCs that value their data, if your target audience is largely millennial, it would take a bold decision to leave Instagram. Chances are, your competition will remain on there, so even without the data play, there could be a cost to moving away from the channel in terms of customers lost to competitors.
Those trying to kick the Amazon habit
As a sales channel, Amazon will continue to rule the roost, even with this launch. However, paying to be on Amazon is a hard pill for DTC to swallow. Your product is so easily lost in a sea of other products, meaning discoverability levels can be extremely low. Instagram has got one over on Amazon here, offering brands superior discoverability, and getting their ads in front of customers who will be engaged with your brand. Brands looking to lessen their reliance on Amazon, and get more bang for their buck, might well consider a move to Instagram. Whether this is a wise decision remains to be seen. DTCs might get greater discoverability on Instagram, but in terms of the amount of data they’ll get, it seems like it’s stepping out of the pan and into the fire.
The new feature will undoubtedly draw in DTCs, but those who do get involved should enter with caution. The strength of DTC brands lies in their ability to understand exactly who their consumer is and what they want through excellence of data, and developing their offering based on this. By relying on the likes of Instagram and Amazon as a sales channel, you are limiting your ability to do this. There’s no ignoring the scale that Instagram could offer, but the wise DTC brand will look to invest more in their own sales channels, if long-term development, rather than a short-term sales boost, is their primary objective.