Comment on Instagram launches shopping checkout, charging sellers a fee by Jake Mcloud

Instagram is opening a whole new revenue stream. Now the 130 million people who tap Instagram’s product tags on shopping posts will be able to buy those items without leaving the app, thanks to stored payment info. “Checkout with Instagram” launches today in the U.S. with more than 20 top brands, including Adidas, Kylie Cosmetics and Warby Parker, which will no longer have to direct customers to their websites to make a purchase.An Instagram spokesperson confirms to TechCrunch, “We will introduce a selling fee to help fund programs and products that help make checkout possible, as well as offset transaction-related expenses.” When we asked how much the “selling fee” would charge merchants, the spokesperson told us, “We aren’t sharing the specific number right now. We are testing a selling fee with businesses during the closed beta. It will not change the price of the items for consumers.” That indicates Instagram wants merchants to cough up the fee in exchange for higher purchase conversion rates rather than forcing users to pay a convenience fee for buying through the app.Instagram’s ad business could also get a boost as Checkout could convince brands that the social network produces better return on investment because there are fewer steps before purchase. For now, only organic posts from the launch partner merchants will feature Checkout buttons, and ads aren’t eligible. But Checkout-equipped ads could be a gold mine for Instagram, just as Facebook’s News Feed ad business looks shaky and CEO Mark Zuckerberg declares commerce as a fixture of the 2019 roadmap.Checkout tags will appear on feed posts, Stories and Explore content from the brands in the closed beta that Instagram plans to eventually open to more businesses. When users tap the post to reveal product tags and open one, they’ll see a Checkout with Instagram button instead of the old “View on Website” button.Their first time through they’ll enter their payment information, which is stored for future purchases. “With their protected payment information in one place, they can shop their favorite brands without needing to log in and enter their information multiple times,” Instagram explains. Saving merchants from abandoned shopping carts left by users frustrated with having to sign up with each different brand is the key value offered here. TechCrunch recently reported Instagram is prototyping a Fundraiser sticker for Stories that similarly saves payment info — a database Instagram clearly wants to build up.After users buy something within Instagram, they’ll be able to track it from a new “Orders” section of their profile that shows the status of an order, plus options to cancel, ini ...Read more

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