Dive Brief:

• Instagram today (March 19) announced the closed beta rollout of Checkout on Instagram, a new feature that lets mobile users complete and track purchases without having to leave the app, according to news shared with Mobile Marketer.
• A "Checkout on Instagram" button will now appear when users tap a shoppable post from brands participating in the early access test. It allows shoppers to browse through different sizes and colors of the product they're viewing before moving to check out. They can then enter their name, email and billing and shipping information, which Instagram will securely store for any future use. The app will also send notifications with tracking and delivery details so buyers can keep tabs on their orders.
• Adidas, Nike, H&M, Uniqlo, Zara and Warby Parker are among the more than 20 brands working on the beta, and Instagram plans to introduce more businesses in the near future. The full list of partners can be found in an Instagram blog post.

Dive Insight:

As Instagram's parent company Facebook plots a controversial pivot to focus on private and encrypted messaging across its suite of products, the Checkout on Instagram news signals that the popular photo and video sharing app will continue to pursue its own ambitions, namely in building out a social commerce business. The new tool could be a powerful revenue driver for Instagram, which has quickly become a pillar of Facebook's growth strategy thanks to features like the disappearing photo and video collages called Stories and previous shopping-related technology like tappable photos.

Though only in beta, Checkout also marks perhaps one of the biggest pushes Facebook has made to compete more closely with the e-commerce heavyweight Amazon, which is starting to snap up a larger share of the digital advertising market dominated by the social networking giant and Google. If Checkout manages to take off, it could command a considerable audience of mobile-minded shoppers, as more than 130 million Instagram users now tap products in shoppable posts per month, according to data shared by Instagram.

"Instagram's influence in commerce continues to flourish. Our merchants have seen incredible success using integrations with Shopping on Instagram to convert fans and followers into loyal customers," Jimmy Duvall, chief product officer at BigCommerce, an Instagram partner working on in-app transactions, fulfillment and shipping, said in emailed comments to Mobile Marketer. "This latest capability allows brands to continue doing just that, without the risk of losing sales by asking consumers to shift to another platform to check out."

While allowing the completion of purchases in-app could make for a more seamless shopping experience on Instagram, it carries potential risks as well. Facebook chief executive Mark Zuckerberg is doubling down on a push for privacy and encryption in the wake of a series of high-profile scandals tied to the mishandling of user data, including Cambridge Analytica. Given the mounting consumer concern around data privacy and several ongoing investigations into Facebook's business, it's possible that some users might be hesitant to give away their personal and financial information to Instagram. Wariness of sharing data like credit card numbers has been a barrier to the adoption of mobile and social commerce generally in the past, and desktop shopping before that.

On the other hand, it's hard to argue with the massive appeal Instagram wields with younger consumers like Gen Zers and millennials, who favor the app's visually-oriented experience and the vast presence of social media influencers on the platform. Kylie Jenner, one of the most popular influencers, has had massive success with her Kylie Cosmetics line of beauty products due to influencer marketing on apps like Instagram. Kylie Cosmetics is perhaps unsurprisingly piloting Checkout. The list of other test partners, covering trendy beauty and fashion brands, direct-to-consumer disruptors and also legacy players like Nike and Adidas, shows how marketers across categories are eager to engage Instagram's user base and encourage more mobile transactions.     

"So many customers find us on Instagram and refer back to our profile to learn about our products," Jet Atkin, founder of haircare brand Ouai, said in emailed comments to Mobile Marketer. "Checkout removes any friction so experiencing and exploring can carry on uninterrupted."

While Facebook weathers choppier regulatory waters and grapples with a changing public image, its business continues to flourish. In a call with analysts discussing fourth-quarter earnings earlier this year, COO Sheryl Sandberg said the company had more than 7 million advertisers across its services, including Facebook, Instagram, WhatsApp and Messenger, and that 2 million of those advertisers were leveraging the Stories format. Last year, Facebook's ad revenue topped $55 billion, a 38% increase over 2017.