A feature that allows Instagram users to select and purchase items directly through the app is finally available in Israel, just at the social media giant celebrates its 10-year anniversary.
After successfully launching "Instagram Shopping" in the U.S. and other parts of the world, the company is moving into sales in Israel.
Up until now, the social media platform promoted its shopping app by tagging products but Israeli users could not check out. Now, Israeli shoppers can complete purchases locally.
Brands now can post information including name and price on their products and open a profile that mirrors a catalogue of their stock regardless of their size and market share.
Payment will still be done outside the app, requiring vendors to connect their products to an external website before the purchase can be completed.
In the U.S., checkout services are already included through Facebook Pay, although on a Beta version only, but the aim of the company is to keep shoppers on their app exclusively.
The seamless process will enable Instagram and its mother company, Facebook, to charge their vendors a commission of up to 5% for each sale starting January 2021, not only maximizing its income but also increasing its presence online.
Michal Raviv, VP of sales at Terminal X, a local, online sales site, called the feature nothing less than revolutionary. However, she said, it is important to understand that "this revolution will not benefit consumers. It will help large platforms such as Google, Facebook and Tik Tok, which want to keep their users on their platforms for as long as possible."
"Anyone that operates a sales site must consider how best to prepare for a time when shopping in Israel will be done on social media platforms just like in America," she said. "The big advertisers, that are also the biggest brands, will grow bigger and the platforms will profit as they grow the number of users and increase their commissions."
Instagram has already announced it would extend its shopping services to IGTV, Instagram Live and stories. The company already enables shopping via Stories.
According to Business Insider, the company is also considering enabling sales via its Reels feature, introduced only last August as Instagram's answer to Tik Tok.
It is unlikely that Israelis will turn to Instagram to buy furniture or appliances, at least initially, so the focus will be on the fashion industry that can find a large market share among the app's users in the country.
The coronavirus pandemic has increased the amount of time users spend on the app and began making the vast majority of their fashion purchases online. It means fashion companies would have to cooperate with the media platform or risk losing business.
Instagram's decision to venture into shopping comes in response to Google, which already has a successful shopping site that also provides price comparisons on their platform. It has also begun asking Youtubers to tag products on their feeds so that a catalogue of products could be built.
The retail giant Walmart is eyeing a partnership with Tik Tok that is in the early stages of launching its own online shopping service.
Hen Ben Yishai, Marketing Manger at Fix, an Israeli underwear brand for young women that is active on social media platforms, said the availability of the new feature in Israel is good news.
"We have been waiting for this for a while," she said. "Most of our marketing is on social media, and particularly on Instagram, where we have a great relationship with our customers. We are half-way there already and see most of our business and promotion conducted on mobile phones."
"We have to be part of the new service. It is an additional sales channel to our website. It is done automatically, and the new catalogue feature is user friendly and visually good. It is directed at a younger market and will make purchases easy." Ben Yishai added that for now, Instagram has not started charging commissions.
Livnat Kopit, owner of La Luna, a small jewelry and accessory brand, is also on the Microsoft Europe and Mideast board of directors. "La Luna is a successful company that gets most of its business from Instagram at the moment," Kopit said.
"Anything that simplifies the shopping experience for my clients is good, as far as I am concerned. I believe the new Instagram service is another sales channel that will reach a larger market and will not have an adverse effect on my own website," she said.
I would like to grow customer engagement with my products, as that would certainly lead to more sales. Most sales thus far have come via Stories and not the feed. When I post a story, I can immediately see more traffic and more sales," she said, adding that she has already begun linking new stock to her Instagram shop.
The Israeli cosmetic company GA-DE is already using Instagram shopping to sell in the U.S.
Ganit Alon, VP Digital and Marketing said the company was invited to join the service a few months ago. "We have a sales channel on the Shopify platform, with a good interface to Instagram's service."
We know it will be available in Israel as well but will not have all the same features as of of yet. Once everything is online, we will be able to reach out to online celebrities and trendsetters to promote our products," she said.
In the U.S. a customer just enters the credit card information on the App and can make any purchase. The order is pushed right through and payment comes via Facebook into the store's account.
"Everything is more accessible," Alon said, "As far as intuitive shopping is concerned, a customer can serf, buy and move on – all on Instagram with a few simple clicks while being exposed to new brands as well."
"We have to comply with certain Facebook standards," she said, "We have to ship the products out within two or three days and there is a return policy, but we control the process and our own sales operation via our own website is more efficient that the Facebook requirements," she said.
"On Instagram we have some more work to do but we are about 80% ready," Alon said. "They have to add a coupon service and have more customized promotional tools before they can be a full e-commerce system, but they will get there."
According to a source, Instagram's strategy in Israel for now, is to create revenue streams from advertising and not from commissions, although that will change in the future.
"They have not yet completed developing the in-app payment feature in the U.S. so it will be awhile before Israeli users will have a seamless sales-process," he said, adding that e-commerce sites operating in the Israeli market are far less user-friendly.
In order to open a store on the app, a vendor must install a payment clearing service that comes at a cost. Promotions for individual shops could also be a challenge and many companies will have to purchase those services as well.
But small businesses that will choose to open a store for their products using Instagram Shopping, will be able to do so without having to set up their own websites and maximize profit using the features available on the app.