Instagram Becoming an eCommerce Marketplace and Competitor to PayPal?

Over the last year, Instagram has been making changes to its platform that seem to position the social media network as a future marketplace.

Both BigCommerce and Shopify introduced shoppable Instagram posts that allowed merchants to easily post Instagram images with links sending potential shoppers back to their online stores.

READ MORE: BigCommerce Brings Instagram Shoppable Posts to UK, Australia, Canada, and More Countries

Earlier this month, TechCrunch reported that Instagram has quietly rolled out payments on its platform.

It has launched the test with dinner reservation app Resy and according to the article, Instagram says users should expect more payment integrations to follow.

Payments on Instagram could become another threat to PayPal.

Sofar the payments company has kept unfavorable news about emerging competition in check and its stock price rebounded after each news cycle. But the shear size of Instagram could be a real problem!

Testing Phase

This quiet payment test seems to be the same pattern that Instagram used to test shoppable posts.

Initial testing of the shoppable posts was done with a small group of brands before being rolled out to a larger audience on BigCommerce, Shopify, and other platforms.

And here again it was methodical in its release pattern. It rolled out the shoppable post feature to U.S. users before expanding it internationally on the eCommerce platforms.

Today, it is still not wide open to everyone. But one can assume that Instagram will continue to roll out shoppable posts to more eCommerce platforms and possibly even offer unrestricted access via its API.

READ MORE: Shopify Boosts Mobile Commerce with International Expansion of Shoppable Instagram Posts

Instagram Marketplace Ambitions

For years it has been a mystery why Facebook has slow-rolled its eCommerce ambitions.

Notwithstanding the local Facebook Marketplace, the company has never put much effort into building a full-blown global eCommerce marketplace similar to eBay or Etsy.

Facebook has concentrated on building a digital advertising business which now ranks second only behind Google.

Even with all the issues around privacy, Facebook’s last quarter earnings and revenues surpassed Wall Street expectations by a significant margin.

And there is no reason to doubt that it will continue to find success in selling advertising.

READ MORE: Facebook Is In a Trust Crisis and It May Impact eCommerce Marketers

Meanwhile, Instagram has built up a huge base of social media influencers that mostly peddle style and fashion products which fit very well with the visual medium Instagram provides.

But cunning marketers have used Instagram posts to promote products in other categories as well that lend themselves to visual marketing.

Between shoppable posts and now testing accepting payments, there is no doubt that Instagram is moving more in a marketplace direction.

It may not resemble the traditional eBay and Etsy models of a unified approach to listing and selling products.

The company may never even embrace an insertion fee/final value fee monetization model either.

But instead, concentrate on an advertising model and expand on a payment feature for specific categories.

It seems the building blocks are being put in place to connect various eCommerce features into a marketplace type service while still preserving the open social media network feel.

The development Facebook and Instagram put into AR and VR may also someday power more advanced visual presentations on Instagram for eCommerce use.

And machine learning algorithms may power visual, text, and voice search to mine hashtags and descriptions posted with images to provide users with an eCommerce search experience.

The new Explore function in Instagram announced at Facebook F8, may just be the beginning to bring eCommerce search functions to the platform.

READ MORE: Facebook F8 Developer Conference Highlights

eCommerce merchants should definitely keep an eye on Instagram and how it is expanding features to become more eCommerce friendly.

Search and Payments are what makes a marketplace and it seems that Instagram is working in both areas to provide more features for sellers.

With 800 million users and growing, it certainly would dwarf eBay, Amazon, and Alibaba Group as a global marketplace!

Do you agree that Instagram is headed into a marketplace direction? Head over to our Facebook Discussion Group or use the comments section below.

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