Facebook Will Rake in $10 Billion a Year from Instagram Checkout: Analyst
A major European investment bank says the Instagram Checkout feature which debuted last week will make Facebook $10 billion richer every year by 2021. The social media app’s new shopping cart is rolling out in beta with 23 top brands (like Nike, Adidas, Dior, and Prada).
Now we know how people are going to spend all those “FaceCoins.”
Facebook Sinks its Teeth into E-Commerce with Instagram Checkout
Facebook is investing heavily in Instagram Checkout, according to Deutsche Bank’s Lloyd Walmsley in a Monday note to investors:
“We think a more streamlined E-Commerce experience on Instagram could add an incremental $10 [billion] of revenue in 2021, and we see ‘Checkout with Instagram’ as a key step towards unlocking this opportunity.”
“We see potential for momentum to carry over to core Facebook and Marketplace and potentially even via a standalone shopping app.”
That last idea may be a bit far-fetched because all of that potentially $10 billion worth of yearly revenue represents the cash value to Facebook of saving users time when they shop.
That’s what Instagram Checkout will do for its users.
It’s giving them more of their own time back. The critics say giving users the ability to make purchases without leaving the app might risk over-commercializing the platform.
Maybe they just don’t get it. Maybe Instagram is just not for them.
Instagram is already, quite organically, one of the most commercialized social media platforms on the Internet, and users like it that way.
They’re the ones who made it that way.
Checkout Makes Instagram a Marketer’s Holy Grail
Rolling out a shopping cart feature is actually Facebook finally catching up to how the users want to use the platform, which is a marketer’s holy grail – a highly commercialized space that isn’t cheesy or trite, but as cool as cool can be, and slick as the gorgeous advertisements in the glossy pages of a beautiful magazine.
Instagram is a place people go to in order to be sold to, but without feeling like they’re being sold to. Its imagery is aspirational, and its highly affluent user base goes there to see what the cool kids are doing. They don’t call it shopping or being sold to.
They call it being “influenced.”
Adding a shopping cart saves users the time of having to tap on the products that catch their eye, then tap over to the account’s profile, then tap a link to leave the app, then go to the merchant’s web page or store in some other app.
And then finally tap out every character of their name, address, and card info.
Instagram will even send mobile notifications when the goods ship.
The new checkout feature is certainly evolutionary, not revolutionary, but it’s an obvious and overdue evolution in the platform that rolls with how people want to use the app.
Its value proposition– saving users’ time– is more readily apparent than that of last month’s Facebook cryptocurrency announcement.
Deutsche Bank is telling investors now is a good time to buy Facebook (NASDAQ: FB), with a $200 price target per share of the social media giant.
How Instagram Checkout Looks On Your Phone