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TechCrunch reports that social networking service Instagram is launching a new checkout service that will enable users to buy items they see on the mobile application without leaving it to visit the products’ websites.

More than 20 brands are participating in the program, including Adidas and Warby Parker.

Instagram will charge each of the brands a “selling fee” for each transaction, though it is not saying at this point it is not defining the amount of the fee; it is, however, saying that it expects the fee to come out of the brands’ profit, with consumers not charged anymore for their purchases.

Relevant brand images will feature checkout “tags” identifying them as qualifying for the program. According to the story, “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, initiate a return or contact the merchant. They’ll also get a notification from Instagram when the order ships.”

TechCrunch writes that “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…”
KC's View:
I guess this makes sense for Instagram, but my concern for the retailers is that they are putting Instagram in the position where it can disintermediate them from their customers. It is not clear to me that this is exactly what is happening, but it is the big thing that I’d be concerned about.