What Meta’s move away from Instagram Shopping means for retailers

working with users. It all started with Facebook Shop, which was launched in 2015. No, I didn’t buy anything through Facebook Shop either. Of all the retailers I’ve worked with, I’ve never seen it emerge as a major channel.

In light of this, Facebook’s recent announcement that it’s scrapping its shopping features on Instagram and making its “new North Star…more directly tied to Meta ad revenue” comes as no surprise. But since when Fortune 100 companies rested on their laurels? That’s doubly surprising given that Facebook’s ad-driven second-quarter revenue showed its first-ever revenue decline, largely due to its ongoing feuds with Apple, and Apple isn’t backing down.

Having the experience from discovery to transaction would be, if Meta cracked it, very lucrative. It would certainly be a great way to diversify the company’s revenue and reduce its dependence on advertising – and the data that powers advertising in a world where data gold pipelines are slowly closing (see: feud with Apple , among others).

The Asian model has not exploded in the West

When Mark Zuckerberg and his Metamates first introduced shopping features to Instagram, they were no doubt envisioning the end-to-end experience of Tencent’s ubiquitous WeChat. There are, however, some key differences. The Asian market seems to have shifted towards mega all-in-one apps. As I write this, I’m on a work trip to Asia, and a recent coffee with a startup CEO here led to an interesting discussion about the app landscape. “So many people are trying to do everything, I don’t know which app to use,” the CEO said.

In the West, we seem to value diversity of services (despite the best efforts of Amazon, Uber, Meta, et al). Whether this is for cultural or commercial inherited reasons, I’m not clear. But I think it’s a good thing for retailers to retain more control over their customer, rather than handing it over to a single entity with a power imbalance against the retailer.

What’s even weirder is how this affects Meta’s move into the metaverse. Although no one knows what it will look like, any reasonably monetized metaverse would contain shopping or shopping features. You’d think Meta would push its shopping capabilities more to onboard retailers and have the data to build some sort of virtual mall, or some other use that I can’t imagine yet. Virtual sneakers for your avatar are fine, but, in all but the most dystopian future, I don’t see a world in which retail sales of virtual items exceed those of physical ones. Will Meta be limited to advertising only in this new universe?

Meta’s shopping value proposition has been slim on both sides of the equation. On the seller side, we have grown accustomed to having control over the customer experience and the ability to tell our brand stories, create niche-specific tools and content, and own customer data. On the customer side, Meta lacks Amazon’s comparison shopping and delivery experience, nor the retailer’s brand experience. And on Instagram there is no possibility to make transactions.

It’s difficult because Meta also doesn’t have the payment details of most customers, unlike WeChat, which performs around a billion transactions a day, or Google and Apple, whose app stores collect details. of payment. The failure of Meta’s Diem/Libra stablecoin did not help on this front.

Ultimately better for retailers

Or maybe Meta is a victim of its own success? Many retailers have relied so heavily on Meta products to attract eager customers to their stores that they may have been hesitant to direct them to a platform store that may kill the golden goose and, if successful, would undoubtedly lead in time to a bigger clip of the post by Meta.

Overall, Meta’s reduction in its shopping features is a positive thing for retailers. Logging in is easier than ever in a world of Shopify and Square, and we don’t need to be more dependent than we already are on a few concentrated platforms. As much as centralization makes life easier, I prefer that suppliers have less power, not more.

Overall, I’m a little puzzled by Meta’s decision. Perhaps the tech giant simply learned the lesson of Captain Ahab, who died in pursuit of the white whale, and left it alone.

About Alexander Estrada

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