Investopedia/Shobhit Seth: Facebook Planning Major Move Into E-Commerce: Report

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Facebook Planning Major Move Into E-Commerce: Report By Shobhit Seth | September 5, 2018 — 7:41 AM EDT
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Facebook Inc. (FB) is looking to make a "major move" into online shopping, according to The Verge. A new standalone app dedicated to shopping is being developed by Instagram, the wholly-owned subsidiary of Facebook, according to the report. (See also, Make Money With Social Networking Sites.)

Citing people familiar with the matter, The Verge reports that the dedicated e-commerce app may possibly be called IG Shopping and will allow Instagram users to browse products from merchants they follow and buy them directly from within the app. The app development is reported to be in progress, and Instagram is said to be “well positioned to make a major expansion into e-commerce.” However, there is no confirmation whether and when the project will see the light of day.
Instagram’s E-commerce Venture Banks on Strong User Base

Owing to its strong user base, which hit 1 billion monthly active users in June, projections suggest Instagram revenues will shoot past $10 billion over the next 12 months with the number of users increasing to 2 billion over the next five years. (See also, Without Facebook, Instagram Valued at $100 Billion.)

Around 25 million businesses are actively operating on Instagram, and around 2 million of them are advertisers. The user engagement on Instagram is also high – around 80 per cent of users actively follow at least one business, the company claimed in a blog post last year. Many individuals, like artists and sculpture-makers, have tasted success by posting photos and videos of their creations on Instagram and securing direct orders from customers which are supplied and settled offline.

The potential of Instragram as a shopping platform is also apparent from other developments. Dedicated shopping services, like Shopify, provide a large number of plug-ins to promote and manage Instagram-based businesses, while other portals offer easy-to-use tools to build photo galleries, content moderation, post scheduling and other shopping-supported services.

The dedicated shopping app will not only bolster Instagram’s user engagement by allowing them another channel, it will also help provide revenue expansion opportunities. The shopping app is expected to directly compete with e-commerce platforms like Shopify. Instagram’s initiative will also benefit from the parent company Facebook which has the potential to support it with the launch of innovative tools, both for merchants as well as the end users.

This is not the first attempt by Instagram to try a shopping feature. After a six-month long trial, it launched Instagram Shopping in March last year that allowed users to directly buy through photos uploaded by companies. The company is currently running a trial for a feature called “Shopping on Instagram,” which allows users to shop directly from Instagram stories. (For more, see Instagram Shopping Now Available More Widely.)

In June, Instagram launched IGTV, an iOS- and Android-supported app-based video hosting and sharing service that will competes head-on with Alphabet Inc.’s (GOOGL) YouTube service. IGTV supports videos up to one hour in length, up from the previous one-minute limit, and is expected to accelerate its popularity and future growth.

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