You are a PM at Instagram. How will you measure the success of Instagram shop?

Clarification

Just to establish a common understanding, Instagram Shops is a feature that allows business accounts on Instagram to create a virtual storefront from which users can purchase goods. This feature has been live for some time now. I’m also going to make the assertion that Instagram takes a cut of the sales.

Context

Before we dive into talking metrics, let’s make sure we understand the bigger picture surrounding the feature. Instagram is a subsidiary of Meta whose mission is to bring the world closer together and give people the power to build community. Instagram Shops helps further this mission statement by helping facilitate commerce between individuals.

Users

• Buyers: The individual users on Instagram

• Sellers: Business pages which can range from a sole proprietor candle shop to a large clothing retailer like a Kohls

Feature Goals

As mentioned above Instagram Shops has been live for some time now so I’m going to make the assertion that we’ve already found product-market fit, users are getting value out of IG shops, and we are a mature product. As a mature product we are going to be less focused on acquiring new users and more focused on increasing engagement amongst our existing user base and increasing monetization. Success for Instagram Shops = Engagement & Monetization

Metrics

Engagement

1. Average number of monthly purchases per user

2. Percentage of users who have made at least two purchases in the past month

3. Percentage of shops who have sold at least 10 items in the past month

4. Percentage of shops who have added at one new SKU in the past month

Monetization

1. Average $ amount of a purchase on IG Shops (market basket size)

2. Aggregate $ value of goods purchased on IG Shops in the past month

North Star Metrics

In terms of prioritization, let’s choose one North Star Metric from each category:

1. Average number of monthly purchases per user -> This will help us monitor just how much value users are getting out of the feature by letting us know how much they are using it. We are more concerned with the user side of the equation as I am making the assertion that if there are buyers on a platform sellers will happily come along as well.

2. Aggregate $ value of goods purchased on IG Shops in the past month -> Assuming IG is taking a fixed cut off of transactions, this will directly correlate with how much money we can make from the feature. This metric also combines both the number of purchases and dollar value of those purchases.

Concerns

The above metrics will do a great job of measuring success for IG Shops, no set of metrics is perfect so it’s worth spending a moment calling out some of the potential downsides, trade offs, or gaps:

1. While intentional, all of our above metrics are pretty high level and don’t offer us a lot in terms of granularity. We wouldn’t know how specific user segments are performing compared to each other. For example, big box retailers like Kohls might be doing a lot of business while your Aunt’s small time candle shop is struggling to attract customers.

2. All of our engagement metrics are relative metrics as opposed to absolute. It is theoretically possible for those proposed metrics to go up indicating success while the total number of users using the feature could go down.

3. IG Shop is just one part of a rich feature set IG offers users. We would want to make sure the success of IG Shops does not cannibalize other features too negatively.

Summary

IG Shops is a mature product and as such should be focused on maintaining engagement amongst its existing users and making money. The north star metrics we are going to focus on measuring our success at achieving those two things are:

1. Average number of monthly purchases per user

2. Aggregate $ value of goods purchased on IG Shops in the past month