How would you decide whether Instagram should add shopping on its website/app?
What factors would you consider before building this feature?

How would you validate the idea?
0 votes
166 views
What factors would you consider before building this feature?

How would you validate the idea?
in Strategy by (66 points) | 166 views

2 Answers

0 votes

Here is how I would approach this problem:

1. Ask clarifying questions: By shopping, do you mean integrating Instagram with e-commerce features? Are we talking about Instagram after the acquisition of Facebook or before? What is the goal behind entering into this industry? Is it to increase the number of users or to increase the usages or to increase the revenue or anything else?


Assuming that we need to integrate Instagram with e-commerce features after its acquisition by Facebook with the goal of increasing the user engagement, we continue in the following manner.

2. What is Instagram? Instagram is a photo and video-sharing social networking app/website aimed at capturing the valuable moments of your life. Anything you like, anything that captures your interest, click it and share with your friends.

3. What are its strengths? General people like to click pictures on their vacations. Selfie addicts click a lot of selfies. Then there are models and fashion designers who post about their latest designs. Also, there are meme creators, who need pictures to show their creativity. So, basically Instagram provides each of them a platform to share their photos. 

4. Would adding e-commerce features complement its strengths? Whenever a user goes out to shop, he/she clicks photos with different designs and shares it with his/her friends. Thus, the two main things in a "shopping experience" are pictures and sharing, which are the strengths of Instagram.

5. What other functionalities will be required by it to expand into this category? Most importantly, the company would need a good network of logistics operations if it wants to step into the e-commerce industry. Currently, it doesn't have that. However, since any e-commerce platform has network effects, Instagram already has a user base, which can help in building up the other side of the platform. Another thing that will be required is good quality developers, which we can safely assume that Instagram has in abundance. 

6. Who would be its competitors? It would be competing with giants like Amazon, Flipkart (India), eBay, etc. if it decides to enter this segment. However, Instagram already has an edge over them with its huge user base.

7. What other innovative features can Instagram add to gain a competitive advantage? Considering the fact, the platform already has a whole database of the pictures of its users, it can use those pictures and show the users how would they look in that picture in case they buy some product.

8. Will there be any cannibalizing effects? Yes. Facebook also has the marketplace, which will be cannibalized if Instagram enters into this category.

9. Are there any opportunities? Well, the increasing penetration of the internet and mobiles predicts a bright future for this industry.

10. Are there any threats? Yes. Many offline facilities like Wal-Mart are also trying to enter into the e-commerce industry.

11. Final recommendations: Based on my analysis, I would suggest Instagram should add shopping on its website/app. The only obstacle being the fact that it would need to create an efficient network of logistics and operations.

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by (52 points)
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As a key stakeholder in IG making this decision, I'd like to first understand the goal of doing this. Assuming its the following goals, which we also see as opportunities: 

  • Increase engagement of the existing user base as they will browse more, hoping to shop
  • Instant gratification for the end user - users already follow influences on IG and a shopping feature will make the last mile of buying the product influencer is talking about seamless. Instant gratification should also result in higher conversion rate
  • IG could charge higher CPC for every product bought on the platform 

There are obvious strengths IG can leverage:

  • Highly engaged user base that is fashion savvy
  • Huge resources available to invest
  • Thousands of influencers who influence shopping trends on IG
  • Most brand shops are already on IG. 
While strengths are great, there are some weaknesses too that IG needs to improve on:
  • An association with Facebook raises doubts on the privacy of user data 
  • IG algorithms would need to be tweaked so that users are not inundated with more ads if they indicate interest in certain products 
  • IG seems to be losing interest of GenZ to other platforms like Tik Tok etc and that might continue happening if they lose sight of their core competency 
Lastly, in terms of threats:
  • Other platforms like Tik Tok that are solely focused on entertainment 
  • Retailers like Amazon and other retail websites could be threat as this is their core competency and they could put a higher % of R&D into improving shopping experience 
 
With this SWOT analysis, my recommendation will be that IG not venture into shopping. Instead, should focus on a seamless handover to the partner for the last mile conversion. 
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