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Instagram Launches Shopping Checkout

On episode 18 of the E-commerce Retail Briefing Podcast: “Checkout with Instagram” launched in beta this week. Smile Direct Club builds momentum towards a summer IPO while a new study from Marketplace Plus shows that Amazon’s brands aren’t all that. Plus, big news from Glossier, Rent the Runway, Brandless, and Ring.

This week’s retail headlines:

  • Thanks to a new $100 million dollar round of funding led by Sequoia Capital, Glossier is now officially a unicorn. Valued at $1.2 billion dollars, the direct-to-consumer beauty brand is banking on its strengths in channel purity, community engagement, and global reach. This is Sequoia’s second deal in the beauty market, a signal that the veteran venture firm believes there’s a significant opportunity with Glossier.
  • Rent the Runway is also having a good week. The company raised a $125 million dollar investment round, its largest to date. The funding lands the company a $1 billion dollar valuation.
  • According to Digiday, Ring is making moves into the retail and content spaces. Based on a slew of new job postings, it appears that the home security startup is looking for folks to manage “operations for Ring-owned Retail stores.” Additionally, the company is looking for a team to “build the Ring news and editorial team from the ground up.”
  • Brandless CEO, Tina Sharkey, has stepped down  and will move into a co-chair of the board position. Brandless CFO, Evan Price, will act as interim CEO as the company looks for someone permanent.
  • WeWork is scaling up its retail startup mentorship network. “Made by We” is WeWork’s retail platform that lets direct-to-consumer startups pitch to a judging panel. Winners get shelf space in WeWork’s on-site stores. For member companies, mentorships are a way WeWork can diversify its business lines as expands to services.

Smile Direct Club to Bring Thousands of Jobs to Music City 

This week, Smile Direct Club announced that it’s adding over 2,000 jobs in Nashville over the next five years. These jobs are in addition to the 1,000 jobs the company announced in June. The new jobs will cover a variety of functions, including IT, marketing, finance, manufacturing and distribution. The jolt of new jobs marks the latest chapter in Smile Direct Club’s explosive growth, one that takes place far beyond the limits of Music City.

As reported by Axios this week, the at-home teeth straightening system is gearing up for an IPO this summer. The company is expected to file its S-1 document by the end of June, with J.P. Morgan listed as lead manager. Smile Direct was launched six years ago and expects to do at least $6 billion dollars in 2019 revenue.

Are Amazon Brands Overblown?

A new report from Marketplace Pulse looked at the state of Amazon-owned private label brands. It analyzed 23,000 products under 400 brands. Here’s what it found:

  • The top 10 most successful private label brands contributed 81% of total sales.
  • Amazon added more than 100 brands in 2018.
  • Amazon’s private label business generated $7.5 billion in 2018. It’s estimated to hit $25 billion by 2022.

However, don’t let the numbers fool you. The study suggests popular political and media narratives about Amazon’s market power are overblown, despite the company capturing 52% of all online spending in the U.S.

Yes, the AmazonBasics line of batteries is making a dent in Energizer’s sales – as we discussed last week – but that’s actually an outlier. A 2016 study by Ten-Ten Data estimated that Amazon captured 94% of all online battery sales, which enabled it to build its AmazonBasics battery into a category leader.

The other categories? Not so much. Most of Amazon’s owned brands are generic and lack the type of messaging that gets shoppers interested. When competing against such categories as apparel, where household names have an entrenched position, Amazon brands do not stand out in the slightest.

As summed up in a Bloomberg headline by Spencer Soper, “Most Amazon brands are duds, not disruptors.”

Instagram Launches In-App Shopping Feature 

The 130 million people who tap Instagram’s product tags on shopping posts will now be able to buy those items without leaving the app. “Checkout with Instagram” launched this week in the U.S. with more than 20 top brands, including adidas, Kylie Cosmetics, and Warby Parker, which will no longer have to push customers to their websites to make a purchase.

Checkout tags will appear on feed posts, Stories, and Explore content from the brands in the closed beta test. When users tap the post to reveal product tags and open one, they’ll see a “Checkout with Instagram” button instead of the old “View on Website” button.

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.

Saving merchants from abandoned shopping carts left by users frustrated with having to sign up with each different brand is one of the key values offered.

A few things are interesting to watch here:

  • With payment information stored exclusively within Instagram, merchants will only get the details necessary to fulfill an order – contact information and mailing address.
  • Users can opt-in to share their emails with the merchant, but it’s not required. Merchants will come out of this with perhaps less data, but the value will come from a more seamless payment process and less abandoned carts.
  • I read in TechCrunch that Instagram was prototyping a feature that would make a user’s purchase publicly visible… just like in Pinterest. Having a social feed of purchases would be a great way for influencers to recommend Checkout-equipped products.
  • As of now, Checkout is not available for Instagram ads. Once it is, the feature will give merchants more incentive to advertise with Instagram.