All through last year, we all heard murmurs, and finally, it happened: from February 2023, Instagram is removing the shop tab from the prime spot on its app! Why? Shops were less profitable than Instagram had hoped, and they decided to take out the noise and refocus on ad revenue. When I heard this news, two questions came to mind: what does it mean for the average social media user, and more importantly, what does it mean for brands on Instagram?

I started by asking myself, why do I use Instagram? The answer was simple: to connect, learn, and get entertained. However, in the last few years, there has been another reason pulling me to the app, buying and selling. In 2019, I used Instagram to run a clothing store to sell vintage clothing. And I am not the only one, today more than half of millennials and Gen Z use social media for shopping. Currently, 72% of users make purchase decisions based on Instagram content, Gen Z even uses Tik Tok more than google to search. The global social commerce industry is now projected to grow to $1.2 trillion by 2025 and is expected to grow three times as fast as traditional e-commerce!

Looking to capitalise on this shift in consumer behaviour, brands were quick to act when Instagram launched shops in 2020. Victoria’s Secret utilised Instagram to sell live alongside its fashion shows, Anthropologie added its entire collection on Instagram to drive in-app sales and millions of small businesses started using shops to showcase and sell products. Their goal was simple: driving direct revenue through Instagram. 

However, with the closing of shops, the 5 million+ brands on Instagram need to rethink their Instagram goals (pun intended!). Let’s look at some brands’ current Instagram strategies.

Tradition publisher, The Washington Post is utilising Instagram to deliver news in a Gen Z-friendly format. Camera brand GoPro is brilliantly using amazing videos created by users to gather attention and showcase its products. My favourite luxury brand, Jacquemus’s aesthetically pleasing page showcases exclusive behind-the-scenes footage, driving one of the highest engagement rates (3.35% vs the 0.54% industry average). Food chain Wendy’s has created a sassy persona, building a loyal following and entertaining users with their posts. 

Brands are trying to create content that stands out: content that people spend time watching and interacting with, content that people share with others, and content that communicates brand values. All the above boils down to one objective for businesses: building brands consumers love. 

Brand building, though essential, can’t be the only objective driving brands in this economic downturn. With the removal of shops, brands need to give a new role to Instagram. But what other purpose could Instagram serve for brands? Let’s find out.

A new purpose for Instagram: Turning unknown users into known users

Most brands have a big unknown pool of Instagram followers who may or may not be current consumers but are aware of the brand. There is a subset within that: more engaged users who follow the brand on Instagram, like their posts and participate in their community. However, out of all these, a small proportion of consumers are known to brands. The biggest opportunity lies in filling this unknown-to-known-user gap.

Let’s look at my favourite sports brand Nike to understand why this could be useful.

In the early 2010s, Nike used social media (among other means) to push consumers to their app and website. They built engagement using free fitness tools, community competitions and challenges and created a best-in-class membership offering with access to priority events, experiences and exclusive products.

By turning unknown users into known ones,  Nike could gather more information about their consumers, use it to create superior products, market products better, make tailored recommendations to consumers and ultimately drive higher sales. Nike’s total D2C sales soared from $2.5 billion in 2010 to $16.4 billion in 2021!

In hindsight, driving consumers to the Nike app and website lead to repeat purchases and contributed to building consumers’ loyalty towards Nike. This is much more powerful than a one-off purchase on social media or with a retailer! Over the last 2 years, Nike has grown membership by 30% per year. They now have 300 million known users, out of which they qualify 100 million as hyper-engaged brand advocates. 

Thus, the more consumers brands know, the more deeply they can engage them and increase the value they derive from them over a lifetime. Instagram is the perfect tool to utilise. Using bios, brands can drive users to the brand site or app, and make users sign up for free newsletters, contests, and promotions in-app. The key is to use these tools in addition to offering consumers great content and excellent products.

The new Shop-less era invites brands to re-think the way they use social media, and use it to build direct relationships with consumers. In my opinion, it’s a blessing in disguise. What do you think?

Manifesto specialises in driving growth by building direct relationships with consumers. While this article touches on one specific platform, social media is only one of many channels brands can use to deliver on brand objectives. Brands need to think about the role and mix of channels they use to reach consumers: traditional physical channels like stores, digital channels like apps, social media and even upcoming channels like the Metaverse!  We are currently working on a channel playbook on the perfect channel mix to build and grow consumer relationships for CPGs. Watch this space for more!