On October 6th, 2010, Instagram burst into the social media scene in style with an unprecedented rise to becoming the top photo sharing app in a matter of hours since release. They have only grown to greater heights since then, with the fairy-tale $1 Billion acquisition by Facebook.

Instagram’s growth is best represented by its celebrity users. While Justin Bieber, one of the most popular names in entertainment and fashion and an early user of Instagram, took 8 months to become the first to reach 1 Million followers, it took just a day for David Beckham to reach the same milestone in 2016. These celebrities then became promoters of several brands on their Instagram posts. This was Instagram’s first foray into eCommerce and Retail though at that time only for digital marketing.

In March 2017, Instagram launched their shopping feature that allowed businesses in the US to tag products on their posts and link them to their respective product pages on the website. This was a key turning point in their journey because it opened up Instagram as a new eCommerce channel and the launch of new features like in-app payments and shoppable Instagram stories (launched just two days back) indicate that Instagram eCommerce is here to stay.

To study the impact of Instagram further, we at PipeCandy, looked at about 50 companies in the fashion retail space in the US. We selected a mix of top brands and retailers in order to observe the adoption of Instagram or the lack thereof across different types of companies in the US eCommerce and retail market. Quite a few trends and inferences emerged.

• New Gen eCommerce make Instagram their own: Fashion brands have taken to Instagram eCommerce exceptionally well, garnering a huge follower base and now using shoppable posts to sell through Instagram.
• Celebrities nail the ‘Box’ Office: Some brands have partnered with celebrities and use their large reach to promote their products and sell on Instagram.
• Old School Retailers missing the play: Predominantly brick and mortar retailers are sitting back on their physical and website sales which will be heavily impacted when brands begin to use Instagram as a full-fledged channel.
• Big Brands eat the cake and have it too: Few of the big brands have begun to invest in Instagram as well, while still selling primarily through their website, keeping both doors open.
• eCommerce Kingpins keep their throne on Instagram: Some companies, including ones that aren’t covered in this report, have used the popularity of their brand to get millions of followers easily while continuing to outdo their competition in online sales.

The graph above indicates how these 50 companies fare on Instagram and their own website by plotting them across Instagram followers and monthly unique visitors on the website. Let us take deep dive into the trends and inferences listed and analyze them.‍

New Gen eCommerce make Instagram their own

Marked at the bottom of the graph are the new companies like Kylie Cosmetics and Chanel, who have taken completely to the Instagram eCommerce channel and are focused solely on the social media platform garnering millions of followers but less than 300k visits to their website. What does it mean? Best of the brands and influencers think that Instagram matters more than a website for eCommerce, for top categories like apparel, accessories, style and fashion and they put money where their mouth is. While Chanel and other similar brands sell through other retailers as well, their dominating presence on Instagram opens doors to a new channel that is waiting to explode, putting them in a prime position to completely utilize it. As in the case of Kylie Cosmetics, which is the make-up accessories brand from the TV star Kylie Jenner, several of these Instagram first brands are built off of Instagram celebrities. They promote these brands to their Million+ followers just through photos and videos.

Celebrities nail the ‘Box’ Office

Celebrities promoting products is not a new phenomenon. But for a generation glued to social media, which has brought stars much closer to their fans, brands born out of the celebrities have seen new-found success. Companies like Under Armour and Good American don’t fare too well on the graph. They have low websites visits and have an average presence on Instagram. But these companies still do quite well because what really matters for them is the popularity of the influencer who backs them. Their fans now vote with money and the influencers are now a sales channel themselves. This is where Instagram is ahead of Snapchat or Twitter. While celebrity access is available in all three, on Instagram, you can buy the Under Armour t-shirt that Dwayne Johnson is promoting and then show the world how you can rock (pun intended!) that t-shirt. This is why influencers are having a huge impact on sales. Khloe Kardashian’s Good American, for example, earned a revenue of $1 Million on just the first day. While some of these companies have their own physical stores, a lot of them sell through retailers who have been generally slow to adapt to Instagram. This could prove to be the Achilles heel for the retailers.

Old School Retailers missing the play

How are the big guns faring? Not too well. As shown above, big retail chains like Nordstrom, Bloomingdales, Macy's do not have much of a presence on Instagram. This is understandable to an extent. Instagram, until recently, was only a digital marketing platform with regards to eCommerce and the retailers were happy to let the brands themselves do the marketing. But when Instagram becomes a full-fledged eCommerce platform on its own and the brands are able to sell directly to customers, the retailers are going to take a hit. Nordstrom and Macy’s have a strong online presence and sell through their website as well. They should be able to adapt late to Instagram eCommerce and still not lose much. But Bloomingdales, Payless and Saks Fifth Avenue are lagging behind on their website and on Instagram and will be affected greatly by the addition of this new channel. But some of the established brands seem to have figured it out.

‍Big Brands eat the cake and have it too

When a line is drawn right through this graph, you can see a small cluster of companies around the top half of this line. These companies have adapted well to Instagram and focused on their eCommerce store as well, getting the best out of both channels. As in the graph, companies like Mango, Forever 21 and Sephora seem to have understood the potential of Instagram eCommerce and have begun investing in it early. Also around this line, at the top of the graph is Zara.

eCommerce Kingpins keep their throne on Instagram

Zara, with 20 Million visitors and about 20 Million Instagram followers, seems to be leading the line on both fronts. Zara serves as a representation of the big brands like Nike who have been excluded from the selected 50. Nike has a huge following on Instagram not just because consumers have the interest to buy from them, but simply to follow their new releases and the sports fashion trend. Other obvious names like Amazon and Walmart are generic marketplaces and not fashion specific, so they were excluded too.

Where do we go from here?

Instagram is only the beginning. In China, WeChat uses mini-programs to connect sellers and customers on a messaging app, offering things such as group discounts to a whole chat group. Diapers which are generally priced at about $6 a pack are sold at a discount price of $3 to a chat group of neighbourhood moms if they’ll all buy it. Within a year of release, these mini-programs now have 170 Million users daily. China also has live streams of product catalogues which are quite innovative ranging from ramp walks to behind-the-scenes of production, where people buy products as they watch the live video. This has increased faith in online shopping and weeded out the fake sellers. With live videos being a popular feature on Instagram, especially among celebrities, it might not be too long before they launch a similar feature. What Instagram eCommerce will also lead to is a change in the way the growth and sales of an eCommerce company are quantified. Website traffic used to be a clear indicator but just the fact that Kylie Cosmetics has made $420 Million revenue in 18 months and is on track to make $1 Billion with less than 300k website visits shows the impact of Instagram. To put that in perspective, here is how Kylie Cosmetics’ growth fares in comparison to their competition.

PipeCandy can help you map trends across channels like Instagram & predict breakout brands that you should partner with, acquire or benchmark against.