As Meta prepares for its “efficiency year”, the company today announced that it is exiting the live shopping business on Instagram, following a similar shutdown on Facebook. Starting March 16, 2023, Instagram users will no longer be able to tag products during live streaming – a capability that has been widely available to US businesses and creators since 2020.
The changes highlight the difficulties faced by the US market in successful direct purchases.
The business is already hugely popular in Asian markets, including China, where apps like WeChat, Taobao Live and Douyin (China’s TikTok) have proven live shopping to be a popular and profitable business. As the pandemic raged across the world, many American businesses also sought to embrace live shopping, to help boost their own online retail revenue. Before too long, experts were calling live shopping “the future of e-commerce,” citing the early traction companies like TalkShopLive, NTWRK, Brandlive, Whatnot and others in the space had gained, alongside the adoption by big tech companies like Meta, Amazon, and YouTube.
But the pandemic had clouded the true picture. As consumers stayed home, online retail exploded and e-commerce sales soared. When the dust settled and things returned to normal, however, analysts found that US consumers had not embraced in-store shopping. A report noted that social commerce as a whole, which includes over-the-air shopping, accounted for only about 5% of total e-commerce sales in the United States last year, according to data from Insider Intelligence.
Soon came news that TikTok, which had been heralded as a potential leader in live shopping, was scaling back its live commerce plans in the US and Europe as many live tests produced no sales. (More recently, it was said to be exploring another attempt at live shopping, this time in partnership with TalkShopLive.)
It seems that the different digital cultures and habits in Western markets have made it difficult to replicate China’s live commerce success, just as it failed to produce an equivalent “super app” that could compete with WeChat.
Meta claims that even though it is ending live shopping, it is still investing in shopping, as 90% of users follow at least one business on the site.
But instead of pushing live commerce, it will now focus on advertising as one of the primary ways people discover businesses and shop on Instagram. This includes using its automated tools such as Shop Ads and Shopping Advantage+ campaigns to improve ad performance, it says. The company will also continue to invest in payment, where people can buy a product with just a few clicks from Instagram and Facebook Stories, Feed or Reels.
Despite its promises, Instagram recently demonstrated its intention to deprioritize purchases on its app. Last month, it made a pretty big change to its navigation, which saw it remove the Shop tab entirely and move Reels to the side. The changes were intended to address growing user criticism of Reels’ aggressive push resulting from Instagram’s competition with TikTok. Recently, Instagram head Adam Mosseri admitted that the company had pushed too many videos and would try to rebalance the number of photos and videos posted. It is likely that the disappearance of direct shopping is also at least partially linked to this decline.
However, Instagram says creators will still be able to go live on Instagram and can invite guests and host Q&As. Businesses will also continue to create and run a store on Instagram after Live Shopping closes.
