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Instagram Checkout Will Make Facebook $10B Richer Every Year: Deutsche Bank

After the latest news about the launch of the Instagram Checkout feature, which hit the headlines last week, many discussions and analyses appeared on the web. Some specialists believe that it can over-commercialize the platform and thus disappoint users, but others consider it as a great step towards the app’s further monetization.

According to a major European investment bank, Deutsche Bank, this feature will allow Facebook to make an enormous revenue of $10 billion each year by 2021. As Deutsche Bank analyst Lloyd Walmsley wrote in his note to investors on Monday:

“We think a more streamlined E-Commerce experience on Instagram could add an incremental $10 [billion] of revenue in 2021, and we see ‘Checkout with Instagram’ as a key step towards unlocking this opportunity.”

The Instagram Checkout feature allows users to do shopping without even leaving the app. The feature currently undergoes its beta testing and is available to U.S-based Instagram users only.

Twenty selected brands already provide their customers with an ability to shop within Facebook’s app. Some of these brands include H&M, Warby Parker, Adidas, Zara, Uniqlo, Revolve, Kylie Cosmetics and MAC Cosmetics. Instagram says that it will be adding more apps in the coming months.

The main idea of the Checkout feature is to inspire users on impulsive shopping. Users are much more likely to buy goods and services when they don’t need to leave the application for other external resources, as it is much easier and less time-consuming.

All the items eligible of in-app checkouts carry a blue “Checkout on Instagram” button beneath them. Thus, tapping it, users just need to provide the email address for the seller to complete the order.

According to Walmsley, Facebook is investing heavily behind this as a priority:

“We see potential for momentum to carry over to core Facebook and Marketplace and potentially even via a standalone shopping app.”

It also can’t but being mentioned that Deutsche Bank has a buy rating on Facebook with a $200 a share price target.

After Facebook has improved its e-commerce capabilities on Instagram, the company’s shares popped over 3.3% , and the recent forecast provided by Deutsche Bank has influenced these numbers greatly. According to Nasdaq analysis, these numbers are to grow further.

Although Facebook is often being criticized by both mass media and governments for keeping users’ personal data, there is still a very slight possibility that it can somehow harm the company, as users themselves seem not to care that much. Instagram has been a popular e-commerce platform for a long time before the Checkout feature was launched, and the number of users hasn’t reduced.

On the opposite, Facebook’s monthly and daily active user totals both climbed 9% last quarter.

While thinking about Facebook’s future revenues, it can’t but be mentioned that the company is not going to stop on e-commerce only. According to Mark Zuckerberg, in the near future Facebook plans to focus on private encrypted messaging, payments, and other services in a move that would see it transition toward Tencent’s TCEHY WeChat model.

Instagram Checkout Will Make Facebook $10B Richer Every Year: Deutsche Bank

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