Instagram Adds In-App Checkout; SIOC Worries; eTailers See 4Q Growth Slow

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Brands Increasingly Concerned About SIOC Implementation: Late last year Amazon released new requirements that packages over 18x14x8 inches or greater than 20 pounds that Amazon fulfills would need to be SIOC compliant or pay $1.99/unit shipped after the August 2019 deadline. At the beginning of the year many brands felt optimistic the deadline was lenient so long as brands are working towards SIOC packaging. However, More Recent Conversations suggest the deadline may be firm and that absent a great vendor manager relationship, brands should plan on meeting the deadline. There is some risk Amazon may increase the $1.99 fine in 2020 as a way to incent hold-out brands to comply. Thus, it may make sense for brands to work on developing SIOC packaging even if the fine today is less than the cost to comply as the fine may move higher.

Modern Commerce: Instagram Adding In-App Checkout Features In an effort to compete more directly in the eCommerce space, Instagram recently launched an in-app checkout feature for brands, enabling consumers to purchase items without leaving the app. This feature is limited to a group of 20 beauty and apparel brands, but likely will be opened to a larger group of brand partners over time. Instagram will be taking a transaction fee (Instagram is not disclosing) in order to facilitate these purchases, and will be able to store consumer’s payment and shipping information within the app for faster future checkout experiences. We view this development as another example of the rapid convergence of brands, media, advertisers, and retailers  last year.

PurePlay eTailer Report Highlights Slowing Growth in the Quarter: We recently wrote a report highlighting key themes from eTailer’s 4Q results. The chart at left shows the mixed results seen by eTailers during 4Q, with many companies seeing some slowdown in Y/Y growth from 3Q to 4Q.

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