Instagram is killing live shopping in March, will focus on ads instead

As Meta gears up for its “year of efficiency,” the company announced today it’s exiting the livestream shopping business on Instagram, following a similar shutdown on Facebook. Starting on March 16, 2023, Instagram users will no longer be able to tag products while livestreaming — a capability that has been broadly available to U.S. businesses and creators since 2020.

The changes highlight the difficulties the U.S. market has had in making livestream shopping successful.

The activity 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┬áprofitable endeavor. As the pandemic raged across the globe, many U.S. businesses looked to adopt live shopping as well, to help boost their own online retail revenues. Before too long, pundits were calling live shopping the “future of e-commerce,” citing the early traction of businesses like TalkShopLive, NTWRK, Brandlive, Whatnot and others in the space had gained, alongside adoption from big tech companies like Meta, Amazon and YouTube.

But the pandemic had clouded the true picture. As consumers stayed home, online retail boomed and e-commerce sales skyrocketed. When the dust settled and things returned to normal, however, analysts found that U.S. consumers had not embraced live shopping. One report noted that social commerce as a whole, which includes livestream shopping, only made up around 5% of total e-commerce sales in the U.S. last year, per Insider Intelligence data.

Soon came the news that TikTok, which had been heralded as a potential live shopping leader, was scaling back its live commerce plans in the U.S. and Europe as many livestream tests produced zero sales. (More recently, it’s been said to be exploring another attempt at live shopping, this time in partnership with TalkShopLive.)

It seems that Western markets’ different cultures and digital habits have made it difficult to replicate China’s live commerce success, just as it’s failed to produce an equivalent “super app” that could compete with WeChat.

Meta claims that even though it’s putting an end to live shopping, it’s still invested 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 main ways people discover businesses and shop on Instagram. This includes the use of its automated tools like Shop ads and Advantage+ shopping campaigns aimed at helping improve ad performance, it says. The company will also continue to invest in checkout, where people can buy a product in just a few taps from Instagram and Facebook Stories, Feed or Reels.

Despite its promises, Instagram recently demonstrated it intends to deprioritize shopping on its app. Last month, it made a fairly significant change to its navigation, which saw it removing the Shop tab entirely and relocating Reels off to the side. The changes were an effort to address growing user criticism over the aggressive Reels push that arose from Instagram’s competition with TikTok. Recently, Instagram head Adam Mosseri admitted the company had pushed too much video and would try to rebalance the number of photos and videos shown. It’s likely that live shopping’s demise is at least partially related to this pullback, as well.

Instagram says creators will still be able to go live on Instagram, however, and will be able to invite guests and host Q&As. Businesses will also still set up and run a shop on Instagram after live shopping’s shutdown.