Pinterest adds hosted checkout

As Pinterest makes a push to expand in ecommerce, we’re on the lookout for hints of more shopping on the visual discovery platform. This month, Pinterest gave details recently on a new feature that’s designed to enable in-app purchases, and remove steps from checkout.

The news: Pinterest is debuting hosted checkout for Shopify merchants. This feature changes the process of making a purchase from a product Pin on Pinterest, allowing users to check out directly within the app, rather than having to navigate to a merchant or creator's website.

How it works: Pinterest shared the following about the shopping process with hosted checkout incorporated:

• When shopping from a product Pin, users pick the color and sizing of a product they want, right within the app.
• To purchase the item, users click Buy, then enter a hosted checkout experience via Shopify that is within Pinterest.
• Users complete shipping and payment within that hosted experience to finish the purchase.
• The fine print: At launch, the feature is only available to users who are in the Pinterest Verified Merchant Program and use Shopify to sell their products on Pinterest.

What does it mean for social commerce?

While this is a single component of a still-evolving experience on one of the social platforms, it’s worth paying attention to. The eventual success or failure of this wave of social commerce is going to be worked out in the execution of features like these, and the ability of teams to optimize as they observe shopper behavior. There won't be a fanfare that sounds when the future arrives. Rather, it will happen gradually. With that in mind, here are a few observations we noted while reviewing Pinterest’s announcement:

The lift: In-app checkout is seen as a key component of the transition to social commerce, where purchasing can take place on a social platform, rather than requiring a redirect to another store or marketplace. But while it is interesting to create a more seamless experience, one question looms over development: Will in-app purchases make people more likely to buy. Pinterest says yes, and offers some data on this front: The company said it saw a 3.9% lift in checkout propensity, or inclination toward checkout, and a 2.7% lift in checkouts per user.

Total control? Pinterest bills this feature as a way to own customer acquisition.

“You’ll receive all order and customer information, and will manage things like order status updates and support, the company states. "This gives your brand more control over the customer relationship and brand integrity throughout the sale”

While this appears to be a broadside against Amazon, Shopify has and will likely continue to make the same argument. It’s a reminder that if social commerce does take off, the social media platforms will become ecommerce platforms. Shopify has been inclined to partner, but there could be moments of tension as they seek to attract merchants. Nevertheless, Shopify is no stranger to this tension. It may in fact be an area where the two platforms can align to bring others over to their worldview. Along with arming the rebels, they must also win their hearts and minds.

Pinterest’s push: As mentioned, this is part of a wider ecommerce expansion that’s coming from Pinterest after a big buildup. The moves made in the middle part of 2022 are as follows: The company acquired AI-powered shopping platform The YES in June, and made its cofounder Julie Bornstein its head of shopping. Then, it hired former Google commerce head Bill Ready as its new CEO. Pinterest then rolled out a host of new features, including a shopping-focused API, product tagging on Pins and a shop tab on business profiles. Hosted checkout, then, is the latest step. On the company’s Q2 earnings call, Ready talked about how PInterest’s shopping initiative is at the heart of what brings people to Pinterest in the first place: Many users come to the platform for ideas, and to discover new things.

“From my perspective, we have an enormous opportunity to lean further into the significant intent and first-party signal that we have on the platform to help users bring the ideas and inspiration they found on Pinterest to life,” he said. “At the same time, I believe that Pinterest's unique use case appeals to advertisers of all shapes and sizes, and gives advertisers the opportunity to engage a crucial and highly valuable moments in the user's purchase journey when the user has clear intent, but is still determining what to buy.”

The plus for Shopify: Speaking of those partnerships, this is just the latest tie-up between Shopfiy and a social platform to make it easier for merchants to bring their stores directly into the social sphere. This summer alone, Shopify also announced deals with Twitter that created a new way to easily showcase products on the bird app, and a partnership with YouTube that allows creators and merchants to link a Shopfiy store and feature products in videos and livestreams. Given the subject of this post, it's worth noting that there were slightly different approaches: Twitter was not making in-app checkout available, while YouTube is allowing checkout within its app. Shopify, as it often does, is indicating a neutral stance on other platforms. Nevertheless, the act of extending the channels where discovery of a product can take place and making that process easier helps Shopify increase the likelihood of conversion for its merchants. Especially as those merchants face rising customer acquisition costs and the fallout from Apple’s App Tracking Transparency, going out and finding new ways for merchants to reach customers is one way to provide value. The fact that it’s an early mover with Pinterest and others indicates Shopify is taking a builder role with social commerce. Plus, Pinterest's shopping experience is likely to make lots of room for not only brands, but also individual creators. Shopify has been growing its offerings in this area, as well, so an expanded presence with Pinterest represents one more way it can serve a growing group that has characteristics of both influencers, merchants and entrepreneurs.

The bottom line: The primary features of this generation of social commerce are taking shape, and in-app checkout appears to be among them. Along with YouTube, Instagram recently introduced its own in-app payment via direct message. There are lots of implications. What does this mean for conversions when merchants are used to promoting additional items in the buy box? Can merchants build in loyalty programs, or offer links to post-purchase offerings. (Perhaps that's where Shopify's just-released Checkout Extensions is designed to come in). Moreover, are Shopify merchants asking Pinterest or Shopify to add features to this checkout experience? These are the questions that will have to be worked out if social commerce is to grow, with the answers likely appearing in the form of product updates. From there, Pinterest and others will layer on their own unique approaches to the experience. (Bornstein has hinted at a big role for personalization). Elements like checkout are the building blocks from which shoppable platforms grow.