Why Your CPG Brand Needs an Instacart E-commerce Strategy

What would you think if I told you there was a company hiring more employees during COVID-19 than Walmart and Amazon combined? With demand for its services skyrocketing, Instacart has been fighting to keep pace. In addition to the 300,000 new shoppers the company hired in late March, it announced last week that it would be hiring an additional 250,000 contractors over the next two months to serve as full-service shoppers.

It’s no secret that online grocery shopping is experiencing elevated momentum and astronomical growth as a result of the pandemic-induced stay-at-home orders. This shift in shopping behavior quickly reshuffled the retail landscape, and you’d be hard-pressed to find a company that has benefited more from the “COVID-19 Effect” than Instacart, which partners with over 350 retailers, including Kroger, Costco and Albertsons. As Americans head into their third month of restricted living, this behavioral shift will become more deeply ingrained into their everyday routines, which will only strengthen the long-term stickiness of Instacart.

Here are five reasons every CPG brand needs a dedicated Instacart e-commerce strategy.

Growth in Top & Bottom Funnel

Instacart is currently accessible to more than 80% of U.S. households and in all 50 U.S. states. This makes it one of less than a handful of online grocery services that are available nationwide. While its geographical scale shows that Instacart was popular before the coronavirus, that popularity has exponentially accelerated as a result of the global health crisis. As stay-at-home orders began in early March, Instacart’s services quickly became essential for millions of customers who needed a new way to get groceries.

Shopping behaviors were being forced to change, and as a result, Instacart began experiencing a record number of daily app downloads. Comparing average daily downloads in February to Sunday, March 15, Instacart saw an increase of 218%. The massive growth in app downloads has led to even more impressive growth in order volume. On April 8, Instacart reported that order volume was up more than 300% year over year. By April 23, just two weeks later, that figure had increased to 500%.

Not Just Grocery Delivery

Since the inception of Instacart, on-demand grocery delivery has been its core competency and best-known service. Instacart completes in-store grocery shopping trips for customers and delivers everything from fresh meat and vegetables to frozen desserts and pantry staples. When customers choose an online grocery service like Instacart, they are seeking convenience and/or time savings compared to the traditional shopping experience. Those benefits shrink, however, when a customer also needs prescription medications, as most services don’t offer delivery for these essential products. While it’s only a singular anecdote, I’ve noted lack of medication delivery from online grocery services as my biggest pain point since I started using them in 2016.

Acknowledging the missed opportunity, Instacart started piloting medication delivery with Costco in late 2019 and recently expanded that partnership to include nearly 200 Costco pharmacies in seven U.S. states and Washington D.C., with plans to go nationwide in the coming months. With this expanded partnership, Costco customers can have groceries, household essentials and pharmacy medications delivered straight to their doors, allowing more consumers to stay sheltered at home during COVID-19.

Ability to Innovate

If you were to look at a snapshot of your life in early February, it would likely be almost unrecognizable compared to your life today. The world around us is changing rapidly, and new behavioral patterns are creating challenges throughout the traditional path to purchase. Those challenges have caused some previous ways of life to severely bend or even break. Companies must adapt at an equally quick pace to overcome these obstacles. A quick search on Google will show you that Instacart has not been shielded from its own challenges, as a previously untested level of demand flooded their processes and procedures. The company has met those obstacles head-on and adapted quickly, thus putting itself in a position to benefit the most.

Here are a few examples of innovations that Instacart has rolled out in response to problems created by COVID-19:

  • “Fast and Flexible” Delivery Option: With an increasing number of customers unable to secure predetermined delivery slots, Instacart rolled out a new “Fast and Flexible” option that automatically matches orders with the first available delivery time.
  • Extended Order Ahead Option: Instacart also released a new Order Ahead feature that allows customers to place orders up to two weeks in advance. Previously customers could only select delivery windows up to seven days ahead.

Instacart has also released several customer service and communication features to make the “new normal” grocery shopping experience as seamless as possible.

Grocery Pickup

In April of 2019, a report from Cowen and Company estimated that click-and-collect grocery services would grow into a $35 billion channel by the year 2020. Most consumers know Instacart for its grocery delivery service, but it also provides curbside pickup across more than 1,500 stores in North America. As is the case with grocery delivery, Instacart’s retail partners usually can’t profitably offer pickup services on their own, but they also can’t risk losing customers to competing grocers. Outsourcing these functions to Instacart allows retailers to offer a variety of fulfillment options with minimal internal investments.

Sarah Mastrorocco, General Manager of Instacart Pickup, believes that pickup could be a multi-billion-dollar business for the company. Instacart is pacing to have another year of triple-digit growth for pickup and expects to have the biggest pickup footprint in North America by the end of 2020. In early April, the company announced the expansion of its pickup service for Sprouts Farmers Market, which will be offered at all 340 stores by early May.

Self-Service Advertising Platform

Instacart also rolled out a “comprehensive advertising toolkit for online grocery” in early April. This new self-service advertising platform helps CPG brands attract customers directly at the point of sale in popular locations. With Instacart ads, you can target a variety of business goals, including sales growth, category share and awareness. The platform makes it easy to claim prominent placement on the digital shelves of 350+ retailers and 25,000+ stores with one campaign. Simply choose the products you want to promote, set a budget that works for your business, and review your results and optimize performance.

CPG brands that may have been slow to adopt advertising strategies on Amazon and/or Walmart would be wise to become first adopters of Instacart’s new advertising options, as pricing on auction-based advertising platforms like these will rise as more advertisers compete for attractive keywords.

Conclusion

It is unknown how long Instacart’s unprecedented growth will last once stay-at-home orders are lifted, but millions of consumers have now gotten a taste of its convenience. During the coronavirus pandemic, Instacart has shown that it can rise to the occasion when consumers need it the most. It has been able to take pain points that have surfaced across the online grocery provider landscape and quickly innovated to provide new solutions. With its move to add a self-service advertising platform, Instacart is proving that it is a major player to consider for any CPG brand’s digital strategy.

OneSpace Can Help

Designed to ease the burden on manufacturers, OneSpace’s full-service Instacart solution helps brands improve performance at a time when a record number of new online shoppers are flocking to the platform. Our solution features daily management of paid advertising using Instacart’s new self-service advertising platform, as well as product content optimization and deployment. Each part of the solution can be used independently or combined depending on the needs of the manufacturer. Contact OneSpace to learn more.

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