Instacart's Evolution: From Grocery Delivery Service to Online Advertising Platform
Instacart, initially a digital grocery service, is venturing into the realm of online advertising to enhance its revenue streams. Despite facing challenges like rising costs and profitability issues, the company sees opportunities in diversifying its portfolio, celebrity endorsements, global expansion into Europe, and empowering its shoppers to become independent business owners. These strategies aim to drive sustained growth, build customer loyalty, and strengthen Instacart's market presence.
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Christina Chapman The Golden Knights Clarkson University Reh School of Business Willem Kurdziel John Molson MBA International Case Competition 2021 Patience Robinson Case 3 Abhi Tripathi 1
Instacart, a digital grocery service, which helped shift shoppers from supermarket aisles to smartphones, is now making a push into selling online advertising but the question is, will this new evolved business model be sustainable? Grocery Delivery Service Only Grocery Delivery Service & Online Ad Food and consumer brands spend on digital advertising is projected to continue to grow (~32% growth YoY 2021, further expected growth 17% 2022) Inability to turn consistent profits given continued rise in transportation and labor costs Squeezed profit margins Established footprint Significant Market Value Growth YoY ($265M new investment in 2021 driving a market valuation of $39M) Diversified Portfolio- More retail partners = larger product footprint and offers non-CPG brands a place to market their goods (Over 500M products and expanded partnerships with new retailers beyond grocery) OPPORTUNITY! Celebrity Endorsement Strategy Global Expansion Strategy Instacart Shoppers Strategy Smart Shopping Cart Strategy Future Growth Closing
Global Expansion Europe is the most attractive market to penetrate next - Similar demographic as North America - Personal transport is common - Expands grocer customer base - Already well established in existing grocery stores and supermarkets: - - ALDI Walmart Celebrity Endorsement Strategy Instacart Shoppers Strategy Smart Shopping Cart Strategy Global Expansion Strategy Future Growth Closing 3
Instacart Shoppers as Business Owners Current State: 1. Customer places product order in Instacart app- limited to separate orders per store 2. Random shopper is assigned to shop order 3. Random individual is assigned to deliver order (could be different individual from shopper) Inconsistent delivery services Unsatisfied customers/Potential for customer loss Result Forward Looking Strategy: Empower Instacart shoppers to become their own business owners! 1. Every Instacart shopper sets their own fees, hours, and stores 2. Ability to select the same shopper again and again 3. Ability to receive multiple deliveries from different stores from one shopper Consistent delivery services Repeat customers/ Ability to build strong relationships between shoppers and customers Result Celebrity Endorsement Strategy Instacart Shoppers Strategy Global Expansion Strategy Smart Shopping Cart Strategy Future Growth Closing 4
Smart Shopping Carts - Caper Acquistion More Efficient Shopping Avoid Check Out Lines In-Store Navigation Check-Off Shopping Lists Better Customer Experience More Trips per Day for Instacart Shoppers Additional avenue of data for Instacart Better understanding of customers Leverage digital ad business Better lay out stores Data Acquisition Shopping Behavior Cut Down Costs Reduce labor costs Better Manage Inventory Less front-end workers Efforts can be allocated to store maintenance and customer service Reduce carrying cost and waste from unused inventory Competition Amazon Brick-and-Mortar Stores with Similar Tech Smaller grocers will be able to compete in the future Celebrity Endorsement Strategy Global Expansion Strategy Instacart Shoppers Strategy Smart Shopping Cart Strategy Future Growth Closing 5
Celebrity Endorsements Strategy Gaining more clicks and purchase power: Adding celebrity chef videos Recipes will call for products with purchase link attached to the video Ability to filter by famous chef s recipes Adding cookbooks Provide ways to tell customers what to buy Adding fitness experts Meal prep for keto, vegan, etc. customers Adding dieticians Adding dietician support to select customized meals with pre-ordering links Celebrity Endorsement Strategy Global Expansion Strategy Instacart Shoppers Strategy Smart Shopping Cart Strategy Future Growth Closing 6
Closing Statement In order for Instacart s growth to continue post COVID-19, specifically within advertising, it requires the continued need to develop and maintain connections with consumers, shoppers and retailers in order to create and maintain the infrastructure needed to foster their success as an e-commerce service. Celebrity Endorsement Strategy Global Expansion Strategy Instacart Shoppers Strategy Smart Shopping Cart Strategy Future Growth Closing 7
