Grocer’s Options for their Instacart Strategy
A once highly sought-after service, the longevity of Instacart has recently become a topic of discussion. Adapting to a new pattern of grocery shopping, services like Instacart took off like wildfire, allowing customers to shop for their favorite goods from the comfort and safety of their own homes. Experts contend that if growth continues at the current pace, $20 billion is on the table for grocery e-commerce within the next two years.
However, Instacart’s rapid adoption brought to light numerous issues from both a customer and business perspective that have recently had many questioning whether this technology is already on its way out.
From a customer perspective, many customers began to express dissatisfaction at the selection of both goods in the store and the items their picker chose for them. Their produce was bruised, their meat had too soon of an expiration date, and the items substituted due to out-of-stock merchandise didn’t fit the bill. The physical experience that grocery shopping provides was unable to be translated into a digital-first experience. Once the shiny surface wore off of the new service, many found themselves preferring to head back into stores.
From a business perspective, however, the risk of churn was far higher than bruised produce. By grocers allowing Instacart to partner with them, they unknowingly opened their gates to their valuable data. A valuable lesson in “digital sharecropping” has emerged from this service, meaning that customers are essentially Instacart’s instead of the grocers themselves. Through this, Instacart has been able to learn the strengths and weaknesses of the existing grocery model, allowing them to begin the development of newer technologies. Instacart has emerged as the more significant threat to independent grocers, holding a 59% share of the delivery market. Because of this access to data, Instacart has the potential to go toe to toe with giants like Amazon.
One of the largest risks to grocers is the lack of brand loyalty Instacart supports. For example, if an item is out of stock at one retailer, a customer has a very easy search of a nearby store’s inventory and may choose to swap their order altogether. There is no incentive on Instacart to keep a customer’s basket at a certain grocer, causing an increase in customers switching brands. Their main concern is gravitating the customer to its platform, not changing a customer to a loyalist of a certain grocer. When surveyed, 43% of Instacart users stated that if their preferred grocer became unavailable on the platform, they’d ditch that grocer and continue with another Instacart grocery store instead.
So, a grocer essentially has three options for an Instacart strategy:
1. Delist Themselves from Instacart / Implement Last-Mile In-House
While many are concerned about removing this option from their offerings, the risk of churning loyalists far outweighs the chance of customer churn of Instacart users. As mask mandates begin to lift, many customers have headed back to their favorite stores. This gives grocers the chance to move to an in-house solution. With customers heading back in-store, there is a lower likelihood of customers moving their order to a different store when a product is not available. This gives grocers a chance to find suitable substitutions or get insight into what products to add.
On top of this, many grocers are finding that customers prefer to use in-house solutions, think Walmart or Target versus services like Instacart. This allows customers to streamline their experience by going through one retailer versus layers of services on top of one another.
It also keeps operations in-house, allowing for greater control of the process and a higher level of quality assurance than possible when using a third-party service. A growing concern through the platform is something called tip-baiting. This is where a customer will create an order with a large tip to lure in a shopper and change the tip after checkout to a lower amount. Because of this, many shoppers are turning down orders out of fear of this occurring, and customers end up frustrated that their order has been delayed. By taking this service in-house, this issue can be avoided altogether and the store can remain in control of the associates packing the order, total amount, and tenure.
2. Implement/Invest in a Strong Loyalty Program
If a grocer is to continue using services like Instacart, implementing a strong loyalty program is a must to keep customers coming back and remaining loyal despite merchandise shortages or other switching factors. By launching a loyalty program with your Instacart strategy, your customers will be far more likely to keep their order with your brand. Popular ways to do this include offering reward points, exclusive offers, gas discounts, and other incentives related to their unique shopping habits.
The easiest but most dangerous option for an Instacart strategy is that a grocer can choose to not act in response to these concerns. While the solution continues to be utilized as is, change is inevitable. By acting now, grocers can get ahead of the curve and ensure their customer experience remains top tier.
A simple solution for your Instacart strategy is to solve customer’s concerns when using these third-party solutions. For example, a store can add signage next to various products on how to select the best option. THis can aid the third-party contractors in picking a better product. Another solution would be to set aside time each day for the shoppers so that their order pickings do not interfere with the store’s prime shopping hours.
While we do not know what the future holds with regards to grocery delivery, it is important to remember how quickly services like Instacart came into the picture to fill a need we never felt we would have. By remaining diligent in understanding the full customer experience and interpreting feedback, it is probable to assume change will be coming again.
Get ahead of the game and delight customers with our multitude of post-purchase experience solutions.