Instacart considers its future after COVID-era boom

Like Zoom, Instacart, the grocery delivery service, reached the status of a verb during the pandemic, but amid turbulence and shifting consumer preferences the delivery company’s future is far from clear cut.

Why it matters

As the dust settles on the frenzy of expansion in e-commerce during lockdowns, companies that benefited from an accelerated adoption are working hard to think up new ways to expand their services profitably, often using suites of technological capability to offset the costly expansion of delivery. Where this goes, however, is anyone’s guess.

What’s going on

Instacart continues to grow, with revenues up 20% in 2021, according to a source speaking to the Wall Street Journal, who added that the trend appears to continue into 2022.

The trouble appears to be that while orders are up, basket sizes are smaller versus the pandemic. This is largely because people are simply going out more. This was to be expected.

But the other issue is that from its position of leadership in the pandemic, competitors are catching up and eating into the firm’s market share. While there is lots of headroom and expected growth, doing this profitably is going to be extremely tough.

It is responding in two ways:

• Instacart is driving hard into providing services to retailers to grow an increasingly important B2B capabilities that have served competitors like Kroger, Walmart, and Amazon extremely well. These services include advertising.
• On the customer side, Instacart is focusing on its more frequent buyers – these are typically buyers of both foods and non-food items, per the Journal. In addition, recent users are more likely to continue buying on Instacart than those who dabbled with the service in the 2020 lockdowns.

Go deeper

Interested in playing on Instacart? WARC has you covered with WARC Digital Commerce’s report How to win on Instacart, powered by data from Edge.

Sourced from WARC, WSJ. [Image: Instacart]