Instacart is the largest on-demand grocery delivery service in the country—and the leading online grocery platform in North America. It partners with more than 600 national, regional, and local retailers; delivers from over 45,000 stores across more than 5,500 cities in North America; and is available to more than 85% of U.S. households and 70% of Canadian households. But is it hurting its retail partners more than it’s helping? When it comes to customer loyalty, the answer tilts toward yes.
In the 2019 Barclays report “Dissecting the Instacart Addiction,” Instacart customers were asked what they would do if their retailer of choice suddenly disappeared from the Instacart platform. A whopping 43% responded that they would simply switch to a different retailer. This shift in loyalty from grocers to services like Instacart isn’t new. Customers value speed, convenience, and hands-free online services. The Barclays study took place well before the COVID-19 pandemic, and throughout 2020, Instacart’s cult following only grew. As retailers continue to lose customers to Instacart, the platform is becoming much more than just an ally or partner for grocers—it’s becoming a competitor.
The problems don't end there. Whispers of Instacart currently building its own micro-fulfillment centers persist, threatening to remove the role of grocers in their operations altogether. As food retailers face the reality that third-party partners and solutions like Instacart aren't the answer to expanding their digital offerings, delivery services, and incremental revenue, they need to figure out what is?
Here are five reasons why adopting a completely self-owned and self-managed digital retail media networkis the answer to meeting digital demand, while retaining and growing your piece of the grocery retail market.
● Build awareness for your brand, not a third-party’s. The statistics make it explicit: turning to solutions like Instacart doesn’t boost your brand awareness or bring your name to the forefront, it brings Instacart’s name to the forefront. Ultimately, the app makes you more disposable to your consumers—not more valuable. Adopting a robust digital retail media network allows you to put your name on everything you do digitally, in-store, and at your consumers’ curbs, keeping your brand top-of-mind for any shoppers who interact with your store. White-labeled and dynamic, you’ll gain a digital advertising network and comprehensive engagement hub that opens the door to omnichannel outreach, without sacrificing your monetary and loyalty returns in the process. Setting yourself apart is the best way to set yourself ahead, and detaching your brand from dominant names like Instacart to bolster your own presence (rather than theirs) is a smart strategy.
● Profit from e-commerce growth without the risks of outsourcing. There’s no denying that e-commerce is growing, but breaking into the category on the backs of giants like Instacart and Amazon poses more risk than it’s worth—leaving your brand vulnerable to their shifting whims, decisions, and goals. More than 20 years ago, leading retailer Toys R Us outsourced its e-commerce activity to Amazon. It soon found that despite the partnership, its brand was left lagging. By the time it decided to take control of its own online business, it was too late. In a lot of ways, Toys R Us lost the digital race before it even began. By outsourcing today, you risk making the same mistake. A digital retail media network of your own allows you to tap into the e-commerce market—and its massive growth—without the risk of being left behind by big players with their own agendas.
● Control your customer experience to build loyalty from within. Maintaining customer loyalty entails retaining control of your customer experience. Outsourcing even a piece of the customer journey doesn’t allow you to do that. By building or buying your own digital retail media network, you can manage your pricing, product selection, customer service, and fulfillment workflows, without ceding control. By offering the best customer experience you can, you won’t just win back customer loyalty until the next third-party partner comes along—you’ll keep it indefinitely. Offering engaging new digital offerings and multimedia content extending throughout the entire shopping journey will bring you closer to your customers than ever before. Helping them understand that the shopping experience they’ll soon know and love belongs to your brand and your brand only is the best way to build sustainable loyalty. Both your customers and your bottom line will thank you for it.
● Lower your prices and remain competitive. Digital retail media networks are a proven model for retailers. Take Walmart as an example. The company continues to invest in its platform infrastructure and drive innovation around every aspect of order fulfillment and the user experience. Its network provides complete control of its customers’ end-to-end experiences, while allowing them to offer significantly lower prices than Instacart. While Walmart and any other retailer that decides to move forward with their own digital retail media network can set any prices that they like and make the return back in digital ad sales, incremental sales, and increased shopper spending, Instacart can’t. The cost of a personal shopping service can only go so low—and it's a cost that retailers relying on it will continue to incur as well.
● Get into the race while you still can. As major players continue to move ahead and dominate the market, the race for smaller retailers to get involved is ramping up, and there’s not much time left. Taking control of your e-commerce business, launching your own digital retail media network, and growing your business through it is the only way to stay in the game, let alone come out on top. By getting up and running on a retail media network quickly, you can solidify your position before it’s too late.
By 2022, it’s expected that more than half (51.3%) of the U.S. population will be digital grocery buyers. Don’t miss out—and don’t give any more of that market share to Instacart. Adopt and maintain a competitive e-commerce offering sooner rather than later, and do it all in a way that supports your brand, rather than dilute it. To learn more about launching your own digital retail media network, contact Swiftly today.