Mojahid_Mottakin/Depositphotos.com
February 20, 2025
Instacart Believes It Has a ‘Right To Win’ in Omnichannel, Bets Big on Caper Cart and FoodStorm Offerings
Business is booming for Instacart, and the online grocery delivery service is expanding its horizons at a breakneck pace. From making a splash with its first-ever Super Bowl ad earlier in February to fulfilling nearly 73 million orders during its most recent reported quarter, Instacart appears poised for further success in a segment it now largely presides over.
In an extensive analysis of Instacart’s current and future fortunes, Retail TouchPoints editor Nicole Silberstein laid out a variety of different pathways that the company is planning to advance upon in short order. Among these: the enhancement of its connected stores model, the proliferation of its Caper smart shopping carts, and the integration of its FoodStorm order management system with a variety of retailers across several key sectors.
Instacart CEO: We Have a ‘Right To Win in Omnichannel’ as Act One Draws to a Close
Speaking of the company’s game plan in terms of a stage production, David McIntosh — Instacart’s chief connected stores officer — outlined the thinking behind its next moves.
“We think about online delivery as Act One,” he said in an interview with Retail TouchPoints. “Act Two is digitizing the in-store experience with services like Caper [smart carts] and FoodStorm [order management]. Where we’re going is to unify the experience. Our vision is that, on a 10-year horizon, customers won’t have to choose between shopping online or in store; it’ll be one single, unified mode, powered by Instacart.”
Instacart CEO Fidji Simo echoed the above sentiment in a Q3 2024 letter written to shareholders.
“Because we have already built integrations with retailers’ core systems — from their point-of-sale to catalog to loyalty programs to couponing — we can much more easily launch new technology offerings for their stores as well, which gives us a right to win in omnichannel,” he said.
“Our strategy of deeply integrating with our partners sets us apart from the competition and will fuel our future growth,” he added.
Instacart’s deep integration with its retail partners has provided a solid groundwork for the expansion of the company’s interests in act two, one which relies heavily upon bringing grocers online via the connected store concept.
Caper Smart Shopping Carts, FoodStorm Order Management System Provide a Futuristic and Frictionless Experience, Driving Spend
The foundational building blocks of Instacart’s near-horizon goals rest on a dual-pronged approach spearheaded by its Caper smart shopping carts in addition to its FoodStorm order management platform.
The Caper Cart is aware of each item placed within it, allowing customers to see a real-time balance sheet while shopping. Targeted advertisements, promotions, and incentives can be provided to each customer based on a linked membership or rewards card, allowing shoppers to “log in” and be served by Instacart’s proprietary Carrot AI model. According to McIntosh, double-digit increases in basket size have been reported by partners using the Caper Carts.
Add gamification into the mix — Silberstein mentioned interactive treasure hunts in the store, a Temu-style prize wheel, and other options — and the fact that 90% of Caper Cart users log in with a loyalty card before beginning their shopping journey, and greater potential emerges.
“The combination of that loyalty adoption, with the screen, with an understanding what’s in your cart, with the location system, unlocks all these new possibilities around gamification that not only digitize customers in the store but just make the shopping experience so much more fun,” said McIntosh. “It’s very rare to find something with so much consumer pull. It transforms grocery shopping from a utility to an adventure.”
Regarding Instacart’s FoodStorm order management system, which allows users to order customized sandwiches, produce orders, floral arrangements, and other personalized products, its integration with the Caper Cart means that shoppers can effortlessly enjoy a one-and-done experience while strolling down the aisles — or from the comfort of their home. On the retailer’s side, software allows for workflow management through timeslot offerings, and kiosk ordering has already proven successful in the fast-food market.
Furthermore, the modular nature of these products means that grocers, caterers, florists, and other retail and service industry clients can pick and choose which integrations make sense for the unique demands placed upon their operation.
“We’re observing a natural gravity around the product suite,” McIntosh said. “A retailer doesn’t have to take everything. They can start with one product. But they’re seamlessly integrated, so it’s really easy for a retailer to stack them on top over time.”
Ad Business, Edge AI Key to Instacart’s Continued Success
Silberstein noted that Instacart’s ad business is increasingly growing across its platforms, including Caper. At the same time, the company is zeroed in on what it calls “edge AI,” a catchy way of describing “on-the-fly” AI processing at the customer’s fingertips. These efforts suggest that technology integration will play a major role in the future of the grocery business.
“We’re building AI models that have to respond in 200 milliseconds at the edge [that is, close to the user] to make the experience good. You can’t be waiting minutes to get a recommendation as the customer moves through the aisle,” McIntosh suggested.
“Edge AI is a totally different technological approach, a totally different technological expertise, a totally different data set [than cloud AI],” McIntosh added. “What’s also unique about our approach is the ability to connect with the cloud piece. For example, with Carrot AI I can say, ‘Make me a meal plan for a family of five under $X per month and avoid these specific foods that my kids don’t like,’ build that list all in the cloud and then sync that list to Caper, the edge AI experience. We’re building an advantage in AI overall, leveraging our data set both in the cloud and at the edge, and then connecting them together in a very unique way.”
Discussion Questions
Does Instacart face real competition from other grocery delivery services such as DoorDash and Walmart+ moving forward, or will it retain (or even grow) its profits and market share via Caper and FoodStorm?
What obvious headwinds (if any) might Instacart have to deal with in terms of spurring adoption, both from retailers and from customers, in deploying its near-term strategies?
Will digitalization of the grocery shopping experience leave some consumers confused or alienated as opposed to a more traditional outing?
Poll
Loading …BrainTrust
Ananda Chakravarty
Vice President, Research at IDC
Neil Saunders
Managing Director, GlobalData
David Biernbaum
Founder & President, David Biernbaum & Associates LLC
Recent Discussions
More Discussions
How Can Retailers Crack the Gen Z ‘Riddle’?
Gen Z is becoming an increasingly important consumer demographic, but an elusive one to map. How…Does Bath & Body Works’ Scented Holiday Campaign Pass the Sniff Test?
Bath & Body Works is kicking off a new campaign with scent being at the fore…Which Tech Will Solve In-Store Inventory Woes?
Three major tech lineups are looking to solve retail inventory problems. Which is most suited?
The job of Instacart is to make the lives of their retail clients easier in ecommerce and omnichannel. By and large, their main solution of facilitating online ordering and delivery, fulfils that need. They have, more recently, expanded their services into other areas. Some of them like FoodStorm, solve genuine needs. Others, like Caper Carts, are much more questionable. The big issue for me, however, is that retailers could eventually replace Instacart, especially as ecommerce technology becomes more sophisticated. In this regard, it is surprising that Instacart hasn’t gotten into automation in the way a player like Ocado has. I’d suggest this is more defensible ground than their current model.
Cheeky bas****s , aren;t they?! Then again, maybe Mr McIntosh’s error isn’t hubris as much as not paying enough attention to being taken out of contest…anyway, let’s try and get beyond the headline(s) and back to analysis: Instacart has certain advantages –
goodgreat name recogntion, a customer (store) network and a lot of infrastructure – that we normally refer to as “first mover”. Unfortunately, I’m not sure how important those assets are in this sector…particularly when you view online grocery as a perpetually iffy financial proposition (boundless enthusiasm notwithstanding).I agree that Instacart has a strong chance to succeed in omnichannel and is investing heavily in Caper Cart and FoodStorm.
Through the integration of advanced technology into both online and in-store operations, these innovative solutions aim to enhance grocery shopping experiences.
Using Caper Cart’s smart cart technology and FoodStorm’s order management system, Instacart will streamline the shopping process, reduce wait times, and improve customer satisfaction.
While I’m a fan of what Instacart has done, the omnichannel view is not necessarily a done deal. A grocery with 500 locations and an average of 200 carts per store will require a considerable expense to outfit and manage -even a small percentage of the carts. Add to that a back of the napkin estimate of ~70% of shoppers aren’t even using a cart and typically run in for a few items here and there, the loyalty, identity and even ad dollars are not automatic. The relationships with grocers can also quickly sour if retailers don’t feel they’re getting a fair share of the profits and cost savings the tech allows- hence Instacart must build up their measurements and attribution models with precision. Ambitious goals for sure, but the right to win is more of an opportunity to play in the same fields with companies like Walmart and Kroger who dominate the grocery markets with $150B+ revenue, a long distance from Instacarts ~$3.4B. However, that doesn’t mean it can’t grow fast, and markets can change quickly- the tech won’t be the driver, the relationships will and Instacart has moved in the right direction to service the retail sector- especially with infrastructure and pricing acquisitions such as Eversight, Foodstorm, and of course Caper.
Instacart offers retailers two things they don’t do well plus a bonus. The two things Instacart does better is 1) implement modern technology and 2) take risks. The bonus offer is acting as a buffer between retailer and customer for service fees related to online orders. “It’s not us charging you more, it’s Instacart.”
As Instacart scales and gains experience, they will continue to take risks and expand their retailer offering. All the while building a targetable audience of shoppers advertisers want to reach and the ability to reach them when advertisers most want to reach them.
I’m impressed with what Instacart has done.