Instacart wants ‘to make online grocery shopping more affordable’

Source: Instacart
Nov 15, 2021

Instacart has added a deals section, exclusive member savings and discount delivery options to its app “to make online grocery shopping more affordable.”

The delivery platform is adding the savings features at a time when grocery costs are escalating amid increasing supply chain challenges.

Asha Sharma, Instacart’s COO, said groceries are one of the largest monthly budget expenditures for households. “For most families, when it comes to grocery shopping we know that every dollar matters,” he said in a statement.

“Roughly 60 percent of offline grocery transactions in the U.S. include coupons, and across our own marketplace customers have already saved more than $400 million this year,” Mr. Sharma added. “That’s why we’re proud to roll out these new features that help customers get exactly what they need, while also saving along the way.”

The app’s new features include:

  • Deals tab: A new Deals Tab offers “millions of dollars in savings” with daily coupons from retailers and CPG brands in addition to “hundreds of thousands” of existing deals and coupons. Instacart said the company is “reimagining the grocery circular for the digital age.”
  • New reduced cost and free delivery: Instacart will be reducing or waing delivery fees in select markets on orders placed more than 24 hours in advance. The option is designed for “weekly planners who place their orders in advance.”
  • Offering five percent credit back on express pickup orders: Express members, who use the company’s contactless curbside pickup over the next few months will receive a five percent credit upon order pickup, usable on future orders. 
  • Dollar store hub: A new Dollar Store hub allows customers to browse deals from about 14,000 dollar stores, including Dollar Tree, 99 Cents Only Store, Five Below and Family Dollar.

Eighty percent of shoppers are actively looking for grocery deals, including coupons and promotions, and 92 percent say grocery brands should be doing more to provide cost savings options for consumers, according to an Inmar Intelligence survey from December 2020. Nielsen research found that 30 percent of fast-moving consumer goods in the U.S. were sold on promotion pre-pandemic.

DISCUSSION QUESTIONS: Does price and the difficulty using coupons deter consumers from ordering groceries online? Which of the newer features on Instacart’s app appear equally beneficial to consumers as well as the platform’s grocery partners?

Please practice The RetailWire Golden Rule when submitting your comments.
"Probably the reduced cost for regular weekly deliveries will be the biggest boon."
"Convenience is something that people have to pay for and when times get tough that additional expense will be one of the first things to go."
"As inflation rises, Instacart’s new additions make it easy and clear for online shoppers to save money and time. The Dollar Store hub collaboration is genius..."

Join the Discussion!

18 Comments on "Instacart wants ‘to make online grocery shopping more affordable’"

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Paula Rosenblum

Probably the reduced cost for regular weekly deliveries will be the biggest boon.

You know, it’s hard for me to answer this because I am always willing to pay a premium for convenience and crowd avoidance. But I’m not the working poor. And I never use coupons. I have to confess there are things I just don’t understand because of my overarching good fortune — like waiting to buy a burial urn until the urn company is offering a free shipping promotion. Who does that? Apparently lots of people. Just not me.

I guess it’s a question of Instacart deciding how big it wants to be. It will always be in some danger of getting dis-intermediated by the grocers themselves, but it’s also easy to just take your money and let someone else do the work, which most grocers seem to be doing. Sure, the biggest will spend the money on tech and get the scale to make it work. But for smaller companies, Instacart is easy from the retailer side, too.

David Naumann

The cost of delivery fees is probably the the biggest deterrent to ordering groceries online. Reduced costs of delivery fees and highlighting a deals tab with manufacturers’ coupons to further reduce the total cost will help entice more shoppers to try Instacart for grocery delivery. Getting more first time online grocery trials is the best way to increase Instacart’s customer base.

Ken Morris

Well, it looks like Instacart wants to be the Amazon of grocery. They have a great game plan to do just that with their robotic pick, pack, and ship deal with MFC provider Fabric, so they are positioned to be the low-cost provider and chief disintermediator. This is getting interesting as anything that buffers the current inflationary push on grocery prices will be a positive for shoppers. Instacart is also making the claim of having its discounts be somehow “easier,” but I didn’t see any specifics in the article. The idea of offering discounts on orders that have a greater lead time suggest that Instacart’s profitability benefits greatly from operational savings when it doesn’t have to fulfill orders quickly.

Dr. Stephen Needel

There are numerous barriers to ordering groceries online. 1.) You need to plan for your order or pay way too much for near-instant delivery. 2.) You need some flexibility in products given availability. 3.) You need to trust your picker to pick fresh products (I know there are return policies but after numerous returns, people may be done with the process). 4.) You need prices that are in-line (not identical) with your local grocery stores. 5.) You need to be willing to pay a delivery/processing fee – nobody is doing this for free. 6.) You need to be able to get all the deals that you would get in-store.

So yes, adding coupons is a good thing and no, 60 percent of offline transactions probably don’t include a coupon.

David Spear

All four of Instacart’s new app features should be welcomed by users, in particular by frequent shoppers. I especially like the reduced cost and free delivery option when consumers place their orders 24 hours in advance of pickup/delivery. This is a win for both sides and could build tremendous momentum in the marketplace.

Doug Garnett

None of these get at increasing online grocery purchase. There are many reasons people prefer to choose their own groceries and a pandemic of ordering online has shown people why they prefer to go to the store.

Online ordering is a good service for a minority of customers – I expect 10 percent or less. Free stuff or deals might increase how often that 10 percent orders but they are not effective ways to bring more people to use online ordering.

Melissa Minkow

It’s great to see that these online changes are inspired by what works offline and are missing from the digital experience. Online grocery shopping tends to be more common among higher income groups, so this could help other income levels try it out. Grocers and delivery services will have to be careful though – a lot of the disruptive moves they’re making (15-minute delivery, aggressive promotional strategies) are margin-eroding, so hopefully Instacart can offer this long-term.

Lisa Goller

While price fluctuations and coupon issues deter some consumers from e-grocery, other factors are at play. Limited online assortments, low trust in pickers’ choices, questionable substitutions and a desire to browse the colorful aisles keep shoppers loyal to brick-and-mortar.

As inflation rises, Instacart’s new additions make it easy and clear for online shoppers to save money and time. The Dollar Store hub collaboration is genius, boosting the chain’s online reach and giving consumers more affordable choices. Targeting price-conscious shoppers helps Instacart compete with grocery leader Walmart and discounters like Aldi.

Richard J. George, Ph.D.

Instacart has always suffered from the consumer perception that while it is convenient, it is expensive. Most of this perception comes from high delivery fees. Efforts to reduce this expense, plus the focus on deals should make a difference. However the silent attribute may be the partnership with the extreme value retailers, namely the dollar store segment.

Andrew Blatherwick
Instacart is correct that as food prices start to rise, consumers are looking for better value and cheaper prices. What they do not say is that Instacart and all online food shopping is more expensive than traditional grocers and therefore they are the ones most likely to be hit by this situation. They launch these initiatives as if they are new and revolutionary. Strange that they have been a part of food retailing for as long as shops have existed. Convenience is something that people have to pay for and when times get tough that additional expense will be one of the first things to go. All retail may find it tough but surely online retail will find it tougher than most. Many online retailers and particularly these instant food delivery companies grew up when money was not so short and when people were more worried about contact with others than price. As that changes, will their fortunes? The U.S. Consumer Price Index is rising at its fastest pace since 1990, long before online retailers… Read more »
Dion Kenney
1 year 4 months ago

New, technology-driven shopping innovations are being developed and implemented every day. And Instacart has made a significant contribution to the local-online market. I’m intrigued by the specific ideas they are currently implementing, and believe that it can help to identify ways that shoppers can reduce their grocery bill via less expensive product selection.

Where I’m uncertain about the long-term benefits that can be reaped by this approach lies in the primary drivers of rising prices – supply chain and inflation. Incorporating online shopping technology into grocery stores’ business model is generally focused on two main benefits: expand your market reach, and create efficiencies in your operations. But in this case, neither of those benefits will have an impact on rising grocery costs.

In the long run, they may be able to create meaningful cost reductions if they create a consulting element to Instacart which helps grocery stores improve supply chain operations or create more efficient shopping/delivering operations that can significantly eliminate operational costs.

Camille P. Schuster, PhD.

Accessing coupons easily is a boon for manufacturers, retailers (if the coupons are retailer specific) and consumers. All the new features provide benefits for consumers and could accelerate the use of Instacart by consumers.

Ryan Mathews

When it comes to online grocery delivery, price is clearly a deterrent for some consumers – a deterrent, but the way, likely to become more of an obstacle if inflation grows or stays constant. All of the features are potentially attractive to consumers — with the possible exceptions of the dollar store option. But I think Instacart’s grocery partners ought to be a little concerned here. For quite a while now I’ve noted that Instacart’s brand grows in direct proportion to a decline in its partners’ brand value. If the dollar store hub idea works, how long before Instacart becomes a sourcing platform that locates the best deals available in a market and delivers them directly to a consumer? If and when that happens former “partners” will find themselves as “vendors.” If I were a supermarket operator that might make me nervous.

Ananda Chakravarty

Price definitely impacts customers who purchase frequently as in grocery. For customers in certain segments, coupons are also high impact, especially as coupons directly reduce price. Online grocery shopping is not an easy task-when basket sizes are larger, items are substituted, and quality is subordinated to price and convenience.

Although a great idea to open up the lower end market, Instacart will see slow adoption in the newer segments, but it will expand their market over time. The reduced/free delivery option when placed in advance is an exciting option, as is the dollar store hub — as these expand the market. Of all these, the dollar store hub has high potential- but also high risk as dollar stores have little online ecommerce. Delivery cost would exceed product price making profitability questionable.

John Karolefski

Delivery fees and the difficulty of finding and using coupons put off first-time users of online grocery shopping. Obviously, any improvements would be welcome. Would these improvements “greatly improve” business for Instacart? “Slightly improve” would be my hunch.

Mark Price

Price and difficulty accessing coupons are definitely reasons consumers have hesitated to use online grocery shopping pre COVID. Given the rising price of groceries today, these benefits are well timed for impact. The other barrier is delivery cost and the reduced cost of delivery hits the other button — all targeted at consumers who have used Instacart in the past but are at risk of attrition as consumers get more comfortable returning to grocery stores.

Anil Patel

Coupons or any deals whatsoever must be easily accessible to customers. I believe Instacart is well equipped to ensure that the customer experience on their app is as seamless and convenient as possible.

In terms of Instacart’s grocery partners, I don’t see why it shouldn’t be helpful to them. Even if they do not perceive the benefit of Instacart, they are compelled to use it.

The two most essential elements influencing a customer’s decision are price and convenience. Customers are going to be attracted by Instacart’s offering because it addresses both of these concerns. Partnership with them is not an option, but rather a need that bears rewards for the grocery partners.

Brad Eckhart

Automating the coupon process for the consumer through the deals tab is a great way of encouraging consumers to take advantage of the discounts already being offered by retailers and CPG brands. I also believe consumers will respond to the idea of taking advantage of the discounts offered by utilizing the retailer’s curbside pickup. With just a bit of planning, consumers can plan their online purchase when they know they are going to be running errands at some point during the week.

"Probably the reduced cost for regular weekly deliveries will be the biggest boon."
"Convenience is something that people have to pay for and when times get tough that additional expense will be one of the first things to go."
"As inflation rises, Instacart’s new additions make it easy and clear for online shoppers to save money and time. The Dollar Store hub collaboration is genius..."

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