Store of the Future   //   May 17, 2024

Brands and retailers are still trying to figure out the secret to impulse purchases in online grocery

Brands and retailers are still trying to figure out how to drive impulse purchases for online pickup and delivery grocery orders.

Curbside pickup and delivery services saw a huge spike in activity during the pandemic, and have since remained popular shopping options for those who prefer convenience over wandering through crowded aisles. But, this created a challenge for grocery brands that want to reach potential new customers: how to encourage more people to make impulse purchases when they are not physically passing by new products on grocery shelves.

Services like Instacart and Uber Eats have evolved to help encourage impulse buys, allowing brands to advertise on checkout pages and even post-purchase. However, the interfaces on many retail apps are still not sophisticated enough to target shoppers with the items that might catch their eye while building their cart. Now, the challenge for brands is to figure out the right way to foster discovery by creating and running ads that encourage their products as add-ons without draining their retail media budgets.

Many shoppers intentionally choose delivery or buy online, pickup in-store to keep them disciplined. The data arm of Kroger, called 84.51°, asked grocery shoppers in its May 2024 consumer digest how they plan to shop next month. According to respondents using in-store pickup, 46% said they choose the option to help reduce impulse purchases. Similarly, 36% of those who use delivery apps think it helps them avoid unnecessary purchases that may otherwise lure them in-store. 

This behavior has proven to be a pain point, even for brands that buy ads to target digital shoppers.  

Elizabeth Marsten, vp of commerce media at Tinuiti, said impulse purchases have been harder to push now that people have settled into their post-pandemic routines. And while digital grocery shopping is still a growing area, the rate of its growth has slowed down since the peak in 2020 and 2021.

Marsten also said that more generally, it’s becoming harder for brands to be discovered, as inflation is causing more shoppers to stick to only the necessities when grocery shopping.

However, Marsten said that many pickup and delivery services have gotten better at encouraging people to add on new or unplanned items in subtle ways. “It used to be where once you finish an order and check out, that was kind of it,” Marsten said. “I’m seeing a lot more placement of post-checkout modification.”

She added that Target, for example, has been doing this by pushing Starbucks orders as part of the curbside pickup experience. When someone places a curbside pickup order through Target and then indicates in the app that they are on their way to pick up the order, select Target stores will then ask the customer in the app if they want to add on a Starbucks order.

Some online grocers are trying new programs to drive spur-of-the-moment purchases. Marsten pointed to Instacart as a good example of a platform that’s building ad tools specifically for impulse buys. Last year, Instacart launched an impulse ad tool meant to resemble a brick-and-mortar checkout aisle stocked with snacks and candy. This is where brands can promote items like a chocolate bar, a pack of gum or a single beverage can. These listings have to be under $7 to be eligible for sponsorship. These types of ads are becoming more popular among grocery clients that want to increase sampling, Marsten said. They’re also being heavily pushed by Instacart. 

Overall, one of the best ways to encourage last-minute ad-ons is through the use of discounts and promotions, Marsten said. Digital shoppers are more likely to stop and add a new product to their cart if it’s discounted, much like they do when seeing yellow sale tags in stores. “But that depends on how much the brand wants to discount and the margin they’re willing to give up,” Marsten said.

Bryan Gildenberg, founder of commerce consultancy Confluence Commerce, said impulse purchases are highly influenced by the mindset of the customer and how well their attention is grabbed when their interaction is curbside or quick in-store pickup. 

With a retailer like Walmart, for example, Gildenberg said the online shopper and their hauls differ from the in-store shoppers. “The pickup customer using the app tends to go for higher ticket items,” he explained. This affluent cohort is an opportunity for brands to target for discovery and drive first-time trials. “But the challenge is in getting the right products in front of them based on what categories they’re interested in,” Gildenberg said.

One of the current problems with the online ordering experience, Marsten said, is that the platforms are trying to guess these listing suggestions based on past purchases or what’s currently in the basket. Resurfacing past purchases speeds up the checkout process. But these suggestions generally tend to be limited to the user’s most shopped brands or categories, so it doesn’t always account for things like seasonal items. They also don’t always help shoppers discover new brands, Marsten said.  

Improvements in recommendation engines is what will help build the basket up, Marsten said. “This is where I see AI – when used properly – helping us move forward in that area.”

But the potential for future improvements is of little use to emerging brands tasked with figuring out what types of ads to invest in to drive impulse purchases.

Nona Lim, founder of Asian food brand Nona Lim, said reaching customers who rely on pickup and delivery is still tough for the brand. The company previously tested Instacart-sponsored listings, but Lim said it has since pulled back on those.

“During the early parts of Covid, Instacart ads were effective and the repeat sales were high,” Lim said. But as Instacart’s ad tools grew and more brands discovered their use, Lim said it became more expensive for smaller brands like hers. “For a lot of traditional retailers, their digital promo capabilities are siloed from what we run in stores,” she said.

Nona Lim tested Instacart sponsored listings, but Lim said it has since pulled back to focus on more practical marketing tactics like social media content, brand collaborations and giveaways. 

The company also tried to play with sponsored products on Kroger’s and Target’s networks to encourage impulse purchases. But Lim found that in order to make these sponsored listings a success, her brand would have to test many iterations for a long period of time to get accurate results. In turn, Lim said the brand has opted to focus on more practical and easier-to-execute marketing tactics like social media content, brand collaborations and giveaways. 

“It’s tough right now for CPG brands to know where to spend ad dollars,” Lim said. “If you want to invest in click-and-collect, you have to have a good budget and someone to specifically monitor and analyze the return on investment.”