Instacart continues to move beyond grocery delivery with new retail partnerships
Instacart is continuing to expand beyond grocery delivery ahead of an anticipated IPO with a new strategy to provide same-day delivery of large items straight to consumers’ doorsteps.
Instacart recently announced the launch of its “Big & Bulky” fulfillment option in partnership with multiple retailers such as Big Lots, Container Store and Staples. The expansion will allow customers to order large items like furniture, appliances or electronics from those stores for same-day or scheduled delivery.
Instacart, which built its reputation on grocery delivery, has partnered with more than 800 brands across its 10-year history. But it’s increasingly diversified beyond grocery since at least the onset of the coronavirus pandemic when it entered prescription delivery with Costco in April 2020, then adding same-day delivery for 7-11 and Sephora in September 2020.
The Big & Bulky announcement follows other non-grocery offerings in the past six months: Lowe’s became the first home improvement store on the platform in February with pilots in Charlotte and Austin, while Office Depot launched same-day delivery of school supplies in March.
For retailers, it means a potential new avenue to provide same-day delivery to customers, and net new customers who are browsing the Instacart platform. And for Instacart, it’s yet another expansion ahead of a potential IPO for the platform, which filed a draft registration statement with the SEC in May. The platform is also in the middle of a growth spurt, with The Wall Street Journal reporting earlier this month that revenue in the most recent quarter hit an all-time high of $621 million, marking 39% year-over-year growth.
Instacart said in an emailed statement to Modern Retail that the company plans to continue its non-grocery offerings, though it declined to say what percentage of its business it makes up.
“While grocery continues to be our foundation and focus, selection is a defining feature of our marketplace and we want to continue to create greater value for customers beyond their weekly grocery shop and across store aisles,” the statement said.
This season, Instacart has been promoting its non-grocery items with back-to-school plugs on its Instagram. Prior posts have encouraged people to use Instacart to buy Best Buy electronics or grill items for Father’s Day.
Instituting the Big & Bulky selection has meant increased education for Instagram’s gig workers — publicly referred to as shoppers — who are picking up and delivering the orders. Pilots ran this spring indicated that 97% of shoppers accepted bulky orders — and they can see ahead of time what’s in the order so they can decide whether or not to accept it.
“We only offer batches in which all individual items can be carried by one person and fit into the vehicle the shopper has specified,” Instacart told Modern Retail. “We partner closely with retailers to obtain up-to-date information about the sizes and weights of the items in their catalog, to ensure no item is too large for an individual shopper and their reported vehicle.”
Instacart has been increasingly diversifying its offerings and approach under CEO Fidji Simo, who joined the company in August 2021. The company recently announced that Simo will be named chair of the board of directors, to become effective once Instacart becomes a public company and founder and executive chairman Apoorva Mehta will transition off the Board, according to a July press release.
Since her arrival, Simo has signaled that her strategy is to lure in more users with the content of the app that can be used for more than just grocery shopping, and a move to becoming a broader retail platform. This spring it introduced Instacart Platform to offer services and technology to retailers, and in May it announced the rollout of new shoppable ads.
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Bryan Gildenberg, senior vice president of commerce with Omnicom Retail Group, said retailers that partner with Instacart may be betting that they can acquire new customers who are using the platform, while providing the convenience of same-day delivery that they may not be able to on their own.
“Instacart has figured out how to monetize a shopper’s desire for real-time convenience in a way that other retailers don’t have the operation infrastructure for,” he said.
The retailers that are partnering with Instacart for non-grocery items may also see a benefit from getting new customers who are more comfortable shopping on mobile. That’s especially true for users that have signed for Instacart’s premium service that provides free shipping on orders above $35, Gildenberg said.
Mobile continues to be a source of significant e-commerce activity, with Insider Intelligence reporting that about 44% of all U.S. retail e-commerce spend will come from mobile by 2025.
“People have gotten used to Instacart’s interface, and in some ways, particularly on mobile. it might actually be a slightly easier interface to shop if you’re buying multiple things than other e-commerce platforms,” Gildenberg said. “A more mobile-first shopper may be more comfortable with Instacart’s interface.”
Ian Televik, vice president of marketing and customer experience at Fabric, a retail technology company that focuses on fulfillment, said that expectations for on-demand and fast delivery for consumer goods has increased since the e-commerce boom of the pandemic.
Fabric conducted a survey among 500 consumers that showed 61% of those surveyed expect free next-day shipping, with 52% expecting it for a minimum purchase of only $40. And while many major retailers may be onto those trends, less than 5% of retailers outside of the top 10 offer free next-day delivery, Televik said.
From that perspective, partnering with Instacart gives retailers a new way to reach new shoppers.
“Online shopping wins on convenience, time savings, and product selections, all factors that stores will always have a hard time competing with,” Televik said.