Instacart scores vendor ads
Moving further down the supply chain, Instacart Inc., the grocery delivery start-up, has partnered with a number of vendors to help defray delivery expenses.
General Mills, Unilever, Coca Cola, PepsiCo, Campbell, SC Johnson and other consumer goods companies are offering coupons and paying to advertise on Instacart’s website.
Customers navigate to Instacart Deals from the homepage or by visiting instacart.com/store/deals. When they click to add discounted products to their basket, the virtual coupons are immediately applied and the savings are seen at checkout. Examples of ads seen include free delivery for spending $10 on Red Bull or 75 cents off Dove soap.
In its sixth month, the vendor program now makes up 15 percent of Instacart’s revenue, according to Bloomberg News. Apoorva Mehta, Instacart’s CEO, told Bloomberg, “It’s like AdWords for groceries.”
According to Instacart, consumers benefit from the ease of one-click deals and avoiding “the days of coupon cutting and wandering stores to find the exact promotion.” Brands only pay for redemptions, as opposed to the typical setup of paying for distribution and estimating potential redemption rates.
“This new platform revolutionizes the coupon space by allowing shoppers to browse for deals and offers on Unilever brands such as Dove, Lipton, and Ben & Jerry’s items every day across Instacart’s broad retailer network, and see the savings immediately at checkout,” said Doug Straton, VP, digital-e-commerce for Unilever, when the program was officially announced last November. “Importantly, it should prove to be extremely efficient in targeting the right shoppers for those offers.”
The apparent early success of Instacart Deals comes amid recent reports that Instacart is cutting its hourly pay for some delivery workers in another bid to shore up profitability. In December, it raised delivery fees for customers to $5.99 from $3.99. Instacart also makes money by charging more than retail prices for items at some stores or through commissions paid by the grocer.
- Instacart Launches “Instacart Deals” – Instacart
- Instacart Gets Red Bull and Doritos to Pay Your Delivery Fees – Bloomberg
- Instacart, a Startup Worth $2 Billion, Slashes Pay of Some of Its Lowest-Paid Workers – re/code
- Inside Instacart’s fraught and misguided quest to become the Uber of groceries – Quartz
- Grocery-Delivery Startup Instacart Cuts Pay for Couriers – The Wall Street Journal (sub required)
DISCUSSION QUESTIONS: Will vendors increasingly get involved in helping subsidize grocery delivery costs through advertising and couponing? Do you see consumers, brands or retailers gaining the most benefit from a platform such as Instacart Deals?