Instacart aims to transform in-store shopping with smart cart/checkout acquisition

Discussion
Source: Caper AI promotional video
Oct 20, 2021

Instacart has acquired Caper AI, a smart shopping cart and checkout technology startup.

The deal, according to Instacart, provides the company with the tools needed to “transform the in-store shopping experience” for both its retail partners and their customers. Caper AI uses computer vision, weight sensors and other technologies in its Caper Cart and Caper Counter products. The company’s smart cart is designed for use in stores 20,000-square-feet and up while its checkout tech works in stores of all sizes.

“We’re focused on creating even more ways for retailers to develop unified commerce offerings that help address consumer needs across both online and in-store shopping,” Fidji Simo, Instacart CEO, said in a statement.

One of the key features of the startup’s technology is that customers are able to pick fresh produce and other items without having to scan or weigh the products to check out. The feature enables customers to buy what they need in less time than other forms of self checkout or with cashiers.

Grocery retailers including Kroger and Wakefern in the U.S. and Sobeys in Canada have deployed the company’s smart carts.

“Our goal is to connect customers to food — no matter how they want to shop or when they need it,” said Stephanie Jenkins, Kroger’s vice president of strategic partnerships. “Kroger is proud to be leading the industry in the adoption of new innovative technologies, including Caper AI smart carts, as well as partnering with Instacart on other industry-leading innovations.”

The largest supermarket operator in the U.S. and Instacart last month announced the launch of a virtual nationwide convenience service — Kroger Delivery Now — to deliver fresh food, household essentials, meal solutions and snacks in as little as 30 minutes.

Instacart, which confirmed it paid $350 million to acquire Caper AI, has been on an acquisition spree, earlier this month buying FoodStorm, a software as a service order management system for catering orders and prepared foods.

“We’ll continue to deepen our investment in our suite of enterprise technology services, unlocking new solutions that help power the comprehensive ecommerce platforms of retailers across North America,” said Ms. Simo.

In an interview this week with TechCrunch, Ms. Simo referred to Instacart as “a retail enablement company,” adding that, “We already have a vast platform to power commerce services [covering] both delivery and pick up that already blends the lines.”

DISCUSSION QUESTIONS: What is your assessment of Instacart’s acquisitions of Caper AI and FoodStorm? How will these deals affect Instacart’s business as well as its partners and rivals?

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18 Comments on "Instacart aims to transform in-store shopping with smart cart/checkout acquisition"


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Mark Ryski
BrainTrust

This appears to be a smart bet by Instacart – and a big one. Acquiring effective technology solutions can create a competitive advantage, and potentially improve margins, but only if the technology actually does what it aspires to do. This deal sends a strong message to competitors and partners that Instacart is investing in their service delivery, which can also help attract new partners/clients.

David Naumann
BrainTrust

Instacart’s acquisition of Caper AI aligns with its vision of enabling grocery retailers with new innovations. It looks like Instacart is becoming more of a technology company than a service company. What I really like about the Caper smart cart is that shoppers don’t have to weigh produce as the cart has a built in scale. Produce is the greatest friction in moving shoppers to self-checkout.

Ken Morris
BrainTrust

Instacart needs to do whatever it can to minimize its in-store footprint. With FoodStorm, Instacart is making a smart play for the high-volume catering and prepared foods segments and acquiring Caper AI looks to be a significant effort to accelerate shopping times and gain efficiencies. But do I smell disintermediation here? The video is great, right down to the items in the shopping cart like Mrs. Meyer’s cleaning products, and organic pasta. But who owns the data? Is this a situation where Instacart not only owns the customer but now understands their preferences? Beware of Greeks bearing gifts, as the Trojans used to say. 

Neil Saunders
BrainTrust

Instacart clearly wants to be a technology service provider for retailers not just in delivery but in other areas, such as in-store technology, too. This makes sound commercial sense and I can certainly see opportunities to license out this technology as grocers maneuver to gain a competitive edge. All that said, the debate at retailers will be whether to develop their own solutions or rely on a third party. Some will be reluctant to rely too heavily on Instacart, others will be very happy to obtain an “off-shelf” solution.

Rich Kizer
BrainTrust

I am outside of the grocery industry so my question is, how many systems are there to choose from? I remember my excitement at the Amazon grocery store opening when I received a guided tour of their system and store. My guess is that this technology in the article is leaps and bounds ahead of the current others available today, right?

Raj B. Shroff
BrainTrust

Maybe the play for Instacart here is the advertising and product suggestion component which can add revenue and subsidize the delivery fees. As shoppers adopt carts, Instacart gets that data and can get paid to suggest items in real time on the screen right in front of the shopper. If they can beat rivals to the shopper’s eyes, it gives them a leg up.

As for FoodStorm, perhaps it will provide better integration into grocers’ prepared foods business as prepared meals grow and grocers give restaurants more competition.

It seems Instacart isn’t clear where and how to grow from here. Are these brilliant long-term moves that will help resolve that issue? I am not convinced they are.

Bob Amster
BrainTrust

Well, this industry veteran missed the point. These Casper carts appear to be designed for the convenience of the consumer that shops in the retail store. I fail to make the connection to Instacart, unless Instacart plans to use these same carts, in the retail partners’ stores, to pick online orders and deliver them to the consumer. That may work.

Lisa Goller
BrainTrust

Instacart’s new acquisitions will smash physical and digital barriers, and create growth opportunities in grocery and foodservice.

Caper AI touchless tech will help Instacart boost retailers’ efficiency and data gathering in stores, where most transactions still take place.

Acquiring FoodStorm gives Instacart greater reach into ready-to-eat foods for households and events. Instacart could grow its influence in this segment to counter delivery apps and foodservice players.

Overall, these moves allow Instacart to offer retailers omnichannel sophistication and insights for effective, targeted digital ads. After all, CEO Fidji Simo is a digital marketing wonder.

Jennifer Bartashus
BrainTrust

This is an interesting move by Instacart, but getting retailers to buy into deploying this technology may be harder. It comes down to cost and scalability, and whether customers want or need the perceived benefits. Do retailers want to get into deeper relationships with Instacart than they already have? This would arguably give Instacart much deeper insight into a retailer’s operations than they already have with online grocery orders and delivery, which is something that may not be appealing to grocers.

Melissa Minkow
BrainTrust

Technology is the future of grocery. It’s no longer enough for any player in this space to just be good at one thing. These are smart investments by Instacart to stay relevant and to address even more of shoppers’ needs.

Doug Garnett
BrainTrust

I continue to be surprised by retailers’ embracing of things like this. Reading the words they say about themselves, we have yet another one-dimensional technology which claims to deliver value to customers but can’t really explain what that value is.

Retailers need to avoid things like this – don’t chase whispers.

David Spear
BrainTrust

Instacart’s acquisitions definitely bolster the enabling capabilities they bring to retailers, and it also arms them with the ability to capture data and insights that gives them a powerful advantage over their competitors and even some of their retail partners. It feels a lot like the Amazon model. Maybe one day soon we’ll see Instacart acquiring a large grocery retailer.

George Anderson
Staff

Fidji Simo was brought in as CEO with the stated goal of driving Instacart’s digital ad revenues. The Caper acquisition seems like a good opportunity for the former Facebook exec to drive incremental ad sales through the smart cart screens.

Raj B. Shroff
BrainTrust

That’s the play that makes the most sense to me. Without that, this deal doesn’t make sense to me. Otherwise, it is commodity tech with no connection to their business.

Ryan Mathews
BrainTrust

Call me cynical … and I am … but this seems another step toward making the Instacart brand more important than the brand of the retailers they serve. What’s next? Their own stores?

Ananda Chakravarty
BrainTrust

Exciting, exciting exciting. Just handing this capability off to their instacart shopper group can dramatically reduce the friction between instacart and groceries plus improve potential productivity of the shoppers. Faster response times and more effective shopping schedules. With the right arrangement, Groceries can offer up the services to in-store shoppers, simplifying checkout and enhancing store experience with much lower costs than developing it themselves. This can be big. Have to keep your telescope on this one…

Shep Hyken
BrainTrust

So, Instacart is moving from services that happen out of the store (delivery) to inside the store (checkout technology). They are still in their “lane” — but barely. I’ll be interested to see how this plays out. No doubt, the technology is good and Caper AI is a good business. The question is if it is congruent with the Instacart business that we know. I love when companies are flexible, and in some cases reinvent themselves. Maybe this is the beginning of a new Instacart.

Kai Clarke
BrainTrust

This appears to be a poor focus for Instacart as it keeps trying to shave a few minutes off of the shopping experience, instead of improving the overall shopping experience/template. There are clearly larger issues than saving a few minutes of time when purchasing products in the retail environment. Some of these include minimizing out-of-stocks, rapid delivery systems for online purchases, and changing how the online purchase is managed.

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