What will Instacart’s new grocery pickup service mean for home delivery?

Discussion
Image: Instacart
Nov 08, 2018
George Anderson

Instacart has built its business on selecting and delivery groceries from a wide variety of retailers across the U.S. and Canada. The company, which boasts of having access to more than 70 percent of U.S. households and more than 50 percent in Canada, has announced the rollout of a new click and collect service that it plans to take nationwide in 2019.

The rollout of Instacart Pickup follows a multi-month pilot that the company used to gain feedback from customers. The service is initially being made available in nearly 200 stores in 25 markets including Atlanta, Boston, Charlotte, Minneapolis, Nashville, San Francisco and Washington, D.C. Grocers offering the pickup service in addition to home delivery include Aldi, Food Lion, Publix, Schnucks, Smart & Final, Sprouts, Tops Friendly Markets, Wegmans and others.

While Instacart’s home delivery service has grown to cover 15,000 stores, it appears as though the company needed to broaden its options to competitively address the growing popularity of in-store and curbside pickup programs offered by Target, Walmart and others.

“Our customers want choice and we’re excited to now offer the pickup option they’ve been asking for,” said Nilam Ganenthiran, chief business officer at Instacart, in a statement. “In our house, sometimes the ritual of going to the grocery store is inspiring and helps us meal plan for the week. Other times, we’re busy and can’t get to the store, so delivery makes life easier for us. For families that are out and about and running errands, a pickup solution might be a better fit for their family rhythm.”

Customers looking to place pickup orders can use Instacart’s mobile app or access its site to select the store location, add items to their cart and schedule a window for them to get their order before checking out. The company’s app users will receive a message when their order is ready for pick up. Customers can also send a message to Instacart’s personal shoppers to let them know when they are on their way to the store. All orders are brought out to the customer’s car. The service is free for Instacart Express members while non-members are charged a fee based on the retail partner, store location and time of day.

DISCUSSION QUESTIONS: Do you read anything into the rollout of Instacart Pickup vis-à-vis home delivery of groceries? Will the additional offer of a pickup service lead to further growth in terms of food retailing partners and number of locations?

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"I think it is a smart move. It is being thought of from the customer perspective. "

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9 Comments on "What will Instacart’s new grocery pickup service mean for home delivery?"


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Neil Saunders
BrainTrust

This is a good move for both Instacart and those retailers that partner with it. There are lots of reasons shoppers sometimes favor click-and-collect over home delivery and it is a fast growing part of the market. Moreover, it is more cost effective for retailers and Instacart to service consumers when they collect from store.

The main threat for Instacart is if retailers decided to “go it alone” once online sales reach a critical volume. However, for the time being, Instacart’s website, its service and general proposition are strong and it provides a genuine solution for retailers.

Chris Buecker
BrainTrust

I think it is a smart move. It is being thought of from the customer perspective. Some shoppers prefer home delivery, some prefer pickup at the store for example while on their way back home from work. I love the app functions provided they work properly. It gives the customer full flexibility.

Bill Friend
Guest

Adding pickup options for grocery shoppers is a natural extension to Instacart’s business model as adoption for this convenience continues to grow and is expected. Home delivery is not always the best and most convenient choice.

What will be interesting to see is how well the business model works between Instacart and the retailer because this approach now leverages employees from the retailer doing the pick process. They now having responsibility for properly storing the picked order within a scheduled pickup time window. The additional operational overhead is not insignificant for the retailer. They are essentially paying Instacart for technology but at what price?

In broader retail, the upsell potential for bringing buyers in to the store for pickup is well understood. It will be interesting to see if this is nearly as significant for grocery where it is more likely they get their pickup curbside and never enter the store.

Ricardo Belmar
BrainTrust

Great move by Instacart and the retailers that work with them! Shoppers want choice and sometimes that equates to delivery while other times it’s pickup. Both are convenience options for shoppers that save time but fit different needs – smart move to remain competitive and stave off future Amazon competition!

Brian Numainville
BrainTrust

Our just released 2018 Online Grocery Shopper Study clearly shows that Instacart is performing well on many of the key elements of the online grocery shopping experience. In fact, OSAT among those fulfilled by Instacart outscores supermarkets as a whole as well as Walmart. So if Instacart can leverage these strengths as they migrate to offering a pickup model it should lead to continued growth for Instacart.

Richard J. George, Ph.D.
BrainTrust

While a little late to the game, the click and collect move makes sense, particularly given the opportunity for customers to add high-margin in-store items. This should provide some long-term benefits to Instacart.

James Tenser
BrainTrust

Seems to me Instacart’s service adds another node to the end of the supply chain. So I have some questions about how it improves net consumer value — via delivery or click-and-carry. Still, the company’s expanding partner portfolio and widespread consumer acceptance has been more than remarkable. It has succeeded in establishing a brand that we are hearing sometimes supersedes those of actual retailers in the minds of shoppers.

I’ll be very interested to learn how Instacart organizes order staging areas within the stores it serves. Can it operate store pickup services within the spaces it already uses for delivery orders? What temperature control methods will be in place? Will orders roll out the front entrance to the regular parking lot or will there be a separate side door?

Instacart has shown how the digital aspects of taking and fulfilling orders can be relatively easy. The physical configuration may prove to be harder.

David Naumann
BrainTrust

This seems like a good move by Instacart, as consumers like different pickup and delivery options based on their schedule and the type of products they are buying. What would be interesting to to understand is why a consumer would order items to be picked up from the store via Instacart instead of directly from the retailer’s website. Are retailers subcontracting with Instacart to develop the front-end ordering website as an alternative to their own or is a complementary ordering site?

Ananda Chakravarty
BrainTrust

Curbside pickup is yet another option for consumer convenience and a strong move by Instacart to offer adjacent services to delivery, countering home grown curbside programs like Clicklist et. al. It gives grocers who don’t have the resources, skill set, or motivation a chance to play with the big guys. Good move with staying power.

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Braintrust
"I think it is a smart move. It is being thought of from the customer perspective. "

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