Business is booming for Instacart, and the online grocery delivery service is expanding its horizons at a breakneck pace. From making a splash with its first-ever Super Bowl ad earlier in February to fulfilling nearly 73 million orders during its most recent reported quarter, Instacart appears poised for further success in a segment it now largely presides over.
In an extensive analysis of Instacart’s current and future fortunes, Retail TouchPoints editor Nicole Silberstein laid out a variety of different pathways that the company is planning to advance upon in short order. Among these: the enhancement of its connected stores model, the proliferation of its Caper smart shopping carts, and the integration of its FoodStorm order management system with a variety of retailers across several key sectors.
Instacart CEO: We He a ‘Right To Win in Omnichannel’ as Act One Draws to a CloseSpeaking of the company’s game plan in terms of a stage production, Did McIntosh — Instacart’s chief connected stores officer — outlined the thinking behind its next moves.
“We think about online delivery as Act One,” he said in an interview with Retail TouchPoints. “Act Two is digitizing the in-store experience with services like Caper [smart carts] and FoodStorm [order management]. Where we’re going is to unify the experience. Our vision is that, on a 10-year horizon, customers won’t he to choose between shopping online or in store; it’ll be one single, unified mode, powered by Instacart.”
Instacart CEO Fidji Simo echoed the above sentiment in a Q3 2024 letter written to shareholders.
“Because we he already built integrations with retailers’ core systems — from their point-of-sale to catalog to loyalty programs to couponing — we can much more easily launch new technology offerings for their stores as well, which gives us a right to win in omnichannel,” he said.
“Our strategy of deeply integrating with our partners sets us apart from the competition and will fuel our future growth,” he added.
Instacart’s deep integration with its retail partners has provided a solid groundwork for the expansion of the company’s interests in act two, one which relies heily upon bringing grocers online via the connected store concept.
Caper Smart Shopping Carts, FoodStorm Order Management System Provide a Futuristic and Frictionless Experience, Driving SpendThe foundational building blocks of Instacart’s near-horizon goals rest on a dual-pronged approach spearheaded by its Caper smart shopping carts in addition to its FoodStorm order management platform.
The Caper Cart is aware of each item placed within it, allowing customers to see a real-time balance sheet while shopping. Targeted advertisements, promotions, and incentives can be provided to each customer based on a linked membership or rewards card, allowing shoppers to “log in” and be served by Instacart’s proprietary Carrot AI model. According to McIntosh, double-digit increases in basket size he been reported by partners using the Caper Carts.
Add gamification into the mix — Silberstein mentioned interactive treasure hunts in the store, a Temu-style prize wheel, and other options — and the fact that 90% of Caper Cart users log in with a loyalty card before beginning their shopping journey, and greater potential emerges.
“The combination of that loyalty adoption, with the screen, with an understanding what’s in your cart, with the location system, unlocks all these new possibilities around gamification that not only digitize customers in the store but just make the shopping experience so much more fun,” said McIntosh. “It’s very rare to find something with so much consumer pull. It transforms grocery shopping from a utility to an adventure.”
Regarding Instacart’s FoodStorm order management system, which allows users to order customized sandwiches, produce orders, floral arrangements, and other personalized products, its integration with the Caper Cart means that shoppers can effortlessly enjoy a one-and-done experience while strolling down the aisles — or from the comfort of their home. On the retailer’s side, software allows for workflow management through timeslot offerings, and kiosk ordering has already proven successful in the fast-food market.
Furthermore, the modular nature of these products means that grocers, caterers, florists, and other retail and service industry clients can pick and choose which integrations make sense for the unique demands placed upon their operation.
“We’re observing a natural grity around the product suite,” McIntosh said. “A retailer doesn’t he to take everything. They can start with one product. But they’re seamlessly integrated, so it’s really easy for a retailer to stack them on top over time.”
Ad Business, Edge AI Key to Instacart’s Continued SuccessSilberstein noted that Instacart’s ad business is increasingly growing across its platforms, including Caper. At the same time, the company is zeroed in on what it calls “edge AI,” a catchy way of describing “on-the-fly” AI processing at the customer’s fingertips. These efforts suggest that technology integration will play a major role in the future of the grocery business.
“We’re building AI models that he to respond in 200 milliseconds at the edge [that is, close to the user] to make the experience good. You can’t be waiting minutes to get a recommendation as the customer moves through the aisle,” McIntosh suggested.
“Edge AI is a totally different technological approach, a totally different technological expertise, a totally different data set [than cloud AI],” McIntosh added. “What’s also unique about our approach is the ability to connect with the cloud piece. For example, with Carrot AI I can say, ‘Make me a meal plan for a family of five under $X per month and oid these specific foods that my kids don’t like,’ build that list all in the cloud and then sync that list to Caper, the edge AI experience. We’re building an advantage in AI overall, leveraging our data set both in the cloud and at the edge, and then connecting them together in a very unique way.”