Why Instacart Is Quickly Becoming Consumers’ “Go-to” Delivery Service
In the wake of COVID-19, Instacart has emerged as an undisputed opportunity for brands to acquire and retain grocery and CPG shoppers. If you sell in-store at a participating retailer, then an Instacart Ads program should be part of your media strategy.
Tinuiti recently sat down with Amanda Campos, Senior Insights Manager at Instacart, to discuss the latest digital shelf insights and trends from Instacart, as well as why (and how) Instacart should be part of brands’ promotional strategies.
Here’s a recap of what we covered:
Instacart’s 2020 growth
During COVID-19, Instacart quickly adapted to meet consumer needs, and consumers responded by making Instacart an essential part of their daily lives. In the first half of 2020, Instacart saw a 500% increase in order volume and a 35% increase in average basket size.
The Instacart network and operations grew as well:
- 10k+ new stores (40k total stores)
- 150+ new or expanded partners (500+ total retailers)
- 1,500+ new pickup locations
- 15x number of care agents
- 3x number of shoppers (500k+ total shoppers)
Instacart is quickly becoming consumers’ “go-to” delivery service, with growth in traditional grocery categories and beyond. Instacart has continued to partner with new retailers and expand throughout 2020.
Though Instacart’s primary focus is on grocery, they continue to add non-food selections for consumers across the marketplace. New and expanded partnerships include:
- Bed Bath & Beyond
- Staples
- Walmart
- 7Eleven
- Costco
- Sephora
- And dozens of local grocers across the country
Unsurprisingly — especially given the huge growth of online grocery shopping during the pandemic — food continues to grow year-over-year as the most-shopped category on Instacart.
The top 5 food categories by sales volume are:
- Produce
- Dairy & eggs
- Meat & seafood
- Frozen foods
- Beverages
While food categories continue to grow, non-food categories are also gaining traction quickly. For example, household products are up 19 points year-over-year.
And online grocery shopping is here to stay.
The global grocery market, which has grown consistently for the past decade, is seeing a spike in 2020 driven by COVID-19, with online grocery penetration hitting rates previously not expected until 2025. US online penetration in grocery has more than doubled in the last several months.
We can expect online grocery shopping to continue to grow even as brick-and-mortar stores reopen and the pandemic wanes. A study by BCG shows that consumers tend to keep most habits adopted during a crisis, even after the period of distress ends. And online grocery is expected to grow 15X faster than brick and mortar over the next 5 years.
What does this mean for Instacart? With 89% of users seeing Instacart as an essential service and 86% likely to keep using Instacart in the future, the platform will undoubtedly continue to grow in 2021 and beyond.
Instacart shopping behavior in Q4
Thanks to the holidays, Q4 is one of the biggest times of the year for Instacart shopping.
Based on last year’s trends, search volume is likely to spike throughout Q4 2020: Q4 2019 search volume was up 39% compared to the average week in 2019.
Instacart also saw a shift in top-searched terms around the holidays in 2019. Four days before Thanksgiving, for example, search increased 44% from the November average, with these top 5 keywords:
- Cranberry sauce
- Stuffing mix
- Turkey gravy
- Whole turkey
- Pumpkin pie
One day before Christmas Eve, search increased 36% from the December average, featuring these 5 most-searched keywords:
- Black-eyed peas
- Prime rib (roast)
- Spiral ham
- Gift card
- Appetizers
Shoppers still search for staples during the holidays, and popular year-round search categories maintained high volume during Q4. However, holiday-related search categories — like powdered cocoa, pies, pecans, and dough — see the fastest growth in search volume.
Advertising on Instacart
So, what does all this mean for brands looking to advertise on Instacart?
Grocery ecommerce is clearly having a moment, with US retail ecommerce sales in the food and beverage category growing over 58% in May 2020 alone. Today, more than 500,000 people — up from 200,000 in March — serve as Instacart shoppers, picking, packing, and delivering groceries and goods for customers across North America. And Instacart has seen order volume surge by as much as 500% since March.
Instacart presents a massive opportunity for retailers and brands to reach a national audience while they shop on Instacart’s website or app.
Instacart advertising options
Instacart offers 4 main categories of ads:
- Delivery promotions
- Hero banners
- Coupons
- Featured Products
Delivery promotions: Delivery promotions are enterprise-level investments across multiple markets throughout the US. Brands work directly with Instacart to set up these promotions, which have big budgets and are mainly used by giant brands like Proctor and Gamble or Johnson & Johnson.
Hero banners: For hero banners, there’s a flat fee and one-week minimum, and brands work directly with Instacart to set that up. Like delivery promotions, these are mainly enterprise-level investments from national brands.
Coupons: Brands can also offer coupons through Instacart. Once redeemed, coupons aren’t available for the next 30 days, which helps avoid extreme couponers. The only format currently supported is “Save $X on Y quantities of Z.”
Brands only pay for redemptions, making this a more budget-friendly approach than the delivery promotions and hero banner.
Featured Products: Last but not least, Featured Products follow the classic paid search setup.
Your available SKUs are loaded into your Instacart ad account, giving you the option to add products to campaigns. Instacart currently only supports exact match keywords. Products show up in search based on geographic availability and stock levels near the signed-in customer.
Featured Products campaigns follow a cost-per-click (CPC) model with no minimum budget. Like Amazon and Google, Instacart uses a second price auction format, meaning you pay $0.01 more than the next highest bid.
Getting started with Instacart Ads
To advertise with Instacart, you must sell your products in a brick-and-mortar store — Instacart is not a broker or marketplace.
Instacart began offering self-service advertising options in May 2020. This is a great option for small or emerging brands to get started with Instacart advertising through Featured Products.
While there’s no minimum budget required for Featured Products campaigns, Instacart recommends reviewing how many SKUs you have, how many store locations, and what your historical sales have been via Instacart without advertising. Then, plan your budget based on how much you’d like to grow those sales.
Key takeaways
Instacart’s scope and size offer brands an incredibly rich data set and a unique understanding of the ecommerce landscape and how customers are shopping. Because users have to be signed in to see retailers and ads, your ads will show up only to relevant audiences.
All in all, if you’re a retailer or brand with products on the Instacart network, you need to start advertising on Instacart.
For a more granular deep-dive into Instacart’s advertising options and how to set up a Featured Products campaign, check out our webinar, Insights & Advertising on the Growing Instacart Marketplace, featuring Elizabeth Marsten, Senior Director of Strategic Marketplace Services at Tinuiti, and Amanda Campos, Senior Insights Manager at Instacart. View the webinar on-demand here.
Ready to get started? Learn more about how we can partner with you for success on Instacart today.
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