Revisiting My Instacart Predictions🔮

I am not in the prediction business and I am not overly strong at identifying trends, but back in 2023 I took a stab at guessing what Instacart was building.

I decided to write about my Instacart predictions after seeing their booth at Expo East (RIP).

After that show, I had an epiphany on how I thought Instacart was going to start putting together these various pieces to create one retailer-agnostic platform that every brand used.

This week we are bringing back that issue from late 2023, but with a few notes on what has come to fruition in the year and a half since the original post. Everything in bold below are updated to the original post with the new information we now have. Enjoy!

It was a simple booth, mostly black, with their iconic carrot logo illuminated in the center. The booth was packed with Instacart team members and the site was a bit funny given how small the booth was and how many people crammed inside.

Outside the booth was a sleek kiosk with a call to action to “Swipe For Demo” and swipe I did.

The product they were launching was Instacart Sell Sheets. One of the first exercises that all brands go through is creating their sell sheet, but is the TAM for sell sheets really moving the needle for a company with the market cap of Instacart?

Sell sheets might have been what they were calling it, but it was more of a digital profile of your brand. It had all the relevant information that a buyer would need to buy your product and a very similar look and feel to RangeMe, but one important difference was that there was Instacart sales data for the brand at the bottom of the digital sell sheet.

I spoke to a team member to confirm what I thought from the demo. Instacart Sell Sheets was a searchable directory of brands that all Instacart retailers could use to discover new brands with the added value that you could see how that brand was performing in other accounts via Instacart’s sales data.

I asked if they were going after RangeMe with the product and they did note the similarities in the value proposition, but for me, what I couldn’t get past was how if Instacart executes what I think they want to accomplish on the B2B side over the next 5-10 years, that we might be looking at a massive shift in who runs retail.

Let’s take a quick look at Instacart by the numbers:

• September 19th IPO off to a rough start

• 10M users and 600K Instacart shoppers

• They service 1,400 banners and 80,000 retail locations

• Work with over 5,500 brands (as of 2022)

We all understand the core of Instacart’s business which is their grocery delivery service, but almost 30% of their 2022 revenue was retail media. In an age where every retailer is starting to understand that they are actually a media company, Instacart now is directly competing with Amazon, Kroger, and Walmart all of which are vying for your precious trade spend budget.

I don’t know if this is the future playbook for Instacart, but the sell sheets product had me thinking. If Instacart truly wanted to take over the CPG/Retailer business services industry; what’s stopping them?

Let’s break this down into a few categories…

Discovery

There are a lot of platforms that charge brands on the promise that they will get your brand discovered by new retailers, distributors, or investors.

RangeMe is probably the biggest name in this space, but there are plenty of startups trying to eat into their market share.

If Instacart wants to add a $100/mo charge on top of their platform to generate a sell sheet which then gets you listed in front of all their retail partners with accompanying data, I think that’s a pretty compelling offer, especially if you’re already spending your media dollars with them in some capacity.

I also think buyers would be attracted to this value proposition over some other discovery platforms because the supporting data drastically de-risks their purchasing decisions on the most volatile part of their business, which is emerging brands.

I wrote the initial post in October of 2023 and in November 2023 is when I believe Instacart launched Brand Explorer.

Brand Explorer gave retailers the ability to search through brand sell sheets.

With the announcement of sell sheets at Expo East, making those public and searchable to the retailer was a natural progression.

Admittedly, I haven't touched base with many brands who have said they have gotten accounts from Instacart yet, but I am excited to see how they compete with other discovery platform in the long term.

The promise of new retailers is a huge driver for emerging brands and can drastically increase the top of funnel for them by getting those brands in early and having them grow with Instacart as they expand.

Data

Ok, you're now using Instacart for added retailer discovery, and it’s netting you a few new accounts every year.

As your brand grows you begin looking for data services. Spins, Nielsen, IRI are all leaders in this space. The data is expensive, but well worth it, if you have the acumen to act on those insights.

What’s stopping Instacart from going into this market?

Instacart isn’t getting sales data from non-Instacart purchases at the scale that those three data giants are, but they do have transaction APIs set up with a lot of their retailers for reconciliation purposes, so in theory, they could start collecting that sell-through data and reselling it to the brands.

You’re already getting Instacart performance data and Instacart Ads data, so enriching this with any type of overall sales data would be a powerful value add. I don’t think Instacart can create as strong of a value proposition here as they can in some of the other verticals I highlight, but it’s worth noting given the emphasis on data in the current climate.

Now your retail stack consists of using Instacart to get discovered, you're then spending on their ads platform, and subscribing to their data reports.

Let’s take it a few steps further….

Most of the data plays for Instacart so far have been around ad performance and A/B testing different campaigns, but they have layered on insights.

These insights help brands gain access to market share and basket share, consumer insights, and trends.

They have also launched their data as a service arm which empowers brands to see velocity across multiple retailers, segment audiences, and their sales decomposition.

When I wrote this original post, I thought that it would be legacy data providers that would be the most impacted, but now I see it is platforms that leverage data to provide actionable insights such as Crisp or Bedrock.

With Instacart, I can identify what's working or not and and use the Instacart suite of tools to then take action on those insights.

I don't believe there is a pathway for Instacart to have as much third-party data as the legacy providers, but there is nobody who can compete with them when it comes to blending high-level retail data with actionable marketing levers.

So many brands subscribe to data providers with very little direction on what to do with that data. They then pay for a separate platform to help them make that data actionable. With Instacart it's clear how to act on the data and the data they provide is then pushing brands to use their ad platform more often and more effectively.

Kudos to NielsenIQ as well for partnering with Instacart, I have to imagine that partnership will be a cornerstone for both companies as they continue to grow.

Merchandising

Instacart has 600,000 shoppers who are in stores daily, fulfilling orders and walking up and down each aisle. The shoppers are all well-trained in taking pictures and following substitution scripts, anyone who has ordered from them knows this.

Brands are constantly looking for more visibility into how they are performing on-shelf and that includes placement and inventory.

I think if your brand has an order placed for it at a specific retailer and you have also approved Instacart for merchandising help, most brands would be open to paying a per-store fee for an image and snapshot of available inventory.

An Instacart shopper isn’t going to secure you new placement or build a lavish end cap display, but as a simple add-on function, I think this could really compete with a lot of merchandising services. Agan for fast-moving consumer goods, I think your need for a full-time merchandising team will always be there, but for an emerging brand that just needs the blind spots filled in, this could be a great offer.

Now you have everything in one place (data, store images, retail media, and discoverability).

A few months back Instacart launched brand tasks.

This enables brands to utilize Instacart and their in-store workforce to help with merchandising and managing inventory.

Transparently, this does seem like the lowest hanging fruit from all the bullets that I discussed previously.

They have an army of qualified people in a variety of retailers daily. It just makes too much sense that they would get into the merchandising business.

I do think that it will be awhile until they can compete against merchandising specific companies that can build displays and be true partners for a brand, but they will definitely eat into the gig merchandiser companies very soon.

Distribution

This opportunity is the one that intrigues me the most.

We have seen a ton of startups launch in the last 5-10 years that are trying to disrupt distribution. Pod Foods, Mable, and Faire are just a few. When you boil it down though, most of these are marketplaces with one side being retailers and the other being brands with some sort of dashboard and drop-ship capabilities that enable the process.

If you're talking about a distribution marketplace - 10,000,000 users and 80,000 points of distribution, is what some people might call, a head start.

What is blowing my mind, is what if Instacart decides to enable orders through the new sell sheet platform?

They could partner with KeHE and UNFI to show the availability of the product to the retailer in those preferred distributors, enable buyers to place an order from an Instacart sell sheet, and take a % of that sale that they pass to the distributor.

Now your whole retail process is being touched by Instacart at some point and I am probably missing some other obvious opportunities here.

No updates on this one.

It's is definitely the moonshot of the predictions that I outlined, but one that definitely still intrigues me.

Brands spend over $200B a year on trade spend and we are now seeing how Instacart can take a major piece of that addressable market sans any trade spend efforts in Amazon, Walmart, and Kroger (non-Instacart partners).

The sell sheet product at Expo East in a vacuum was not revolutionary, but to me, it represented the perfect trojan horse for Instacart to start weaving its way into more and more of the relationship between brands and retailers.

It's great to see Instacart continue to innovate and push out tools that can give brands a clearer pathway to retail success. I am eager to revisit these predictions at the end of the year to see how the platform continues to innovate.