What I Think Instacart Is Building, and How It Effects All of Us 👀

As I walked through the halls of the Pennsylvania Convention Center, in between all my trips to Dinic’s across the street in Reading Terminal, I was intrigued by one 10×10 booth more than anything else.

The booth was Instacart’s.

Before I dive into this story more, I want to highlight how different this issue is than previous On-Shelf posts. This is very speculative, on a product that I thought was cool and that I haven’t been able to stop thinking about.

I think understanding future innovation and the relationship between platform, brand, and retailer is both fascinating and imperative, and my hope is that this issue helps with that. It was also just fun to put myself in the mindset of a much larger company with endless resources compared to my own.

Alright, back to it…

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.

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….

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).

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.

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.

Instacart is having a tough second half of 2023 like most companies, but if they execute on even a small percentage of what I think is coming, every service provider will have them listed on their competition slide while every brand will have them listed at the top of their trade spend plan.

One Thing I Had To Share

If you have time I would urge everyone to watch the above TikTok and give Ashwinn a follow. He does a great job breaking down branding and how important it is.

The Drumroll rebrand is a great case study of how brands can effectively tell the consumer everything they need to know about a product with their packaging.

Branding is critical to retail success and way too many founders prioritize what’s important to them on the packaging versus what’s important to the consumer. Ashwinn does a great job navigating those pitfalls and making digestible content for CPG founders.

I tried the product at Expo East and loved it. This is definitely a brand to keep an eye out for in 2024.

That is all for this week! Next week we will dive into product placement and how securing multiple placements inside your key accounts is as impactful as any promotion you can offer.