Grow Your Natural Food Brand on Instacart
How Does Instacart Work?
If retail has been the recent history of natural grocery, and if grocery eCommerce is the presumed future, then Instacart is providing a hybrid model that is bridging the gap between the two.
With Instacart, shoppers log into an app or a web interface and based on their location can fill a virtual cart with products currently available in nearby retailers, to be delivered to their front door.
For brands who are familiar with the Amazon grocery world but are new to Instacart, consider this hybrid marketplace as a direct relation to Amazon Fresh. There is no additional inventory requirement from sellers beyond participating in retail, consumers who might otherwise have stood in grocery aisles and bought off the shelves are now buying off the shelves from their couches.
Why Does Instacart Work?
Instacart offers simplicity and daily convenience that has earned them a loyal user base.
Part of the acceleration of this loyalty is thanks to the pandemic which helped train a population of consumers to buy food from their homes. On top of that is the timing of having similar services developed for ready-to-eat food delivery, apps like Doordash and Grubhub, which have familiarized consumers with the process of using their phones to get food to their front door.
Instacart reports that their demographics tend to live in cities and to only buy a few grocery items at a time. In this way, it is acting as a sort of extended pantry for consumers in a convenient delivery range of retail stores, a way to get the necessary ingredients for dinner without overstocking a small home.
Why You Should Participate
If you are already in retail locations, Instacart offers the opportunity to bolster those brick and mortar sales, and to have some control over your own success in stores.
For years, food brands have been reliant on the game of retailing, which includes relationships with buyers, competition for eye-level placements, for a spot in a small grocery store’s newsletter. With Instacart, brands are able to in effect bring sales to the retail stores, to control their own merchandising and promotion from afar.
This is a perk for retail relationships too, and for a small business hoping to expand into new retailers, as a presence on Instacart shows commitment to helping support your own on-shelf sales.
How to Succeed
As much as there is loyalty to the Instacart marketplace, there is an equal loyalty towards brands on the marketplace. And this is aided by the app itself. The first thing shoppers see on Instacart’s interface is the ‘buy it again’ widget.
We talk about Amazon as being a search engine, but Instacart is a sort of personal assistant, whereby the allure of browsing down a well-curated grocery store aisle has been replaced with the simplicity of an interface that can serve up your preferred brands and translate past purchases into new suggestions.
And when shoppers do explore, Instacart reports that their users disproportionately shop on the app compared to a desktop. They further claim that roughly 70% of conversion via search comes from products in the top row, which on the Instacart app is four listings.
To succeed on Instacart requires an investment and good retail inventory management.
The investment is to win bids through search advertising. The inventory management allows that Instacart’s algorithm will keep your product in customers’ carts once they’ve tried it.
How to Fail
While a well-managed advertising presence and strong SEO can launch your Instacart success, a lack of grocery inventory can sink it.
As soon as a product goes out of stock in a retailer or a region, Instacart’s system knows to stop serving ads to local traffic. On the one hand, this means that your ad spend won’t get out of hand when OOS, but it also means that any momentum with getting into consumer’s carts and shopping habits will fall immediately to zero.
Getting Set Up
Instacart’s setup process is simplified by the fact that they are cross-referencing the databases of the retailers where your product is already sold.
From there Instacart offers that certain product detail fields can be manually optimized for better search performance. As with any SEO across marketplaces, brands should remain conscious about balancing the need to be found through their keyword usage with the dynamic of having well-written copy that will convert sales once shoppers have found the listing.
Images On Instacart
Unlike other marketplaces, Instacart’s carousel of images are specifically laid out, with a slot for a nutritional panel and a separate one for ingredients. If both features are in one image it will likely be rejected.
Call-outs are not allowed on product images, and only one carousel slot is designated for a lifestyle image.
Advertising On Instacart
There are two types of campaigns on Instacart, Sponsored Product and Display. Each has a different reach in the marketplace and eventually, you will want to utilize a combination of the two to cover as much digital real estate as possible.
Instacart’s automated campaigns are a good way to get started on the platform, as these campaigns draw on the marketplace’s understanding of your products to target a range of competitors and broad keywords.
Not only is this a viable starting point for your advertising, but it can be a great tool for understanding your brand from a customer’s perspective. Through these startup campaigns, you may find—by studying conversion metrics—that the way consumers on mobile perceive your product is different than has been the case on grocery shelves.
On the other hand, Instacart’s PPC advertising approach does require regular upkeep. While the metrics can be useful and the algorithms at play are less of a black box than those you might find on Amazon or Wamart.com, there is still a hugely powerful platform with enough impressions to be found that an unmonitored budget can be spent with unnerving speed.
Where On The P&L Does Instacart Belong?
Once you have found sales through Instacart’s search functionality, there is the business of accounting for it.
Where Instacart lands on a P&L is an interesting question with no definitive answer from company to company. The sales should reasonably belong in retail, which is already established as a revenue stream and shouldn’t be double-counted.
Because Instacart offers no data about which retailer or even which region a sale came from, there would be no way to accurately pull these sales out of retail sales to establish them as firmly Instacart sales. So you might establish Instacart as a sales channel, but you would have some difficulty deciding where else on the P&L to deduct those sales from
From this perspective, Instacart may seem like a pure expense. And this may be true.
Think about it as a new form of advertising, like a billboard that allows you to track and optimize performance in real-time, to seek out customers who are actively shopping in your category. This is a digital billboard where converting keywords can be tracked and inflated, where audiences are acknowledged and sought after.
We’ve come a long way from putting our billboards next to highways and hoping they convert.