Paid Media

Grocery eCommerce: Why You Should Be Advertising On Instacart

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In 2020, online grocery sales grew 54%, reaching a value of $95.82 billion. Retail investors expect that more than half of the US population will buy their groceries from the internet by 2022.

Source: eMarketer

At the center of this change, Instacart represents more than 50% of online grocery purchases made in 2020 and continues to grow to match the pace of the eGrocery market. Therefore, advertising on Instacart has become a retail marketer’s best opportunity to get the brands they represent on the frontlines of a growing industry.

In this article, we discuss why you should advertise on Instacart, including:

  • The economic future of grocery eCommerce
  • Why consumers and advertisers use Instacart
  • How to get started advertising on the platform

The Growth and Future of Grocery eCommerce

In 2020, the number of online grocery customers increased by 42.6%. More than 131 million shoppers now buy their food online.

Additionally, the sales of non-food items from eGrocery stores are increasing as well. This indicates limitless growth potential for the platform as it expands to accommodate additional consumer demands.

The COVID-19 pandemic shifted the entire grocery industry to an economy based on convenience. Instacart’s ability to deliver any products from its grocery partners with same-day delivery has made it a driving factor not only in the growth of eGroceries, but other care products as well:

As online grocery is expected to grow 15x faster than its brick-and-mortar counterparts in the next 5 years, Instacart is growing to support this change. It now delivers from over 500 retailers, with a market value that has grown to $39 billion.

The question for retail advertisers has become whether Instacart will remain as valuable as it was during the pandemic, as only 49% of those who used online grocery delivery services in 2020 reported that they will still use them after the pandemic, according to data collected by McKinsey & Company:

Source: Financial Times

As the grocery eCommerce market has expanded to include non-food groceries, Instacart now features branded products from all aisles of the grocery store, from cleaning products to beauty supplies. As it continues to partner with more retail stores, the opportunities to provide these products will only increase. Supported retailers can advertise not only food but baby care products, office supplies, and more through Instacart advertising.

Why Consumers Love Instacart

Instacart now represents a convenient way for shoppers to acquire their weekly groceries. Before the pandemic, Instacart had not become accepted as a normal shipping channel for food and household products. Now, the future of eGrocery retail advertising requires an in-depth understanding of just how popular Instacart has become.

Instacart Revenue

Convenience and safety drive Instacart’s revenue in 2021. After the COVID-19 quarantine, shoppers remain more conscientious about their shopping habits and more willing to continue using the services that helped them through the pandemic.

In 2019, Instacart was reporting a financial loss of $25 million per month. In 2020, they created $35 billion in sales, generating over $1.5 billion in revenue.

Instacart Users

This revenue indicates an increase in active users, which now number more than 9.6 million.

To combat the possibility that consumers will return to normal shopping habits, Instacart has increased the number of its supported grocery and retail companies past 500 (twice what it was in 2019). Additionally, over 500,000 shoppers now deliver Instacart products from stores to homes.

Scale and Reach

Instacart’s reach translates to growing numbers of supported retailers across North America. Instacart now supports over 500 million products in 500+ retailers in over 5,500 cities.

In a bid to compete with Amazon’s grocery sales after it acquired Whole Foods, Instacart has also partnered with Walgreens to offer same-day delivery for OTC medications and other items like beauty, hair, and vitamin products.

Setting the Bar for Personalization and Convenience

Instacart offers many features that endear their customers to them. The first is same-day delivery, which has allowed the app to conquer the problems of convenience that used to plague long-distance grocery purchases. This feature also encourages Instacart’s Walgreens medicine deliveries, emergency pet supplies, and other products that people need in a hurry.

By offering an intuitive online app, Instacart also encourages personalization. Shoppers can save orders for later, order in advance, buy exactly what they bought last time, and shop from anywhere. For customers over 60, Instacart offers a special Senior Support Service that walks them through the basic features of their new handheld grocery store.

Why Advertisers Love Instacart

In addition to Instacart’s growing list of partners, customers, and supported retailers, every one of the world’s top 25 CPG brands advertises on Instacart. Advertisers love Instacart because of the reach their products attain on the platform, the consumer insights the app provides, and the variety of advertising it offers.

A Large Footprint

Brands of any size can take advantage of Instacart’s advertising opportunities. Their business model prioritizes volume, which allows retailers to maximize returns on ad spending. They do this through same-day delivery services and their growing number of retail partners.

In the online grocery market, Instacart has gone from operating at a loss to outselling Walmart as of June 2020. In just a few years of operation, Instacart represents almost half of the total monthly sales in grocery delivery:

Source: Derived From Data News

With nearly half of the revenue in the online grocery industry funneling through Instacart, retailers swarm to the app to give their ads a piece of this footprint.

Data at Scale

At such a scale, Instacart’s consumer base provides ample opportunities for analytic insights. This stream of data can be used by advertisers to increase their ads’ effectiveness on the platform.

Data on this scale is rare due to how brick-and-mortar grocery retail struggles to accurately record customer locations and buying trends with any accuracy. On Instacart, however, the system can provide its advertisers comprehensive analytics. These aid in maximizing marketing returns, strategically targeting audiences for specific products, managing supply chains, and more.

From Click, to Cart, to Checkout Advertising

Another reason advertisers flock to Instacart is the diverse level of customization they offer. Instacart strategically places ads on many pages, which can be used to sell items to customers in different stages of the buying process.

For example, on department pages, home pages, and even on the checkout screen, Instacart can send buyers sales opportunities from top brands. These appear as “featured products.”

Advertisers love this strategy due to how it effectively attracts customers to products relevant to them. The ability to customize these ads based on a user’s shopping history also increases brand loyalty in the long term by encouraging shoppers to continue supporting products they have already used. For more information, you can check out our Gomprehensive Guide to Instacard Advertising.

How to Get Started with Instacart

For market retailers in the grocery industry, Instacart represents the best chance to use eCommerce to advertise their brands. The growing number of eGrocery shoppers has followed a steady rise in Instacart’s industry value. They now compete for shoppers with titans like Amazon and Walmart and show no signs of stopping.

To get started with Instacart advertising, consider strategies for ad campaign management that optimize your investments in the platform’s ads. With the right team of ad specialists and a strategy backed by performance data, Instacart advertising can help your brand reach its exponentially growing number of users.

Author

Zach Llewelyn

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