Brands have every right to feel hamstrung when it comes to achieving meaningful results on Instacart. Due to the complex nature of this innovative marketplace, there are many barriers to success.
One big problem is figuring out how to assemble your internal team. In today’s article, Instacart For CMOs authors Kiri Masters and Stefan Jordev have shared their expert insights on this very topic.
What makes Instacart unique?
Instacart is a grocery delivery and pick-up service. Customers order groceries from participating retailers, and orders are assembled by personal shoppers. Inventory only comes from retailers, never from brands directly.
Instacart is very different to the standard two-sided marketplaces that have come before it. This is because there are four sides to the Instacart marketplace:
- End customer
- In-store inventory shoppers
- Product advertisers (brands)
Although there is an enormous opportunity for brands to win new customers and solidify their market positioning by harnessing the power of Instacart, the complex nature of the marketplace makes it tricky to manage.
Why should I pay attention to Instacart?
Instacart became a go-to platform for thousands of ‘quarantined consumers’ in 2020, resulting in staggering amounts of growth. According to data from analytics provider Second Measure, Instacart is the biggest player in the online grocery space – it’s estimated that they own 56% of all online grocery orders and 71% of all online grocery delivery orders.
“Another important factor is the omnichannel nature of the ecommerce landscape,” explains Stefan Jordev.
“Shoppers are browsing and cross-referencing items across multiple channels. A shopper could discover an item on Amazon but purchase it on Instacart, or vice versa. Therefore, if you’re neglecting the huge numbers of shoppers on Instacart, this could be hurting many different parts of your business.”
Finally, Instacart sits somewhere between sales and marketing on the P&L for most brands. In many instances there is no designated internal team managing Instacart, and this creates accountability and performance tracking issues.
💡Check out Ecommerce Sales Channels on the Rise in 2021
What brands are most impacted by Instacart?
Grocery and CPG brands were the primary beneficiaries of Instacart’s astronomical growth in 2020. However, in the future, Instacart will be a pivotal channel for brands across many other categories. Instacart recently expanded their reach into Beauty, Baby and Pet Supplies through partnerships with Best Buy, Walmart, Staples, Bed Bath & Beyond, Buy Buy Baby, Sephora, and 7-11 among others.
Therefore, any brands that have existing relationships with retailers selling on Instacart should be paying very close attention to the channel.
Where does Instacart fit in my P&L?
“We spoke to over a dozen leading executives during the research for Instacart For CMOs, and the vast majority explained that brands typically assign Instacart to their Sales or Ecommerce internal teams, and this often creates a disconnect,” explains Kiri Masters.
“This is because Instacart revenue is mixed in with wholesale revenue from brick-and-mortar retailers.
At the same time, because Instacart is an online channel, merchandising and advertising is typically allocated to the ecommerce team, meaning budget has to be pulled from another channel if a brand wants to advertise on Instacart.This creates confusion in respect to accountability and attribution.”
🎧 Listen to Where Does Instacart Fit in My Company’s P&L?
Episode 175 of the Ecommerce Braintrust Podcast
How should I structure my Instacart team?
Disclaimer; there is no ‘correct’ answer in terms of internal Instacart team structure as each brand will be presented with a unique set of circumstances. But here are some options you may want to consider:
1) Sales Owns Instacart
- Benefits. Sales will generally have closer relationships with retailers and will have full visibility of other trade promos which can be run in tandem with Instacart. They also have a better overview of supply chain, product availability, price point, and product content data points. If retail partners aren’t engaged with Instacart, the Sales team is better equipped to coach them on the opportunity.
- Downsides. Sales may have a limited grasp on the digital aspect of Instacart and prefer to retain a more traditional brick-and-mortar mindset. Due to their lack of experience with digital ad strategy, they may just focus on products with the best organic ROI, and simply rely on traditional brand awareness focused trade promo activities.
2) Ecommerce Owns Instacart
- Benefits. Ecommerce will be more digitally savvy, and will have a better understanding of how to utilize the native Instacart digital marketing and advertising tools. They will be able to leverage seasonality data points from other digital channels such as Amazon that can be applied to great effect on Instacart.
- Downsides. No direct retailer relationships, limited supply chain understanding (no inventory within participating retail stores means no product availability on Instacart). Too focused on ROI with PPC campaigns, not necessarily taking up all the branding/merchandising opportunities.
3) Hybrid (Sales & Ecommerce Working Together)
- Benefits. Best of both worlds – Sales can focus on the supply chain and retailer relationships, Ecommerce can focus on implementing digital marketing and advertising growth opportunities. Ability to identify problems from opposing sides of the business quickly.
- Downsides. Each team may be reporting to a different senior executive – opposing ideologies and goals may become problematic. Difficult to make quick decisions if multiple parties from different parts of the business need to sign off on every strategic pivot.