- Buyer loyalty to Instacart has declined over the past two years and loyalty to grocers has increased, according to a recent survey by investment firm Barclays.
- In a survey of over 1,000 consumers, only 7% said they were loyal to Instacart, compared to 16% in Barclays’ influential 2019 survey. The percentage of respondents who said they were loyal to their favorite grocers rose to 29%, from 22% in 2019.
- When the pandemic struck, Instacart was the go-to solution for many grocers scrambling to offer online shopping, but it faces growing challenges to maintain its e-commerce reign. “In 2021, our investigation shows cracks in the armor given much greater competition in space,” Barclays noted in the report.
Instacart welcomed many new customers during the pandemic. But loyalty to the company waned as competition from people like DoorDash and Uber has increased and as grocers have gained status during the global health crisis, the Barclays report suggests.
Like the 2019 survey results, the most recent results suggest that buyers are divided on whether they are more loyal to Instacart or to the retailer. But this year’s survey found a slight increase in the number of customers who said they would look for an alternative home delivery option. When asked if their favorite retailer is no longer available with Instacart, 38% of shoppers said they would go to the same grocer in the store and 37% would use another retailer on the Instacart – down 7 and 6 percentage points, respectively, from 2019. Twenty-three percent said they would find another home grocery delivery option, up 12 percentage points from the previous survey.
While more respondents said Instacart is their preferred method of shopping, Barclays said consumer engagement with grocers increased during the pandemic. In addition to the increase in the percentage of consumers who say they are loyal to their favorite grocers, 59% of those surveyed – up from 32% in 2019 – said they use Instacart does not affect their tendency to shop in-store at retailers.
When asked why they rearranged their races on Instacart, respondents were consistent with the 2019 responses, ranking convenience, time savings, and ease of use as the top reasons. But the survey showed that buyers are significantly less impressed with the quality of the products and the prices they get. While nearly a quarter said they liked the quality of fresh produce like meat and fresh produce (26%) and competitive prices (23%) in 2019, only 11% and 8%, respectively, said said the same thing this year.
In its 2019 report, Barclays called retailers’ reliance on the company’s services and marketplace “addictive” and said retailers were losing valuable consumer data and loyalty as a result. Now, with increased competition, including in-house departments from chains like Kroger and Ahold Delhaize, the company has said the industry is entering an Instacart “hangover” phase that could ultimately benefit grocers.
“In our view, increased competition from new entrants will lead to lower arbitration fees for third-party e-commerce providers, which could benefit the e-commerce cost equation for retailers using cost-saving third-party solutions. from gig for [e-commerce] accomplishment, ”the report says.
Compared to other Amazon grocery services, Instacart, Kroger, Shipping and Walmart, Instacart performed well in absolute terms, but ranked last in product prices and overall prices. Walmart obtained the highest score in these two areas. Meanwhile, Amazon got the top ranking in the other five areas: availability of needed products, product quality, ease of purchase, availability in stock, and saving time / making life easier. Shipping ranked above Instacart in all categories.
When examining the net intention to use a service again in the next 12 months, Amazon (91%) and Kroger Click and Collect (89%) had the highest scores, while Shipping had the lowest score (79%).
Instacart has undergone several changes in the two years since Barclays first reviewed the e-commerce service. The company has expanded beyond the grocery store to partner with pet supply chains, housewares retailers and more, and now has more than 600 retail partners. The company also launched a faster delivery service, acquired a catering software company, and began offering automated fulfillment as a service.
Competitors felt more emboldened to call Instacart, by focusing in particular on the desire of grocers to have more control over customer data, such as Instacart faces work woes and pushes back concerns within the grocery industry that it will become a retailer itself.
Instacart CEO Fiji Simo said in a recent interview with the Associated Press that the company’s multitude of premier retailers is a key competitive advantage: “[Customers] care a lot about selection and care a lot about their loyalty to particular retailers. And so our positioning is very, very different from that of our competitors, ”she told the point of sale.
Instacart expects double-digit transaction growth this year and, going forward, sees its advertising business as an important part of its customer experience and a way to keep costs down, according to the AP interview. “[It] allows us to make the service cheaper for consumers and to charge less for grocers. And I fundamentally believe that if we want 30% of people to buy online, we’re going to have to make online grocery delivery cheaper overall, ”said Simo.