What is Instacart and how does it work? Instacart is a grocery delivery and pickup service, available in the United States and Canada. The service allows customers to order items from participating retailers (which now goes beyond just grocery items), with the shopping being done by a personal shopper.
Instacart is different compared to the marketplaces that have come before it. Instacart has more stakeholders than other marketplaces: consumers, in-store shoppers, retailers, and advertisers. Retailers are solely responsible for inventory availability, pricing, and product content, which complicates things for brands. After witnessing Instacart’s explosive growth in 2020, forward-thinking beauty brands are looking for ways to utilize the platform to accelerate their sales.
Why should beauty brands consider Instacart? Instacart’s adoption skyrocketed during the pandemic. Instacart’s leadership team rose to the occasion and quickly increased their shopper network and retailer partners. With consistent investment in these expansion efforts, Instacart is now available to 85% of US households and 70% of Canadian households.
During its expansion in mid-2020, Instacart extended the industry verticals they partner with, launching many beauty brands on their website and app through partnerships with CVS, Walmart, Kroger, etc. Its partnership with Sephora in September 2020 specifically piqued the interest of many beauty brands.
“Today, Instacart announced a new partnership with Sephora to offer same-day delivery in as fast as an hour from nearly all Sephora store locations across North America,” a September 24 press release from Instacart stated. “We’re excited to welcome Sephora to Instacart, bringing more selection to customers looking for seamless, same-day delivery from their favorite beauty retailer.”
How can beauty brands get on Instacart? Unfortunately, the only path to distributing products on Instacart is through a retailer partner that already works with Instacart. This is due to the fact that Instacart holds no inventory. Instead, retailers send data feeds with UPCs of products being sold in their stores to Instacart, who then make those products available for sale based on the zip code of each customer. As such, brands can only use Instacart if their products are being sold in one of the brick-and-mortar stores that form part of the Instacart network .
Instacart’s 2-hour delivery offers a great advantage for last-minute “red alert” situations (e.g., mascara running out a few hours before a big event) and giftable beauty items. Due to delivery delays during Q4 2020, many beauty brands turned to Instacart to help customers looking for speedy deliveries, ensuring that gifts were delivered before Christmas.
e.l.f Cosmetics is a great example of a brand that utilizes Instacart’s reach and quick delivery to help their brand website visitors. e.l.f. initiated a software solution called MikMak to drive traffic from its website to whichever marketplace or retailer the customer would prefer to transact on, whether that’s Amazon, Ulta, or Instacart.
This solution (still in beta) allows the website visitor to input their ZIP code and find the nearest store that has the product they are interested in and order from there.
Featured Products are keyword-targeted advertising campaigns that allow advertisers to bid on relevant keywords and promote products related to those search terms. Featured Products advertising placements on Instacart are almost indistinguishable from organic results — the only difference is the ‘Featured’ label in the top left corner. The first three results for any search are Featured Products – absolutely priceless ecommerce real estate.
At the moment Featured Products on Instacart are associated with high ROI.1:10 ROI (spend $1 on ads, see $10 in return) is not unusual. All of the brands that I spoke with when researching our upcoming book agreed that Instacart ROI is better than most other online marketplaces.
But the true value of Featured Products goes well beyond immediate ROI. Instacart’s ‘Buy it Again’ prompts nudge customers towards repeat purchases. This means that early investment in Featured Products can inspire organic sales from repeat purchases months and months into the future!
Make sure your product assortment is ready
Is your beauty brand already on Instacart? It may very well be without you knowing it. Search for your brand name or products on Instacart using several different zip codes. If your brand is not already sold on Instacart, contact your major retail partners. Retailers are feeding Instacart with data, adding details for products that are being sold on the platform.
If your brands’ products are being sold on Instacart but you don’t see all of them, identify the UPCs that are missing and get in touch with Instacart. They are likely eager to have your full assortment available as you are. If you need to update content on your product listings utilize a content syndication tool to make sure your product feed content is unified across platforms.
Here is a quick laundry list of the demand generation tips we have included in Instacart for CMOs.
With Instacart being such a unique 4-sided marketplace beauty brands will need to determine their current and (if necessary) ideal future organization chart. Who’s accountable for results, and who’s responsible for executing the plan? Assign an Instacart ‘owner’ who will manage the various solution providers and report outcomes.
Determine an advertising budget for initiating your Instacart efforts. Identify a timeframe to reassign this from “innovation” budget to “business as usual” budget.
Determine your criteria for success. KPIs should align with business needs but also be within the scope of what is possible to measure right now. That takes retailer-level sales off the table.
