Instacart aims to convert 25M annual users into monthly shoppers, driving up order frequency. CEO Fidji Simo sees a chance to increase average purchases from 11 to monthly. The company leads in large basket share at 70% of the market.
Instacart has 25M annual users but sees an opportunity to increase engagement, aiming to convert casual users into regulars. CEO Fidji Simo shared that the average user makes 11 orders yearly. The goal is to increase this to monthly. Instacart's wide range of groceries and new restaurant partnerships, such as with Uber Eats, play a role in these efforts. "We want to create habituated customers because we know that when we do, we get the entire grocery spend for the month," said Simo.
To achieve higher order frequency, Instacart is relying on targeted marketing and incentives. These efforts are not just to attract new users but also to engage existing ones. The company introduced affordability options and enhanced features like Instacart+, hoping to build habits among users. Additionally, restaurant orders from their Uber Eats partnership are growing, with higher average basket sizes than competitors. Simo believes these strategies will help boost both grocery and restaurant orders.
Instacart holds a dominant share of the grocery delivery market, controlling 50% of the small basket market and over 70% of the large basket market. These large baskets make up 75% of the industry's profits, underscoring the company's strength in high-value transactions. Despite this leadership, the company recognizes the need for constant innovation to stay competitive. Instacart is expanding its product offerings and retailers like Sally Beauty and The Home Depot to maintain its edge.
Instacart is focused on long-term growth by expanding its partnerships and innovating its platform. CFO Emily Reuter mentioned the goal of increasing order frequency among users who currently make one to five orders annually, aiming to convert them to monthly customers. Simo added, “We’ve added hundreds of thousands of restaurants to Instacart,” and the early data shows that these partnerships are increasing customer frequency and basket size. Over time, Instacart hopes to create a “flywheel effect” between restaurant and grocery orders, further strengthening their business.
Will Instacart’s incentives convert you into a monthly buyer?
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