Instacart exec talks online delivery
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Retailing Today's sister publication Chain Store Age recently spoke with Vishwa Chandra, VP of retail accounts for Instacart, to get a better sense of the current and future state of online delivery.
What is driving growing consumer interest in online delivery?
“Several different factors. Consumers have more access to online delivery with technologies like smartphones, tablets and high-speed Web. In the grocery vertical, we now have the ability to create an online experience that is visually similar to how people shop for groceries. And there has been an evolution in what the customer is willing to accept and feels comfortable doing.”
How has online grocery delivery changed in recent years?
“The offering is no longer just about convenience. It’s also about value, choice and access. You must meet multiple consumer need states. There are high customer expectations, so you must deliver efficiently. It’s hard to develop a customer but very easy to lose one.”
What are special challenges associated with delivery of grocery and perishable items?
“Ice cream and popsicles keep me up at night. As soon as ice cream leaves the freezer, the countdown is on till the customer has a bad experience. It’s a category you cannot simply pick and batch with 50 other deliveries two hours later.
“You also have to understand the customer need state. For example, bananas and avocados are two of the hardest items to pick. There might be three picks for an order of 12 bananas – two or three that are ripe now, two or three that are ripe in a day or two, and the rest that are ripe later in the week.
“In addition, out-of-stocks are a reality of grocery. You have to manage substitutions. If a customer doesn’t get an ingredient they need for that night’s dinner, they must still go to the store or drastically change plans. Customers can give Instacart guidelines on substitutions. They can substitute by brand, product characteristics like organic, or price. They can give us specific requirements or let us make recommendations. We always confirm substitutions.”
Will retailers continue to rely on third-party online delivery services or do more of it themselves?
“Retailers will continue to use outside partners for a couple of reasons. The technology and capabilities needed to provide the right online delivery experience are difficult and expensive to build and maintain. The platform is constantly evolving.
“From an operational perspective, it’s hard to fulfill at the efficiency level of a third-party platform within your silo. The demand you generate inside your silo is a lot lower than what Instacart generates across a city.
“Also, we see bringing in more customers as a core benefit of the Instacart platform. We can bring in customers from outside your traditional area of operation or your competitors’ shoppers. We also gain a larger share of wallet from existing customers and track an average of 2.5 to four times the size of the average in-store basket size.”
How important is on-demand delivery – in less than an hour or even minutes – going to be?
“On-demand delivery will be very important. Customers want delivery that is quick and also flexible. Let’s say I schedule a delivery for when I get home between 6:30 and 7:00, and then at 3:30 I get an invitation to go out for cocktails after work. The ability to easily reschedule my order is equally important as the ability to get it quickly.”
What is driving growing consumer interest in online delivery?
“Several different factors. Consumers have more access to online delivery with technologies like smartphones, tablets and high-speed Web. In the grocery vertical, we now have the ability to create an online experience that is visually similar to how people shop for groceries. And there has been an evolution in what the customer is willing to accept and feels comfortable doing.”
How has online grocery delivery changed in recent years?
“The offering is no longer just about convenience. It’s also about value, choice and access. You must meet multiple consumer need states. There are high customer expectations, so you must deliver efficiently. It’s hard to develop a customer but very easy to lose one.”
What are special challenges associated with delivery of grocery and perishable items?
“Ice cream and popsicles keep me up at night. As soon as ice cream leaves the freezer, the countdown is on till the customer has a bad experience. It’s a category you cannot simply pick and batch with 50 other deliveries two hours later.
“You also have to understand the customer need state. For example, bananas and avocados are two of the hardest items to pick. There might be three picks for an order of 12 bananas – two or three that are ripe now, two or three that are ripe in a day or two, and the rest that are ripe later in the week.
“In addition, out-of-stocks are a reality of grocery. You have to manage substitutions. If a customer doesn’t get an ingredient they need for that night’s dinner, they must still go to the store or drastically change plans. Customers can give Instacart guidelines on substitutions. They can substitute by brand, product characteristics like organic, or price. They can give us specific requirements or let us make recommendations. We always confirm substitutions.”
Will retailers continue to rely on third-party online delivery services or do more of it themselves?
“Retailers will continue to use outside partners for a couple of reasons. The technology and capabilities needed to provide the right online delivery experience are difficult and expensive to build and maintain. The platform is constantly evolving.
“From an operational perspective, it’s hard to fulfill at the efficiency level of a third-party platform within your silo. The demand you generate inside your silo is a lot lower than what Instacart generates across a city.
“Also, we see bringing in more customers as a core benefit of the Instacart platform. We can bring in customers from outside your traditional area of operation or your competitors’ shoppers. We also gain a larger share of wallet from existing customers and track an average of 2.5 to four times the size of the average in-store basket size.”
How important is on-demand delivery – in less than an hour or even minutes – going to be?
“On-demand delivery will be very important. Customers want delivery that is quick and also flexible. Let’s say I schedule a delivery for when I get home between 6:30 and 7:00, and then at 3:30 I get an invitation to go out for cocktails after work. The ability to easily reschedule my order is equally important as the ability to get it quickly.”
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