Grocery delivery service Instacart, which operates in 36 US markets and partners with 135 grocers across the country, has seen an increase in its customers’ average basket size every year since the company was founded in 2012. Nilam Ganenthiran, Instacart’s senior vice president of business development, spoke with eMarketer’s Tricia Carr about the various factors that have contributed to this growth.
eMarketer: Who is the Instacart customer? Are they shopping more or less frequently? Are their basket sizes getting larger or smaller?
Nilam Ganenthiran: I’ll break down our customer in three dimensions. First, who the customer is. When we started the company, the customer was the busy, young urban professional. Today, we’re not just a San Francisco, Chicago and New York success story. Our biggest launch to date was St. Louis.
Our fastest-growing markets are more suburban: Florida, Nashville, Raleigh-Durham and Indianapolis. Today, our customers are young, suburban parents who use Instacart to give them more time to spend with their family and do other things that are important to them.
“The macro trend is that shares of our stomach are leaving the grocery store and going to the takeout restaurant or the pizza delivery guy. We want to bring those dollars back.”The second dimension is frequency. We’re capturing a greater share of our customers’ grocery requirements today. The average customer shops on Instacart somewhere between two and a half and four and a half times a month.
The last dimension is basket size. We started with a big basket size, and it has grown every year. One reason is the retailers we partner with keep adding more items to their catalog, including a lot of fresh, prepared meals.
eMarketer: Are purchase frequency and basket size both rising congruently?
Ganenthiran: There’s an upper limit, but right now that’s what’s happening. The macro trend is that shares of our stomach are leaving the grocery store and going to the takeout restaurant or the pizza delivery guy. We want to bring those dollars back to the grocery store.
eMarketer: How does Instacart encourage users to increase their basket size? Are coupons and discounts important?
Ganenthiran: About a year ago, we launched Instacart Coupons. There are thousands of click-to-cart coupons available at any given time that we source directly from manufacturers. They are essentially national coupons—the equivalent of what a manufacturer puts in the Sunday circular or mails across the country.
“Baskets with one of our deals applied, be it coupons or stock-up-and-save, are anywhere from 20% to 40% larger.”We also do stock-up-and-save or get free delivery. At any given time, an Instacart customer has many different ways to get a dollar amount off their order or free delivery if they buy a certain amount of a brand’s products. Again, these deals come from manufacturers. For example, buy $15 worth of Dove products from Unilever and you get free delivery, or order $15 of DiGiorno pizza from Nestlé and you get $5 off.
Baskets with one of our deals applied, be it coupons or stock-up-and-save, are anywhere from 20% to 40% larger. These are engaged customers.