As grocery affordability continues to be a top issue for consumers, third-party e-commerce providers are not only ramping up their efforts to help shoppers save money, but also highlighting their new tools as key differentiators.
These efforts by e-commerce and third-party delivery providers, like Instacart, DoorDash and Shipt, come at a time when consumers are feeling pinched as they try to manage their grocery budgets.
While fees and tips can deter online shopping, third-party providers are finding ways to make grocery e-commerce more affordable as the online grocery sector continues to grow.
Grocery e-commerce sales hit a record $10.5 billion in October, building on online grocery sales growth in recent months as retailers and third-party providers use promotions to encourage customers to sign up for e-commerce subscription programs, Brick Meets Click and Mercatus reported last week.
As Instacart looks to expand retailer integrations as part of its efforts to power growth, the company has a multi-pronged strategy to boost affordability for consumers, Instacart CEO Fidji Simo told investors earlier this month.
Price-sensitive new users select the company’s Super Saver option for one out of five orders, Simo said.
“That’s a really, really good signal for us of future order growth because if people who tend to be more price-sensitive come through the door and find an option that is really good for them … that will increase conversion and retention over time,” Simo said.
In August, Instacart announced it would waive fees on next-day delivery orders over $10 and launched personalized digital circulars showcasing discounts.
The grocery technology company has also expanded loyalty card access and SNAP online acceptance among its retailer partners in recent months. As the company rolls out more Caper Carts, it has also added savings tools such as personalized coupons to the smart carts.
Customers can now collect fuel points when they use their Kroger loyalty card on the Instacart marketplace. Instacart recently launched flyers with Kroger, according to the company’s shareholder letter for the third quarter, which noted that prices for every featured item in the flyers will soon match in-store prices.
“These [tools] are big, big drivers of affordability for us,” Simo told investors.
Retailers set their prices on Instacart’s platform, and Instacart uses software called Eversight to help retailers dynamically optimize pricing online and in stores as well as identify key value items for price parity, Simo said.
“I would say the biggest change that I have personally seen over the last year is that, in the past, it was a bit of a binary decision: you were either entirely at price parity or not at price parity,” Simo said. “But now that we work with retailers so closely on how to optimize prices, it’s a much more granular decision.”
Instacart is seeing retailers take a “much more sophisticated strategy” with price parity that varies across items and categories, Simo said.
“We are also seeing retailers react to increased competition by lowering prices, which is something that we obviously want to encourage because that’s more value for the customer and a tailwind for Instacart,” Simo said. “So across all of those aspects, I feel good about where this is going.”
Instacart isn’t the only third-party provider zeroing in on grocery affordability. DoorDash included savings tools among seven new features and updates aimed at making holiday shopping easier it announced Monday.
DoorDash redesigned its search function so people can browse items across retail merchants in a single view that lets them more easily compare prices and estimated delivery. DoubleDash, which lets people shop multiple stores with no additional delivery fee, is getting an upgrade that allows customers to bundle items from multiple nearby stores into one order before checkout — cutting down on delivery fees.
Meanwhile, Target-owned Shipt last week unveiled its holiday savings, including seasonal deals such as $15 off an order of $60 or more and limited-time deals at Target leading up to Thanksgiving.
