Ex-Facebook Execs Advance Instacart’s Innovation Agenda
The future of grocery e-commerce is beginning to look very different, and Instacart has positioned itself as a major catalyst of further transformation. The San Francisco-based company may have risen to prominence as a provider of grocery delivery services, but in recent months it has executed a series of deals that mark a transition to what top executives refer to as a “retailer enablement platform.”
This past Oct. 19, Instacart acquired Caper, an artificial intelligence-powered shopping cart and checkout technology platform. On Oct. 7, Instacart acquired FoodStorm, an order management system that enables grocers to integrate foodservice ordering into their e-commerce offering. Further, back in July, Instacart turned heads when it revealed a partnership with robotics company Fabric as part of a next-generation fulfillment initiative.
These moves come amid a major leadership transition that puts the future of the company – and grocery e-commerce – in the hands of two former Facebook executives. On Aug. 2, Fidji Simo, less than a year into her tenure as an Instacart board member, joined the company as CEO. Two days later, her former co-worker at Facebook, Carolyn Everson, was named to the newly created role of president. Now, the pair is intent on establishing Instacart as an entity that hasn’t previously existed in the grocery world.
The Deal With Caper
“When we say we are a retailer enablement platform, it means that we offer grocers the technologies that they need to compete, whether it’s online or even in-store, like with Caper,” Simo says. “We see ourselves as providing grocers with the best technology to sell to their consumers in the best possible way, no matter how their consumers shop. So that started obviously with online grocery delivery, but also powering the websites of a lot of our grocers, powering pickup, and powering fulfillment on their own and operated properties.”
According to Simo, the Caper deal is particularly helpful for grocery retailers that are worried about competing with Amazon.
“Caper AI fits in with the strategic priority for us to be the technology partner that grocers turn to,” she explains, “and we think that’s particularly important in a world where Amazon is obviously making a lot of strides in grocery, and they obviously have the capabilities and financial strengths to create a lot of these new technologies, and we want our grocers to have the same advantage. We see Caper as a way to give them that advantage.”
Caper is reimagining the in-store shopping journey by developing AI-powered shopping carts and automated checkout counters that bring together online and offline shopping to create a new in-store shopping experience for customers. Caper’s object recognition system lets customers place fruits, vegetables and other items in their carts without having to scan or weigh the products, and check out right at the cart. The company also develops smart checkout counters that use cameras and a weight sensor to auto-detect items placed on a counter.
For retailers, Caper’s smart cart technology provides a plug-and-play solution, requiring little capital expenditure, according to Instacart. Caper’s technology enables brick-and-mortar retailers of all sizes to deploy this technology in their stores, creating compelling experiences for customers and driving meaningful growth for their businesses by increasing average basket sizes relative to traditional shopping carts. Over time, Instacart expects to integrate Caper’s technology into the Instacart app and the e-commerce websites and apps of its retail partners, allowing customers to build online shopping lists and browse recipes ahead of time, and check off their lists as they go.
“We’re hearing from retailers that they are seeing consumer habits changing, and that post-pandemic, there’s a new resting heart rate, both on the Instacart marketplace and on retailer’s websites, where consumers are expecting a variety of options across online delivery, pickup, etc.,” Simo says. “What retailers are asking us is to really make sure that we continue to help them compete and help them serve a new range of consumer needs. When you see the rise of quick commerce, for example, and the fact that there’s a lot of growth in the convenience sector, a lot of retailers were asking, ‘What can we do together so that we can approach these consumer needs?’ That’s why we have the Kroger partnership, which is a new offering for retailers to be able to capture that consumer trend.”
Taking the World by FoodStorm
Meanwhile, Instacart’s acquisition of FoodStorm provides retailers with another solution, this time for digital foodservice orders. FoodStorm’s software-as-as-a-service covers multichannel ordering — e-commerce, phone or in-store kiosk — order management; and payment and fulfillment. Its technology also integrates with a large variety of third-party systems, including point-of-service systems, and offers customer relationship management capabilities that help grocers collect feedback, market their offerings and leverage promotional features. With this acquisition, Instacart says that it’s expanding its enterprise technology portfolio to further support its retail partners’ digital foodservice operations, investing in more technology solutions that aim to help retailers grow, compete and better meet the evolving needs of their customers.
“People eat 21 meals a week, give or take, and we want to help our retail partners create more opportunities for their customers to get more and more of those meals from the grocery store,” notes Instacart Chief Technology Officer Mark Schaaf. “We think, for customers, this helps unlock a healthier, more affordable alternative than restaurant delivery, and creates an easier way for people to order prepared foods online, directly from their favorite retailers that they shop from already today. That’s another really exciting aspect of this acquisition.”
Fabric by Design
Instacart first began offering enterprise technology to grocery partners in 2017. Since then, the company has continued to make significant investments in its enterprise business, scaling its engineering team and developing new technologies for grocers. Instacart’s multiyear deal with Fabric earlier this year will aim to marry the speed of robotics with the human touch and attention to detail of Instacart Shoppers, enabling faster fulfillment of customers’ full grocery shop, from packaged goods, household essentials and produce, to deli items, frozen foods and alcohol. Once orders are carefully packed, Shoppers will deliver orders to customers’ doors or place them in staging areas for curbside pickup.
Instacart plans to kick off early-stage concept pilots in partnership with Fabric and grocery retail partners over the coming year and beyond. The new partnership appears to offer grocers some intriguing possibilities; however, Instacart and Fabric have stopped short of providing key details about the launch of their next-gen fulfillment collaboration. For example, the companies haven’t indicated how many dedicated facilities they plan to open, over what time frame, their approximate size or when a pilot location might become operational.
Instacart, which is valued at $39 billion, is rumored to be planning an initial public offering during the fourth quarter, but the company isn’t confirming or denying such a move.
“We’re very focused on building a company for the long run,” asserts Simo. “Of course, we want to be a public company someday, but we are really focused right now on building the business. Our strategy is very different from the other companies joining this space, because we are never going to compete with our retailers. We really see Instacart as being in the business of growing grocery retailers’ business, and that’s very different from others in online delivery.”
