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Cutting The Cord: How Grocery Retailers Can Delist From Instacart And Other Platforms – Forbes

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Many grocery retailers that do business with Instacart are exploring alternatives for transitioning to e-commerce platforms that provide greater value and control to the retailer. Photo Credit:Consumerqueen.com

A recent article I wrote about Instacart has generated a lot of interest from grocery retailers and retail analysts. In the article, I outline the reasons why grocery retailers that are current customers of Instacart are evaluating options for replacing Instacart and transitioning to another e-commerce platform.

Based on feedback from the article, it appears grocery retail executives have several questions they want answered:

  1. What is the process for delisting from Instacart?
  2. How can a grocery retailer switch from its existing e-commerce platform to another e-commerce platform?
  3. How can a grocery retailer with limited digital capabilities compete?

I attempt to answer these questions in this article.

Instacart is an option for retailers that want to offer customers online grocery ordering, fulfillment and delivery. Like any business, customers of Instacart may experience variance in terms of service and value provided. I recommend grocery retailers evaluate its own needs and invest the time and effort to make the best strategic decision.

Grocery retailers interested in speaking with Instacart should contact Instacart directly.

Cutting The Cord

When a grocery retailer has made the determination that maintaining a relationship with Instacart (or another platform) poses too much reputational risk, the retailer is unhappy with the lack of value and service, or a retailer makes the decision it would prefer to utilize another e-commerce platform that offers direct control over the shopper experience, the retailer must complete a series of tasks to successfully make the transition.

Earlier in 2018, I wrote about the threats posed to grocers who aren’t thinking strategically about Instacart. These thoughts were later expanded upon in a series of Digital Grocer podcasts with Toronto-based Mercatus, a leading e-commerce provider to grocery retailers across North America.

Mercatus has experience transitioning grocery retailers to its platform. I asked the CEO of Mercatus, Sylvain Perrier, to identify a specific set of requirements and recommendations for how a grocery retailer can transition from one e-commerce provider to another with no disruption to service.

Sylvain Perrier, CEO of Mercatus, is a recognized thought authority on the topics of technology, innovation and grocery retailing. Photo Credit:Mercatus

Based on a series of discussions with Perrier, the following needs to be addressed/tackled from a retailer’s perspective to migrate away from an e-commerce provider:

  1. Who controls the .com DNS Record?
  2. What are the .com integration points and how are the integrations configured?
  3. How does the retailer secure its shoppers’ data (shopping lists, favorite recipes, account details, active basket history, order history)?
  4. Do stores associates need to receive training to use the new e-commerce platform? What new procedures are required?
  5. If there’s a click-and-collect service, does the retailer need new picking hardware and procedures?
  6. Does the retailer have a marketing plan for in-store and online shoppers to introduce the new platform and promote new features and capabilities provided?
  7. Does the retailer have a measurement plan in place to track the success of the transition?

The sad truth is that a lot of grocery retailers lack the investment in digital marketing to make the delisting move completely painless from a commercial perspective. This is what Instacart is counting on according to analysts I spoke with.

When Amazon acquired Whole Foods, many grocery retailers flocked to Instacart as a short-term fix to a perceived threat. Many grocery retail executives feel “trapped” by Instacart, which is now valued at over $8B billion and whose business is predicated on separating retailers from its customers according to retail analysts I spoke with off-the-record.

Kevin Coupe of Morningnewsbeat.com recently wrote, ‘Instacart’s primary interest is in establishing its own brand as an alternative to grocery retailer brands. Eventually, Instacart’s grocery retail customers will get that message and realize you can’t be a little bit pregnant.”

Coupe’s opinion on Instacart is similar to what I wrote in this article where I made the argument Instacart is a Trojan Horse.

Although challenging, there are many options executives can pursue to end the relationship with Instacart (or another e-commerce provider). My advice is that grocery retail executives should only consider migrating to a platform that can give the retailer autonomy and sovereignty over the shopper experience and its digital future.

The Instacart Marketplace

A primary reason why I have stated grocery retailers should not enter into an agreement with Instacart is because of the challenges associated with Instacart’s Marketplace. A grocery retailer that owns and operates its own .com also controls the data associated with online engagements and e-commerce transactions.

Grocery retailers currently doing business with Instacart, and all grocery retailers considering doing business with Instacart, should all ask the same questions: Who owns the account? Who owns the Marketplace login? Who owns the shopper data? Who derives the most value from the relationship, Instacart or the retailer?

The reason why asking the questions is so important is this: With Instacart, a shopper logs into the Marketplace and selects the retailer they want to purchase groceries. From Instacart’s perspective, any customer that logs into the Marketplace is an Instacart customer first. Instacart controls the marketing message and pushes the shopper towards the Instacart experience.

Instacart understands that helping retain a relationship between a retailer and its customers isn’t what’s important. The value to Instacart is maximizing the total number of customers to shop on its Marketplace. It’s irrelevant to Instacart if shoppers defect to other retail brands as long as shoppers continue to use the Instacart Marketplace to order groceries. Far too many grocery executives have failed to understand this incredibly important fact about Instacart.

When a grocery retailer makes the decision to delist from the Instacart Marketplace, regardless of the reason, the retailer can lose out if it doesn’t plan the delisting correctly. Unless a grocery retailer informs its customers that it has ended the relationship with Instacart, customers normally return to the Instacart Marketplace out of habit. When the customer doesn’t find the retailer they normally shop from listed, two things occur:

  1. The shopper exits the Marketplace and goes directly to the retailer’s website to shop for groceries.
  2. The customer selects another retailer to shop from. (Grocery retailers will find out the hard way they haven’t sufficiently differentiated and have sacrificed their brand at the altar of last-mile delivery.)

The danger to a retailer is losing a customer that simply selects another retailer to shop from. A criticism I have of Instacart’s Marketplace is that it doesn’t auto-redirect a shopper to a retailer’s website after the retailer ends the relationship with Instacart.

No retailer should consider doing business with Instacart or continue doing business with Instacart without a written agreement that states if a retailer ends its relationship with Instacart, Instacart will redirect customers to the retailer’s new e-commerce platform or the retailers website. (Other platforms should be required to provide the same service, not just Instacart).

Retailers must also be prepared to counter the retaliatory tactics used by an online marketplace when a retailer makes the decision to end that relationship. These tactics are likely to include offers of free delivery, membership discounts or enticement to try another retailer on the marketplace for a discount.

If grocery executives don’t have coordinated and consistent above-the-line marketing spend and in-store messaging in place to direct shoppers back to its .com, the retailer will find it difficult to recoup marketplace subscribers.

Based on conversations I’ve had with a number of grocery executives, there is significant upside to the short-term pain of cutting the cord and delisting. Today, online grocery retail only accounts for 2% of grocery sales. However, by 2023, online sales may be as high as 20% or more of all grocery sales.

With online grocery sales expected to surge by 2023, the last thing a grocery retailer should do is outsource its future. Issues such as cold chain, customer substitutions and inconsistent service continue to plague last-mile delivery providers at the expense of grocery retailers’ hard-earned brand reputations. (Note to Boards of Directors at grocery retailers: If the CEO states the only option is to outsource online grocery retailing, fulfillment and last mile delivery, replace the CEO).

E-commerce providers like Mercatus (and other platforms) offer an alternative path that gives grocery retailers the option to protect its brand, share of basket, customer relationships and digital future. I rank Mercatus as one of the best platforms available.

According to Perrier:

2019 is when mature retailers who have previously relinquished their digital commerce experience to fulfillment solutions (think Instacart) will emerge with a renewed sense of strategy and take back control to protect their brand. Moving forward, grocery retailers will explore the amalgamation of best of breed solutions and invest in deep retail shopper experiences by leveraging numerous sources of data about each individual shopper. The future of grocery shopping is knowing what a shopper wants before they do.

Conclusion

Digital continues to grow in terms of importance to grocery retailers. As online sales of groceries increase, grocery retail executives have an important decision to make: take command and control over its digital and last mile delivery needs or continue using an outsourced provider.

My advice has never waivered: grocery retailers must own the customer experience from beginning to end.

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