U.S.: Instacart stimulates revenue, according to new research
Grocery delivery has potential to fundamentally shift the grocery industry. Instacart - an online food-delivery company that does same day-delivery for retailers ranging from big players like Kroger, Aldi and Sam's Club to smaller U.S. grocers Fresh Thyme, Schuncks and HyVee - has quantifiable impact on the success of local grocery sales.
Such findings are critical to the industry as they demonstrate the effects of third-party online grocery delivery and how outsourcing funds to invest in these services may pay off down the line. Companies like Amazon and Walmart have caught on to the importance of e-commerce delivery platforms to boost sales but little to no research has been done on the larger ripple effects of third-party delivery platforms like Instacart.
"Investing in an online retail experience is critical to the success of grocers competing for consumer attention today. The technology and fulfillment needs are complex, and the cost is prohibitive for many. But, with Instacart's support, more than 75 California retailers across 3,500 stores are now online, offering delivery and pickup services that meet the growing needs of their customers," Ron Fong, president and CEO of the California Grocers Association, said in a statement.
NERA Economic Consulting conducted research on four states - California, Illinois, New York and Washington - to gauge the economic impact of Instacart on the grocery industry. Findings show that the delivery service sparks more employment in the region it's in and works as a catalyst for revenue in the sector.
The numbers, what are the ripple effects of online grocery services?
Dr. Kulick of NERA explained that the "rigorous statistical methods" determined that the adoption of the company's services is associated with a boost in retail grocery employment by 4%.
Instacart's market entry created more than 11,500 added jobs and US$337 million in revenue in California, more than 6,600 jobs and US$154 million in revenue in New York, nearly 3,400 jobs and US$75 million in Illinois and over 1,900 jobs and US$56 million in revenue in Washington.
As the grocery industry goes through its first significant tech wave, the business sector is looking for innovation and logistical ease. This study comes at a point when retailers are increasingly aware of the competition posed by e-commerce food sales platforms.
While some incorrectly think that third-party sellers like Instacart are out for grocery customers, the company emphasizes that it looks to work alongside retailers, to collaborate. It currently partners with over 350 retailers across the U.S. from more than 25,000 stores in the U.S. and Canada. Over 85% of households in the U.S. have access to Instacart services.
Earlier this month, UBS unveiled its yearly report that showed the grocery world that online sales are rapidly changing the environment of the grocery sector. It cited that big players like Amazon are expected to disrupt the landscape significantly in upcoming years.
Instacart's proactive research initiative reinforces this observation, showing the real life impacts on the local economy that the booming online grocery industry has.
Critics say, however, that the newly developing online employment atmosphere shortchanges employees - so, even if more jobs are created, it may not be beneficial for workers.
Instacart was forced to reevaluate business practices regarding labor last year for criticism it received about its personal shopper pay model. As companies like Instacart learn as they go in the fast paced environment that the field fosters, they extend better access to earnings for employees - Instacart gave its shoppers quicker access to their paychecks following labor complaints last year as well.