Correction: This story has been updated to reflect that Coca-Cola's move is integrating its loyalty program into native services.
- Instacart has partnered with food and other CPG brands, including General Mills, Nestle, PepsiCo, and Unilever, to pioneer a new way to eliminate grocery delivery fees, which consumers in many cases are hesitant to pay.
- Manufacturers offer coupons to consumers, like free delivery when a consumer spends $10 on Red Bull.
- In addition to coupons, manufacturers are also paying to advertise on Instacart, in what CEO Apoorva Mehta describes as sidebar ads "like AdWords for groceries." These advertisements now make up about 15% of Instacart's revenue after the ad platform launched six months ago.
The next logical step for delivery platforms is to reduce or eliminate fees to lure in more hesitant consumers. But that's not always financially feasible when delivery companies depend on that revenue. Manufacturers, however, can step in and offer coupons for free delivery to encourage consumers to buy more of that company's products through the delivery service.
Manufacturers can tap a relatively new advertising platform to provide delivery companies with the added revenue that will enable them to reduce or eliminate the fees themselves. The advertising is mutually beneficial: In addition to becoming a new, dependable revenue stream for delivery companies, manufacturers have fewer competitors on an Instacart app as compared to in-store advertising and promotions.
Having derived 15% of its current revenue from this new strategy, Instacart has benefited from the company partnerships. If manufacturers find they derive the same benefits, this partnership strategy could be a new trend for manufacturers in grocery delivery. Nestle U.S. vice president Rui Barbas told Bloomberg that the company was "happy with the results" of two campaigns for free delivery on Digiorno and Haagen-Dazs products that Nestle ran with Instacart last year.
In another tech-savvy effort to reach consumers, Coca-Cola is integrating its loyalty program with native mobile services this spring that will enable consumers to earn rewards points they can redeem for free drinks and other perks through Coca-Cola vending machines. In addition to capitalizing on the growth of mobile and driving consumers to its vending machines, Coca-Cola can collect valuable consumer data for targeted remarketing efforts.