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Pondering Instacart's power position

Pondering Instacart's power position

By now you’ve probably heard the big news: Instacart is starting to share, with a customer’s permission, personal data, including contact and purchase information, with a retailer where they purchase their products. That’s right, they’ll share information that they own with the retailer who sold the product.

Behind the news is something even more significant and worth discussing — Instacart, not the retailer, owns the customer relationship.

There’s certainly no problem with this shift in ownership as long as a participating retailer goes into the relationship with Instacart with “eyes wide open.” That should include anticipating the possibility that, in the future, they’ll need to pay to get this information. As an example, we see it happening with car dealers who now pay third parties operating between car buyers and dealers for information they collect about buyers’ interests.

Whole Foods seems comfortable with the Instacart relationship, but then again Whole Foods has a different mix of customers and growth strategy than most other food retailers. They have a larger proportion of secondary shoppers who don’t do the majority of their shopping there. Instacart expands Whole Food’s ability to serve more secondary shoppers and is a powerful way to grow their sales so it works for them.

Bottom line

Before entering into a relationship with Instacart or any similar organization, it’s important to think through how that relationship will impact key customer segments.

  • If it helps you capture more business from secondary shoppers who otherwise wouldn’t come to you, it’s a good thing.
  • If it mainly serves customers who would shop you anyway, it’s a different calculation.  You’ll need to weigh the growth of the additional business vs. the cost of a diminished relationship with those customers.

Overall, to make the best decision moving forward, think through how important it is to strengthen relationships with customers, both now and in the future. These new players are continually changing the game and can undermine that goal, intentionally or not.

How do you feel about the Instacart-retailer relationship?

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