Yesterday we took note of a Wall Street Journal report that Instacart and DoorDash both are planning to launch their own credit cards. The move allows both companies to build on both the business boom that their delivery offerings have experienced during the pandemic, and the relationships that they are directly developing with customers of their retail clients.
So let me get this straight. Retailers outsource their e-commerce functionality to Instacart, which is able to put them into that segment fairly quickly and easily, with a minimum of expense. Retailers give Instacart a piece of the action, plus total access to all the customer data generated through e-commerce. This allows Instacart to then solicit promotion dollars directly from manufacturers, and even weaponize retailers' own data to market against them if necessary. Instacart also is able to open dark stores that will serve its markets without the benefit of a local retail partner (though it hasn't done so yet). And now it will be able to market its own credit card and loyalty schemes directly to those retailers' shoppers, getting an even bigger piece of the action on transactions.
I think that's a pretty fair assessment of the situation. (Feel free to correct me if I am misunderstanding.)
MNB reader Gregg London wanted to correct me:
Kevin, I have a completely different view of Instacart, and Door Dash, and goPuff.
I don't see these Firms as the "evil empire" the way most E-Commerce Providers and Investment Firms and Financial Reporters do.
Instacart's growth, and expected growth with their upcoming IPO, was easy to see, years ago.
In Retailers' quest to add Grocery Delivery some time ago (Instacart started in 2012), it was obvious that "information" would have to be shared - Customer Information (ie Demographics) and Item Information (ie Sales History, Analytics, and Trending).
The fact that Instacart chose to develop, manage, and work with this Data, to their betterment, is - frankly - something that should be applauded. Right?
After all, if the Retailers were concerned, why didn't they choose to replace Instacart?
Why didn't they choose to maintain this level of Data for themselves?
Why didn't IRI or Nielsen (or MSA or NPD) explore this opportunity?
Yes, Instacart, and to a lesser extent, Door Dash, and potentially goPuff, can become their own Grocery Store(s), and they can do so quickly.
But will they?
Time will tell.
At the end of the day, the question that has to be asked is - are Customers happy with Instacart? If they are, and if their Delivery Service increases Retailer Sales, Manufacturer Sales, etc., is there really a problem?
After all, any percentage of something is better than one hundred percent of nothing.
Would it surprise you to know that Customers of some of the larger E-Commerce Providers, actually REQUEST Instacart for Delivery?
So that you know, I supplied the initial Item Data to Instacart, and I supplement the Data for both Door Dash and goPuff.
That being the case, I like these Firms. They saw a need, and they sought to fill it. And they have done quite well.
Even after losing Whole Foods as a Client (when Amazon acquired them several years ago), Instacart has continued to grow.
How many Businesses can say that...can lose a Marquis Client, and not lose a beat?
Did you know that Instacart is the 3PL Wing for Private Label Products from Kroger, Albertsons, and Ahold Delhaize?
I have said this many times, and will continue to do so - I find it a bit disingenuous to complain about Instacart now, when so many Retailers gladly turned over Delivery to them.
I agree with you that this was easy to see years ago.
Nothing disingenuous about my attitude - I've been warning about this for years. (I can be accused of a lot of things, but when it comes to the Instacart story, disingenuity isn't one of them.)
And as much as you admire these companies, I continue to believe (and you actually confirm this with some of your statements) that companies like Instacart are disintermediating retailers from their shoppers. The credit card play only heightens the danger, as too many retailers give up what should be a proprietary advantage.
Indeed, when their customers have become Instacart customers, some of these retailers may actually have one hundred percent of nothing.
I hope when you worked for them, you got stock.
MNB reader Joe McMenamin commented on my criticisms:
I had to send you some props for your comments here. Perfection!
MNB reader Gary Breissinger wrote:
You are spot on in your assessment of the situation.
Once again many retailers utterly failed to recognize or misread a fundamental change in shopper behavior. This failure put them at a significant competitive disadvantage.
Sadly, they have compounded their predicament by electing to use third party providers to bridge the competitive gap.
Predictably, these “partners” are now building strong relationships with shoppers...and positioning themselves to ultimately disinter-mediate retailers from an important and profitable segment of their current customer base.
Once again, short term executional expediency results in long term, strategic disadvantage.
Commenting yesterday on how just 55 percent of employees at Amazon's Alabama warehouse cast votes in the union certification election, I wrote:
It seems likely to me that however the initial vote count turns out, there will be legal challenges that will prolong the suspense.
But I must admit that I cannot quite get over the idea that only 55 percent of the workers at the warehouse voted, and that the union thought this way a high turnout.
Really? Is it possible that 45 percent of workers don't even have a freakin' opinion?
What is seems to suggest is however the vote goes, it potentially can be won by a side that gets just 28 percent of the total workforce to vote its way.
One MNB reader responded:
It seems a lot more logical to infer that the 44% who didn't bother to vote should be lumped-together with the no-union voters. In this case, silence connotes dissent.
Disagree. By that logic, every vote not cast in any election would be seen as in favor of the incumbent. Though there might be some folks who would think that is a good idea.
From another reader:
Kevin- I’ve been involved in labor disputes in the past. My thought is that maybe the 45% that didn’t vote either didn’t want to get involved, or were fearful they would be fired for voting. Though legally you cannot be fired for voting, if you are a rabble-rouser, there are ways to let go of certain people for other reasons. Also, it’s so messy and there is so much tension. It may be that those people care, but just care about their job security more.
Another reader chimed in:
Kevin, the 2020 Presidential election was considered record turnout and roughly 66.1% of registered voters submitted ballots. We get a new POTUS based on 33% of registered voters (and that’s on the high end) in most elections. The Amazon Union vote is not unprecedented.
Not unprecedented, but certainly lamentable. In every election, I think every person qualified to vote ought to be able to vote, and should. I like the Keith Ellison quote: "Not voting is not a protest. It is a surrender."
Regarding Walmart's financial services and fintech ambitions, I wrote yesterday:
Not big on predictions - I leave that to self-styled "futurists," and I just consider myself to be a pundit and a reasonably good guesser - but I'll make one here: This is just the beginning of Walmart shaking up the banking world.
It'll do so in two ways.
First by undercutting legacy financial services on prices and offering people more for their money.
And second, by going after the roughly five percent of US households that are unbanked … Walmart will make banking services accessible, transparent and desirable.
One MNB reader thought I should stay out of the predictions business:
Honestly, Walmart could mess up a one car funeral.
They may offer cheaper rates and more for your money on the surface.
However, look at the poor quality of their private label food offerings compared to retailers like H-E-B and Wegman’s and consider if trusting them with your investments is rational.
We had some discussion here yesterday about the use of a "Suicide Ain't Painless" headline; it was being used as a business metaphor, but the question was if it is too painful a word for some people, and therefore we should avoid it.
MNB reader Jesse Sowell wrote:
I, too, was put off by the headline. I wasn't offended by it, but it occurred to me that readers whose lives have been touched by the tragedy of suicide might be hurt. So I have sympathy for the reader who commented to that effect.
I'm actually far more concerned with the counter-comment you printed today. Being sensitive to the feelings of others is not a lack of being "adult", or promoting a "victim" mentality. I'd say it's quite a good thing. What I find to be wrong is attacking people who show sensitivity to others, especially when using religion to justify the attack. That's not how any God worth emulating teaches us to behave.
I hope that I was sensitive in my response yesterday; I agree with you that it is wrong to attack folks who express their feelings about such things, and I hope MNB readers know that I'm open to criticisms.
I've thought about it some, and I do think that if my life had been touched by a loved one's suicide, I probably would look for another term or phrase. If that's the case, then it ought to be enough to avoid it in the future.
What can I say. I'm a work in progress.
And finally, yesterday we took note of the FMI—The Food Industry Association's 2021 Power of Produce report, which "finds produce department sales reached $69.6 billion in 2020 - an 11.4% increase … shoppers are purchasing more produce than pre-COVID-19 pandemic with shoppers buying more fresh fruit (+8.9%) and more vegetables (+14.2%)."
MNB reader Dave Parker wrote:
It’s heartening for those of us who have campaigned for fruits and veggies since the advent of “5-a Day for Better Health” in 1988 to see an 11% increase in supermarket produce sales reported for 2020. But let’s remember the 25.5% increase reported for March 2020 over March 2019 at the beginning of the COVID-19 shutdown at about this time last year. All that product came into the supermarkets from foodservice channels. If we still see the increased level of supermarket produce sales after foodservice returns to pre-COVID levels, then we may be able to celebrate a real change in consumption habits. “More Matters!”