Project Proposal for Instacart

Abbie Langlais, Cherish Kitchens, Nicole Coalla, Rylee Ovrevik, & Sydney Gilbert

Department of Management and Marketing, University of North Georgia

BUSA 4995: Strategic Management

Professor Dong Shin Kim

September 25, 2023

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Table of Contents

I. Introduction …..…..…..……………………………………………………………...…. 3

II. Case Overview …..…………………………………………………………………..… 3

A. Why did you choose this case? ........................................................................... 3

B. What is important about this case in relation to strategic management? .........… 3

C. What are the strategic issues and what would you do to resolve them? .........…. 4

III. Conclusion ………………………………………………………………………..…… 5

IV. Works Cited ……………………………………………………………………..…….. 6

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I. Introduction

The grocery delivery service industry has skyrocketed in the past couple of years and is

still maintaining sustainable growth. Recognized as the top grocery-delivery service in 2022 by

USA Today, Instacart is our company of choice for this project (Tarlton, 2022). This American

company founded in June 2012 remains one of the leading brands in the grocery delivery

industry.

II. Case Overview

A. Why did you choose this case?

We decided to focus our efforts on this particular company because of the competitive

nature of this niche industry. Even in this post-pandemic era, people are committed to

prioritizing their health and convenience, prompting brands and grocery stores to adapt their

strategies. Because of the recent surge in this industry and the influx of new entrants, we wanted

to take a look at Instacart’s strategic landscape, where they’re already excelling, and where they

may have room to grow and improve.

B. What is important about this case in relation to strategic management?

Instacart’s case highlights critical principles for success in the grocery delivery industry.

Their entry into the market in 2012 emphasizes the importance of strategic timing, and their

adaptability in post-pandemic times showcases the significance of responding to evolving

consumer behavior (Instacart, 2023). Instacart’s diverse revenue streams and use of strategic

partnerships showcase its effective strategic management practices. Through this case study of

Instacart, we can see how competitive advantage plays a key role in strategic management.

Since the normalcy of the world has turned to pre-pandemic times, the question that

stands is how Instacart is maintaining its relevance. They have decreased in value since March of
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this year and they are putting into practice some strategies that they are hoping to create a bigger

increase in the next few years (McKinnon, 2022). They are adding more advertising to their apps

and website. Every time you open the app there is room for advertising and for Instacart to make

a profit out of it. They are also expanding outside of food (McKinnon, 2022).

Expanding and growing what they can deliver is helping them partner with more

companies in order to make revenue. Instacart’s goal is to be the antidote of Amazon to grocers;

they created a platform that gives retailers several tools and solutions including warehousing,

advertising technology, and data analytics. Overall, Instacart’s case serves as a real-world

example of how careful strategic decisions can lead to a company’s sustainable competitive

advantage.

C. What are the strategic issues and what would you do to resolve them?

Customer acquisition is only half of what a company needs to obtain a competitive

advantage. While Instacart is able to obtain customers through free trials and strategic

partnerships, the company struggles with customer retention and loyalty. As of 2021, customer

loyalty to Instacart has been waning (Springer, 2021). A 2021 survey showed that only 7% of

respondents expressed their loyalty to Instacart compared to 16% in 2019 (Connor, 2021). There

is no further data regarding customer loyalty but it could be assumed that as the grocery delivery

market has become more saturated, these numbers have likely decreased.

An effective resolution for Instacart to retain customers would be to establish a rewards

or loyalty program. Rewards create perceived value for customers and can be very effective.

Uber for example offers periodical discounts and free delivery based on your monthly status–

silver, gold, platinum, etc.. If Instacart were to adopt a similar strategy, it would increase

customer retention.
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There are also opportunities for technological innovation within the company’s app.

Improving their technology to retain users and maintain a friendly interface is possible through a

couple of different options, the primary suggestion being improved AI. Instacart has a history of

hilarious replacement item suggestions, and constant poor suggestions decrease convenience and

user appreciation (Hernandez, 2022). With the growth of Artificial Intelligence and its potential

increasing every day, Instacart should tap into an updated algorithm.

By revamping not only the code for their app but their look as well, users will associate a

redesign with improvements–even if they don’t see it right away. Better suggestions on

unavailable items, suggested purchases to go along with items in one's cart, etc., along with a

redesign using the principles of digital marketing equals a better app experience for everyone. In

addition to this, the option to scan paper coupons can introduce a new mix of customers, and

increasing seamlessness between the Instacart customer app and the Instacart shopper/employee

app can cut down on miscommunication.

III. Conclusion

Instacart has made commendable strides in the grocery delivery industry, but the

company has many different areas where it can improve its response to strategic issues. As

discussed, one of the major areas needing improvement is the Instacart app itself. Refreshing the

user interface along with the algorithm can potentially draw customers back to Instacart.

Meanwhile, increasing rewards for shopping with Instacart will provide customers with an

incentive to come back. Instacart also needs to consider new ways to support employees and

customers seamlessly. In conclusion, the company’s potential to thrive in this highly competitive

industry depends on Instacart’s ability to innovate strategically, focus on initiatives, and harness

technological enhancements.
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IV. Works Cited

1.) Tarlton, A., & Campbell, C. (2022, January 6). 11 of the most popular online grocery

delivery services of 2022. USA Today.

https://www.usatoday.com/story/money/reviewed/2022/01/06/best-online-grocery-

delivery-services-instacart-shipt-imperfect-foods/9115250002/

2.) Instacart company | about Us. (n.d.). https://www.instacart.com/company/about-us

3.) McKinnon, T. (2022, June 22). 4 things to know about Instacart’s strategy. Indigo9

Digital Inc. https://www.indigo9digital.com/blog/instacart

4.) Springer, J. (2021, October 6). Customer loyalty to Instacart is waning, new survey

shows. Winsight Grocery Business.

https://www.winsightgrocerybusiness.com/technology/customer-loyalty-instacart-

waning-new-survey-shows

5.) Connor. (2022, August 19). Instacart Case Study: Retention. Medium.

https://medium.com/@conn0r/instacart-case-study-retention-5520f90666c3

6.) Hernandez, G. (2022, February 21). “those are completely different things”: Tiktoker

shows Instacart grocery substitutions they were offered, sparking debate. The Daily Dot.

https://www.dailydot.com/debug/instacart-ridiculous-replacements-tiktok/