Some CPG brands that sell on Shopify are trying to make sense of its recent ad integration with grocery delivery platform Instacart.
Instacart introduced a new ‘Instacart for Shopify’ app last week to let CPG startups with Shopify storefronts advertise their products on Instacart Ads. At a high level, the partnership is primarily directed at allowing Shopify merchants to easily leverage Instacart ads for in-store retail purchases via retailers available on the Instacart Marketplace. “With the Instacart for Shopify app, brands can learn about the sales they’re already driving on Instacart, and immediately take action by setting up Instacart Ads to supercharge discovery and sales,” wrote Ali Miller, vice president of product management at Instacart in a company press release.
Two CPG startups that use Shopify said they appreciated the ease to track their sales data, advertising opportunities and performance on Instacart’s marketplace and many said they were beginning to think about Instacart Ads in a way that they hadn’t before. But that was the extent of it. Some sellers felt the partnership was too sharply focused on in-store sales and may not be a suitable fit for startups that have not reached that scale in terms of presence in enough retail doors.
At its core, one challenge with the Instacart integration is that Shopify is an e-commerce platform that works mainly with smaller brands that haven’t yet expanded largely into retail. As such, for startups that haven’t yet expanded heavily into retail beyond just a few small grocery chains, the integration doesn’t add much.
The new partnership comes a week after Instacart announced plans to go public in an S-1 filing. At a high level Instacart is trying to strike as many deals as possible to grow its ad business ahead of its IPO. And that means striking deals with a player like Shopify, that has reach and access to promising startups, even when many of Shopify’s core customers might not be in a position yet to buy Instacart ads.
“One of the things that jumps out to me about the announcement is it shows how much momentum and focus there is for brands to move to an omnichannel model, because this partnership is not on its face intuitive for an e-commerce business,” said Cason Crane, founder of coffee company Explorer Cold Brew.
Explorer Cold Brew was founded three years ago during the pandemic as an e-commerce only business. Crane said that was largely because of the lower barriers to entry compared to traditional retail focused CPG businesses. “It was also the pandemic, so online commerce was booming and more practical than in-person,” he wrote in an emailed response.