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Instacart is introducing its first credit card, offering rewards to shoppers who use the grocery delivery service.
Partnering with Chase, Instacart is issuing the Mastercard credit card to provide cash back on grocery orders through the service, as well as other every day items. Additionally, it provides a a year of access to Instacart+, the company’s subscription program. According to the companies, the card has no annual fees attached.
“The Instacart Mastercard was designed to provide Instacart users with more value, rewards and savings,” said Doug Einstein, GM for the card at Chase, in a statement. “Whether a cardmember is stocking up on groceries for the week, refilling their pantry with household goods, ordering late-night snacks, or something in between, we wanted to create a card that ensured checking out with Instacart pays off with unlimited opportunity to earn cash back.”
When it comes to cash back, the credit card offers the following:
- 5% cash back on Instacart purchases made with more than 800 retail brands.
- 5% cash back on travel purchased through the Chase Travel Center
- 2% cash back on restaurants, gas stations, and select streaming services
- 1% cash back on all other purchases
By signing up for the credit card, shoppers can also get a year of Instacart+, the grocery ecommerce membership program that offers free delivery on orders of more than $35, as well as lower fees, credit back on certain pickup orders and other savings opportunities.
The card's debut comes a few weeks after Instacart, which recently filed confidential plans to go public in an offering that could happen this year, announced upgrades to its membership program. Instacart+ now includes the ability to share accounts between family members and allowing different members of households to collaborate on an order list. In what now looks like a foreshadowing of the credit card launched this week, the updates also included access to Instacart+ for Chase cardholders at different tiers.
The credit card allows Instacart to offer an additional entry point for customers to its business. While the cash back rewards offered aren’t only for Instacart and Chase, the card provides an incentive to use the service.
Additionally, the free year of Instacart+ provides an onramp into its subscription program. Customers of the membership program are increasingly valuable to the service, as the company detailed when it launched the upgrades to the program:
Instacart subscribers are among the company’s most engaged customers, driving superior lifetime value through increased orders, higher GTV per customer and habitual ordering than standard customers – as well as ordering from a greater diversity of retailers on the platform. On average in 2021, Instacart subscribers spent nearly two times more each month compared to non-subscribers.
Credit card tie-ins are becoming a go-to method for ecommerce marketplace looking to add signups and incur loyalty for subscription services. An offer from Walmart covered the cost of Walmart+ for American Express Platinum Card members who used their card to purchase the subscription service. Amazon has long had a Prime Rewards card with Visa, and offered incentives tied in with the recently-held Prime Day deals event including a $200 Amazon gift card and up to 10% cash back on purchases at Amazon, Whole Foods and other locations.
It shows how financial services can be part of the flywheel that attracts customers, and creates stickiness for a digital business. Following a boom in demand during the pandemic, ecommerce services are now seeking ways to keep growing for the long-term, and build loyalty. It will require not only considering what subscriptions programs offer, but also how those programs attract new members. To create new entry points, partner with others.
Trending in Retail Channels
Retail media networks must drive sales incrementality, a new report from the Association of National Advertisers states.
Retail media networks are creating a new layer to the relationship between brands and retailers, and a new report indicates that brands in particular are still navigating the growing pains.
The last two years brought fast growth of retail media networks, as retailers recognized the value of providing advertising opportunities through ecommerce marketplaces that grew rapidly during the pandemic, and the value of the first-party data they possessed in a world where third-party cookies and IDFA are becoming less valuable tools. For a historically low-margin business like retail, digital advertising also presents an opportunity for a high-margin business line of 50-70%.
Brands have proven to be eager adopters as they sought new ways to reach customers in this environment, as well. According to eMarketer, ad revenue from retail media networks will reach $52 billion in 2023 and $61 billion in 2024. Over the next two years, retail media will account for one in five digital ad dollars spent by marketers. The spend is only expected to grow. According to a survey from the Association of National Advertisers (ANA), 73% of brands said they expect to be spending somewhat or significantly more on retail media in the future than they do today.
However, this proliferation has also created “more marketing decisionmaking complexity for advertisers,” ANA CEO Bob Liodice said in a new report.
The need to navigate multiple networks and still-developing tools to maximize the opportunity presented by retail media is leading to a multitude of approaches. Layer on top of that the fact that brands are both selling goods and advertising through retailers, and it’s clear the landscape is being reshaped.
A recent report from the Association of National Advertisers uncovered the areas where fault lines may emerge under the surface:
- Reluctant buyers: 88% believe they are somewhat or heavily influenced by retailers to buy advertising on retail media networks.
- A multitude of players: 56% said they are currently working with five or more different retail media networks.
- Differing goals: Two-thirds of respondents see driving conversion as the most important investment. Only 12% indicated the most important objective was “to invest for future brand growth,” and 7% cited “to drive awareness.”
The results underscore key areas where relationships between brands and retailers can be strengthened.
Sales vs. growth. Retail media must be able to drive both conversions of a single sale in the lower funnel, and brand equity growth in the mid- to upper-funnel.
As one respondent put it, "The jury is still out on if the RMNs are truly driving sales incrementality."
This also has implications for how a brand is budgeting retail media. Some brands are shifting dollars from shopper marketing, brand marketing, and trade spending, which could put the emphasis on short-term sales. But as another respondent put it, "There is concern that while attribution shows RMNs are driving brand sales, they are not necessarily driving brand growth. This is especially concerning where incremental RMN spending is being sourced from brand building budgets."
Standard measurement. Brands want to see an improvement in transparency in measurement. They also want results to be measured in the same ways across platforms. Further, brands believe retail media networks are not fully optimized for their KPIs.
This all leaves room for retailers to show they truly understand what brands are seeking from retail media, and show how they are delivering, all while reducing complexity.
As the report put it, “The next phase of growth for RMNs and value creation for brands will be through RMNs assuming shared responsibility with advertisers for driving brand growth, and demonstrating the ability of their platforms to drive incrementality and positive ROAS for brands. In other words, the next stage of growth will be driven by results versus relationships.”