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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.
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Campbell Soup Company CEO Mark Clouse offered thoughts on messaging amid inflationary shifts in consumer behavior.
After months of elevated inflation and interest rate hikes that have the potential to cool demand, consumers are showing more signs of shifting behavior.
It’s showing up in retail sales data, but there’s also evidence in the observations of the brands responsible for grocery store staples.
The latest example came this week from Campbell Soup Company. CEO Mark Clouse told analysts that the consumer continues to be “resilient” despite continued price increases on food, but found that “consumers are beginning to feel that pressure” as time goes on.
This shows up in the categories they are buying. Overall, Clouse said Campbell sees a shift toward shelf-stable items, and away from more expensive prepared foods.
There is also change in when they make purchases. People are buying more at the beginning of the month. That’s because they are stretching paychecks as long as possible.
These shifts change how the company is communicating with consumers.
Clouse said the changes in behavior are an opportunity to “focus on value within our messaging without necessarily having to chase pricing all the way down.”
“No question that it's important that we protect affordability and that we make that relevant in the categories that we're in," Clouse said. "But I also think there's a lot of ways to frame value in different ways, right?”
A meal cooked with condensed soup may be cheaper than picking up a frozen item or ordering out. Consumers just need a reminder. Even within Campbell’s own portfolio, the company can elevate brands that have more value now, even if they may not always get the limelight.
The open question is whether the shift in behavior will begin to show up in the results of the companies that have raised prices. Campbell’s overall net sales grew 5% for the quarter ended April 30, while gross profit margins held steady around 30%. But the category-level results were more uneven. U.S. soup sales declined 11%, though the company said that was owed to comparisons with the quarter when supply chains reopened a year ago and expressed confidence that the category is seeing a longer-term resurgence as more people cook at home following the pandemic. Snacks, which includes Goldfish and Pepperidge Farm, were up 12% And while net sales increased overall, the amount of products people are buying is declining. Volumes were down 7%.
These are trends happening across the grocery store. Campbell is continuing to compete. It is leading with iconic brands, and a host of different ways to consume them. It is following that up with innovation that makes the products stand out. Then, it is driving home messaging that shows consumers how to fit the products into their lives, and even their tightening spending plans.
Campbell Soup is more than 150 years old, and has seen plenty of difficult economic environments. It is also a different business today, and will continue to evolve. At the end of the day, continued execution is what’s required.
“If it's good food, people are going to buy it, especially if it's a great value,” Clouse said.