Introduction
In the fiercely competitive world of grocery retail, few regional chains have as loyal a following as Market Basket. With 85 stores across Massachusetts, New Hampshire, and Maine, this 100-plus-year-old company has built a devoted fanbase thanks to its steadfast commitment to low prices, extensive selection, and superior customer service.
But in recent years, even a brick-and-mortar stalwart like Market Basket has had to adapt to the new realities of an increasingly online world. Enter Instacart, the leading grocery delivery platform that has helped Market Basket bring its beloved stores into the digital age.
Since first teaming up in 2014, Market Basket and Instacart have forged an incredibly successful partnership that has changed the grocery delivery game in the Northeast. But what makes this particular pairing so special? And what can it tell us about the future of online grocery?
In this deep dive, we‘ll explore the ins and outs of the Instacart Market Basket experience from all angles. We‘ll examine what makes Market Basket such an ideal partner for Instacart, and how the delivery platform has impacted Market Basket‘s bottom line. We‘ll also place their partnership in the context of the broader online grocery landscape and see how it stacks up against the competition. Finally, we‘ll look ahead at where the grocery delivery market is heading and what role Instacart and Market Basket may play in its evolution.
So put on your retail analyst hat, grab your canvas shopping tote, and join us on this journey into the fascinating world of Instacart Market Basket. You may just come away with a whole new perspective on your weekly grocery run.
Market Basket‘s Secret Sauce
Before we can understand what makes Instacart and Market Basket such a powerful duo, we first need to appreciate the special sauce (Hint: it‘s not in the condiment aisle) that has made Market Basket a force to be reckoned with in New England grocery.
Market Basket has been a family-owned business since 1917, when it was founded by Greek immigrants Athanasios and Efrosini Demoulas in Lowell, MA. Over the ensuing century, the company steadily expanded but never lost sight of the values and business model that made it successful.
At the core of Market Basket‘s DNA is an obsessive focus on keeping prices as low as possible. Market Basket‘s prices are consistently 10-15% lower than its regional competitors, and often even cheaper than national discount chains like Walmart. The company is able to maintain these rock-bottom prices thanks to a vertically integrated business model, high sales volumes, and a no-frills approach to merchandising and marketing.
This low-price model engenders tremendous customer loyalty. Market Basket shoppers are known for being incredibly price-sensitive and resistant to competitors‘ promotions or gimmicks. In fact, Market Basket scored an industry-high 89 out of 100 in customer loyalty in a 2019 survey by Retailers‘ Perceptions.
The proof is in the pudding (and the rest of the impressively stocked aisles). Despite spending virtually nothing on advertising and having fewer stores than many of its competitors, Market Basket is the No. 2 grocer by market share in the Boston metro area. Its sales per square foot ($1,180) are more than double the national average for grocery stores ($510). And its total 2020 revenue is estimated at north of $5 billion.
| Metric | Market Basket | Average Supermarket |
|---|---|---|
| Sales per square foot | $1,180 | $510 |
| Prices vs. competitors | 10-15% lower | N/A |
| Weekly customer visits per store | 20,000-30,000 | 10,000-12,000 |
| Average purchase amount | $50 | $30 |
| Advertising budget | $0 | $100,000+ |
Source: Company reports, industry trade publications, analyst estimates
It‘s no wonder that Instacart would want a piece of this grocery juggernaut. But as we‘ll see, the benefits flow both ways.
How Instacart Took Market Basket Online
When Instacart and Market Basket first joined forces in 2014, it was a bit of an odd couple pairing. At the time, Market Basket didn‘t even have a website, let alone any e-commerce operations to speak of. For a tech startup like Instacart, partnering with a digital dinosaur seemed risky.
But Instacart saw untapped potential in Market Basket‘s unmatched customer loyalty and order volumes. If Instacart could harness that demand and shift it online, the upside would be huge. Market Basket, for its part, recognized that grocery delivery was quickly becoming table stakes and that Instacart offered a turnkey way to enter the fray.
Fast-forward to today, and the Instacart-Market Basket partnership has blossomed into one of the delivery platform‘s biggest success stories. Market Basket is consistently one of Instacart‘s top-performing grocery partners in terms of order volume, basket size, and customer satisfaction.
While Market Basket doesn‘t publicly disclose Instacart sales figures, industry analysts estimate that Instacart orders now account for a sizeable chunk of Market Basket‘s overall business. In 2019, The Boston Globe reported that Instacart accounted for up to 4% of total sales at some of Market Basket‘s highest-volume stores. And in 2020, when the COVID-19 pandemic turbocharged online grocery adoption, Market Basket‘s average daily Instacart orders surged by a staggering 200-300% year-over-year.
According to Marketplace Pulse research, as of March 2023, Market Basket is the 8th most popular retailer on the entire Instacart platform, with an estimated 5% share of all sales. That puts Market Basket ahead of major national chains like Costco, CVS, Walgreens, and Target. Not too shabby for a regional grocer with less than 100 stores!
So clearly, Instacart has helped Market Basket unlock a massive new online revenue stream. But importantly, it has done so without cannibalizing Market Basket‘s core in-store business. Instacart gives Market Basket incremental access to customers who value convenience and are willing to pay a premium for it, while still preserving the in-store value proposition for its most price-conscious shoppers.
In essence, Instacart has enabled Market Basket to have its cake (or should we say, its produce, meat, dairy, and cake) and eat it too. By outsourcing the complex and costly last-mile delivery to Instacart, Market Basket gets all the benefits of e-commerce without the expense and distraction of having to build out its own online infrastructure. A true win-win.
Instacart Market Basket vs. the Competition
As impressive as the Instacart Market Basket alliance is, it‘s important to remember that they are hardly the only players in the online grocery arena. In recent years, the Northeast market has become increasingly crowded and competitive when it comes to grocery delivery.
Instacart itself partners with a whole host of other grocers in the region, including Shaw‘s, Star Market, Wegmans, Price Chopper, and Costco. Market Basket is also available on other delivery platforms like Shipt and DoorDash. And of course, there are plenty of other online grocery options that don‘t involve Market Basket at all, from Peapod to Amazon Fresh to Walmart Grocery.
So how does the Instacart Market Basket experience compare to the alternatives? Here‘s a quick rundown:
| Metric | Instacart Market Basket | Instacart Star Market | Peapod Stop & Shop |
|---|---|---|---|
| Price vs. in-store | 12-15% higher | 15-20% higher | 25-30% higher |
| Delivery fee | $3.99 | $3.99 | $9.95-$11.95 |
| Service fee | 5% | 5% | $0 |
| Minimum order | $10 | $10 | $60 |
| Delivery speed | As fast as 1 hour | As fast as 1 hour | Next-day |
| Average order size | $100 | $80 | $120 |
Source: Company websites, analyst reports, crowdsourced data
As the table shows, Instacart Market Basket is generally one of the most affordable and flexible grocery delivery options out there. While Instacart‘s 12-15% markup over in-store prices is certainly not nothing, it‘s a lot less painful than the 25-30% premium you‘ll pay on Peapod. Factor in Instacart‘s low $10 order minimum and speedy delivery options, and it‘s a compelling value proposition.
That said, Instacart Market Basket is not necessarily the cheapest game in town. Its 5% service fee can add up, especially on larger orders. And savvy shoppers may be able to find even lower prices through curbside pickup or by strategically combining in-store trips with delivery orders.
Still, when it comes to the overall combination of price, selection, speed, and convenience, Instacart Market Basket is tough to beat. It‘s no wonder that it has become the go-to grocery delivery choice for so many cost-conscious New Englanders.
The Future of Grocery Delivery
As the Instacart Market Basket case study illustrates, the online grocery market is evolving at warp speed. Adoption is skyrocketing, competition is fierce, and customer expectations are higher than ever. So where do Instacart and Market Basket go from here? And more broadly, what does the future hold for grocery delivery as a whole?
In the near term, Instacart and Market Basket will likely continue to deepen their partnership. Market Basket shoppers can expect to see more personalized promotions, product recommendations, and delivery options as Instacart hones its data capabilities. Behind the scenes, the two companies may also explore new fulfillment models like micro-warehouses or dark stores to increase delivery speed and efficiency.
More intriguingly, Instacart and Market Basket could pioneer new ways of marrying the in-store and online grocery experiences. Imagine being able to use the Instacart app to reserve high-demand items for in-store pickup, or getting real-time Instacart notifications about in-store specials and promotions. As the lines between brick-and-mortar and e-commerce blur, an omnichannel approach will be critical.
Zooming out to the industry level, the next decade of grocery delivery will likely be defined by a few key trends:
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Consolidation: With so many players currently vying for a slice of the online grocery pie, some consolidation is inevitable. Expect to see more M&A as platforms look to gain scale and expand geographically.
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Verticalization: The Instacart marketplace model has been wildly successful, but it has its limitations. Increasingly, grocers will look to take more control over the e-commerce experience by bringing delivery capabilities in-house or partnering with platforms on a white-label basis.
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Automation: To continue driving down costs and expanding margins, online grocers will have to lean heavily into automation. Expect a wave of investment in everything from robotic micro-fulfillment centers to driverless delivery vehicles to AI-powered inventory management systems.
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New models: The grocery delivery market is ripe for disruption from new business models. From flash-sales sites like Misfits Market to membership-based players like Imperfect Foods to ultra-fast delivery upstarts like Gopuff, there‘s no shortage of insurgents looking to upend the traditional grocery playbook.
So while the Instacart Market Basket alliance is well-positioned to thrive in this brave new world of online grocery, they can‘t afford to rest on their laurels. Only by staying nimble, innovating relentlessly, and always putting the customer first can they hope to fend off the competition and retain their spot at the top of the grocery delivery food chain.
One thing is clear: with online grocery sales expected to top $100 billion by 2025, there is a massive opportunity ahead for the players that can crack the code on this complex and dynamic market. And if the past eight years are any indication, you can bet that Instacart and Market Basket will be right there leading the charge. The only question is, will you be along for the ride?
