Business

Instacart needs to call a grocery store in the store

Instacart, an online grocery ordering platform, wants to continue running the pandemic. To do this, you need to physically move to more stores.

Instacart announced on Tuesday that it will acquire Caper AI, a manufacturer of artificial intelligence shopping carts and checkout technology. The $ 350 million transaction is Instacart’s largest transaction, emphasizing that in-store grocery shopping continues to play a central role in the industry, despite the growth of online distribution platforms. ..

According to Instacart, the acquisition will provide retailers with a smart checkout counter that can automatically detect items placed there. According to the company, it can provide retailers with a “plug and play” cart solution that recognizes products, eliminating the need for customers to weigh or scan products. According to Instacart, customers can also check out directly in the cart.

There is no doubt that the pandemic was a boon to Instacart.At a technical conference hosted by The Wall Street Journal on Tuesday, the company’s new CEO, Physissimo, former Facebook head‘NS

According to the traditional Blue app, Instacart’s transaction values ​​have doubled since early 2020. According to BloombergSecondMeasure data, Instacart’s year-over-year growth in consumer sales peaked at 433% in April 2020.

But it’s a difficult act for any business, no matter how hot it is. Growth slowed this year, according to data from Bloomberg’s second major. Over the past six months, Instacart’s monthly consumer revenue has actually dropped by an average of more than 7.5% compared to last year.

According to Baird analyst Colin Sebastian, food is a $ 1 trillion industry in North America, with about 10% of purchases online. Instacart believes online penetration will grow to 30% over the next five to ten years, Simo said Tuesday.

However, grocery stores have expressed concern about Instacart’s model, and many say they aren’t making money on the platform due to high Instacart fees. Others have complained that the platform over-controls their interactions with their customers. Therefore, Instacart helps you become a full-fledged omni-channel partner for grocery stores. This is what CaperAI trading helps to achieve.

Instacart also said it hopes to pursue a public offering. Simo declined to comment on the timing before and after the offer on Tuesday, but it will be important to strengthen growth indicators in advance. This gives Instacart a strong incentive to play in stores, where 90% of grocery sales are still taking place.

To compete with something like Amazon.com‘NS

AMZN 0.58%

Whole Foods and Instacart need to offer solutions that offer a wide range of appeal. The company is already strengthening its advertising business, especially helping brands reach consumers at the point of sale. According to Simo, it was clearly fascinating. Instacart’s advertising business is growing three digits year-on-year.

A more diversified business model will undoubtedly help Instacart put itself in a better position for its final listing. Instacart, for $ 350 million, puts fairly expensive eggs in Caper AI’s smart basket, but at least it’s not betting the entire farm on basic grocery delivery.

Write in Laura Forman (laura.forman@wsj.com)

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Instacart needs to call a grocery store in the store

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