Grocers Turn to White-Label Solutions to Capture Instacart’s Wallet Share

There was a time when grocers hoping to make their offerings available online, especially those without the resources to build out an entire in-house delivery business, had few options other than relying on third-party marketplaces such as Instacart. Now, however, as grocers’ digital needs have continued even in a post-lockdown world, online grocery businesses have been challenging Instacart’s hold on the category with white-label alternatives.

Wholesaler Great Lakes Foods, for instance, announced Wednesday (July 6) a selection of white-label, Software-as-a-Service (SaaS) online grocery solution eGrowcery to offer its independent supermarket operator customers access to the company’s online purchasing and fulfillment tools.

“We needed to provide our retail partners with eCommerce technology that makes it as easy for them to engage with their shoppers online as it is in the store,” said Great Lakes Foods President Tom Jushka in a statement. “The eGrowcery solution provides them with everything required to start and operate an exciting website that will help retain existing shoppers and attract new ones.”

When third-party marketplaces were the only option for independents to get online, several issues arose threatening the long-term viability of the model. For one thing, the commissions that aggregators such as Instacart charge can be steep, when grocers are already operating with very narrow margins. For another, surveys revealed that shoppers were more loyal to aggregators than to the grocers themselves. Additionally, third parties stood between grocers and even the most basic data about their customers, such as contact information.

eGrowcery is not the only white-label solution that has emerged to take on these challenges. In the summer of 2021, Walmart launched GoLocal, monetizing its extensive driver network with a white-label delivery service for merchants.

Read more: Walmart Launches GoLocal Last-Mile Delivery for Other Retailers

“In an era where customers have come to expect speed and reliability, it’s more important than ever for businesses to work with a service provider that understands a merchant’s needs,” Walmart U.S. President and CEO John Furner said in a statement at the time.

While the best-case scenario for Instacart would be one in which grocers were forced to rely on its marketplace to reach their customers online, the aggregator has taken something of an “if you can’t beat ’em, join ’em” approach to white-label solutions. In March, the company launched “Instacart Platform,” which includes piecemeal fulfillment solutions and other tools.

See more: Instacart Plans Micro-Fulfillment Warehouses for Instant Delivery

Even with the rise of white-label solutions powering direct ordering platforms, consumers continue to frequent third-party grocery marketplaces, according to data from the May edition of PYMNTS’ ConnectedEconomy Monthly Report, which drew from a survey of more than 2,600 U.S. consumers. The study revealed that the share of consumers using same-day grocery aggregators, such as Instacart, each month rose from 30% in March to 34% in April. In the same period, the share ordering delivery from grocers’ direct channels rose from 35% to 38%.

Read more: 19M More Consumers Went Online to Bank, Buy and Pay Bills in May 2022