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Mercatus Integrates ‘Instacart Connect’ As Third-Party Marketplaces Tighten Their Hold On Merchants

Mercatus, an online grocery solution that facilitates orders for 240,000 shoppers a month through retailers including Weis Markets and Save Mart brands, announced Monday (Aug. 30) that it is integrating Instacart’s white-label Connect program into its platform. The integration lets grocers on the platform take advantage of Instacart’s infrastructure and workforce to fulfill orders.

This announcement appears to mark the first major utilization of the Instacart Connect feature, of which few to no mentions appear online until Aug. 20, 2021, and it seems that Instacart never officially announced the launch of the feature. Through Connect, grocers can embed Instacart fulfillment into their existing eGrocery websites and apps, offering delivery, pickup, and/or last-mile delivery.

The Context

The feature resembles those recently launched by leading third-party meal delivery services in response to widespread concern that these marketplaces force merchants to cede their relationships with their customers to these platforms. DoorDash and Grubhub are among the third-party delivery providers that offer restaurants white-label fulfillment tools.

These services are a mixed bag for merchants, on the one hand giving them a turnkey order fulfillment option wherein the restaurant or grocer remains the consumer’s point of contact, and on the other hand shoring up third parties’ hold on order fulfillment, keeping merchants reliant on their offerings.

What Consumers Are Saying

The online grocery space is growing. A PYMNTS census-balanced survey of over 5,000 U.S. consumers published in the report, The Bring-It-To-Me Economy: How Online Marketplaces And Aggregators Drive Omnichannel Commerce, created in collaboration with Carat by Fiserv, finds that 57 percent of shoppers now order groceries online, including more than two-thirds of Gen Z shoppers and bridge millennials and 63 percent of millennials. Plus, 46 percent of consumers across age groups are buying more groceries online than they were before the pandemic.

You may also like: New Study: Bring-It-To-Me Economy Ascends As Consumers Embrace Home-Centric Lifestyles  

What the Experts Are Saying

Initially, Instacart worked for grocers as a short-term solution, but the growth of the category poses significant issues with the solution.

“Online grocery was the black sheep of eCommerce — nothing was happening there — and then in 2017 Amazon acquired Whole Foods, and the entire market panics, and grocers are looking for the easy solution, the turnkey solution, and that’s Instacart,” Orlee Tal, CEO of grocery tech solution Stor.ai (formerly known as Self Point) told PYMNTS in an interview. “It made sense, because it was such a tiny portion of their business, but now that the [online grocery] business is growing, I think that more and more grocers are finding out that there are … challenges here.”

Read more: Stor.ai CEO: Sticking The Landing Keeps eGrocery Customers Coming Back

Now, not only is Instacart taking a cut of grocers’ sales and capturing consumers’ loyalty at the expense of their loyalty to grocers — the company may also soon become these grocers’ direct competitor.

“Grocers have been going through a phase where they’ve been adapting to the COVID and post-COVID worlds … [and] a lot of them have been losing money by switching quickly to Instacarts and so forth of this world,” Colman Roche, vice president of eCommerce and retail at logistics solutions provider Swisslog, told PYMNTS. “Instacart has talked of having their own automated micro fulfillment centers … It’s continuing to be a highly changeable environment.”

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