In continuation to our previous article, where we explained the journeys of Walmart and Homedepot transforming into advertising platforms, this article will discuss the recent developments in the retail media or commerce advertising space. Here we will focus on the new age retailers that have recently embarked on the journeys providing access to the precious retail media to the advertisers and sellers on their platforms. Our picks of the month are - Instacart, Ulta Beauty, and GoPuff. While Instacart and Gopuff are in the US's grocery and essentials delivery space, Ulta Beauty is a US-based chain of beauty stores delivering beauty products across the country.
All three of these retailers are taking the conventional industries head-on and winning as well. Instacart has grabbed as much as 10% share from Walmart in the online grocery market during last year itself.
The convenience of online shopping combined with the changed user behavior driven by the global pandemic has brought millions of new shoppers online. Most of them are expected to stay that way once the pandemic is over.
Now let's dig deeper into each one of our retailers of the month to understand the details of their retail media platforms.
Instacart is a grocery delivery and pick-up service currently operates in the US and Canada. Founded in 2012, the website and app-based service provider caters to over 5,500 cities across the two countries.
In 2020, Instacart accounted for a majority (57%) of all online grocery purchases thanks to the improved supply chain, same-day delivery, and tie-ups with a range of big and small grocery chains in the US.
The company saw a rise of 500% in order volume in 2020. As a result, it became a huge opportunity for brands to woo the grocery and CPG customers.
In May 2020 Instacart launched its self-serve advertising platforms allowing the brands and agencies to create and manage sponsored product campaigns. The campaigns work on the second price auction system, with the flagship ad inventory being the featured products. The featured products are based on keywords in the searches and currently only allow exact matches to show ads.
Valued at $17.7 Billion, in October 2020, Instacart raised $200 million in funding. The firm says the funds will primarily be used to expand its enterprise and advertising business.
In recent developments, Instacart is tying up with retailers in spaces beyond grocery. It has partnered with Michaels, Bed Bath & Beyond, Sephora, and Dick's Sporting Goods, to open up opportunities for non-CPG advertisers. This will further boost their advertising revenues along with the addition of more ad formats and inventories.
Ulta Beauty is an American chain of beauty stores carrying cosmetics and skincare brands, men's and women's fragrances, nail products, bath and body products, beauty tools, and hair care products. It is the largest retail chain for beauty products and cosmetics in the US.
Earlier this year, the retailer launched its advertising arm to sell ads that appear as sponsored products on its e-commerce platform and programmatic ads on publishers' websites and social media sites like Facebook.
Ulta Beauty's sales are smaller than Walmart and Target, but what makes it an excellent destination for brands to put in their advertising dollars is the niche audiences and rich first-party data in the form of loyalty cards.
Ulta Beauty has Criteo and Epsilon as its technology partners.
Gopuff is a food & beverage and consumer goods delivery company in the US, currently operational in 650+ cities. The company is the newest member in the retail community to launch its self-serve advertising platform. The platform enables brands in categories like food & beverages (alcoholic & non-alcoholic), electronics, consumer goods, health, beauty, and other essentials to reach their customers at the last stage of their buying journeys and get the products delivered within minutes. Gopuff offers two modes of in-app and website inventories - sponsored product ads and sponsored search ads. The company's advertising network partners – The CitrusAd Network, Skai (formerly Kenshoo), and PacVue allow brands to run in-app media placements of sponsored products or search ads to target and convert high-intent customers.
In conclusion, the last two years saw a surge in retail media networks or retail advertising platforms, primarily among the retail giants like Walmart, Target, and Walgreens. But with the dawn of 2021, more specialty retailers like Ulta Beauty, Gopuff, and Instacart embarked on the retail media journey. This can be attributed to changing consumer behavior (because of the global pandemic), building advertisers' (brands & agencies) demands, and evolving digital advertising landscape (fading 3rd party cookies, the growing impact of first-party data, and the need for newer advertising avenues).
We would be keenly following the developments in the retail media space and will come with new detailed articles covering the same, in the future.