Unilever Leverages Participation in Online Grocery Shopping

By Dale Buss

With a stable of brands ranging from Ben & Jerry’s ice cream to Axe body wash, Unilever needs to participate in a big way in the reinvention of grocery shopping in the digital era. And the big Dutch CPG has found Instacart to be a very valuable partner in redefining its own shopping experience for American consumers. 

Unilever began a strategic partnership in late 2015 with the grocery-delivery service and has been experimenting with various types of digital promotions attached to Instacart-based online purchases and deliveries of its brands and product lines, ranging from free-shipping offers to sampling to Instacart Deals that allow shoppers to redeem digital coupons instantly.

“We’re very much in the test-and-learn phase,” Ajay Salpekar, director of e-commerce and new business development for Unilever USA, told CPGmatters. “So we don’t have as much data as we’d like to concretely say what works really well for us and what doesn’t.”

But Unilever clearly is one of dozens of CPG partners that is finding Instacart effective in certain ways to promote their brands via a growing digital platform, in ways that they simply can’t accomplish with traditional shopper and in-store marketing in the brick-and-mortar environment. Instacart “personal shoppers” pick up and deliver customers’ groceries from physical supermarkets, big-box stores and other conventional outlets, but so much of the appeal of Instacart for CPG brand executives is what they can do via the service’s e-commerce aspects.

“The big dilemma for brands is how do they affect the consumer in that ‘last mile,’” Dan Bourgault, head of brand partnerships for Instacart, told CPGmatters. “Well, we’re the last few inches, with people sitting with the phone in their hand selecting where they want to shop and what they want to buy. So we have a lot of influence in talking to the customer base, presenting opportunities to engage with brands that you might not normally have on a regular basis.”

For example, Unilever has used free-delivery promotions that “have worked very well for us,” Salpekar said, including for gratis fulfillment of Ben & Jerry’s ice cream and Talenti gelato from Whole Foods Markets. “Ice cream is a good impulse purchase and results in a lot of consumer delight. That’s something we’ve spent a lot of time on. We’re really bullish on ice cream with Instacart; it does pretty well.”

Bourgault explained that Instacart has run more than 30 free-delivery campaigns for brands since last summer where a shopper is required to spend at least $10 on the brand in exchange for a waiving of Instacart’s $5.99 delivery fee. “It doesn’t diminish the price for the brand, but it provides a huge incentive to consumers,” he said. “And now consumers are buying more of their product than normally.”

At the same time, Salpekar said, Unilever is still figuring out which other brands and product lines work best with free delivery. “With some we see significant lifts for the first several days that last a few weeks and then kind of peter out,” he explained. “That’s the test. Part of it is we want to learn how much of that lift stays forever versus we just lose it to whomever else is running that [free-delivery] promotion.”

Unilever also is experimenting with “hero placements” across a category banner page on Instacart. “That doesn’t produce as significant spikes in consumption as the free-delivery promotion,” he said. “So we’re figuring out where it fits in our priorities.”

Salpekar also is “eager to try sampling” further on Instacart, which provides free samples for brand programs when its shoppers drop off grocery deliveries. So far, the company has experimented with samples of Degree deodorant. “Our intention is to use this as a method to sample new-product innovation, which is very important for a CPG,” he explained. 

“You can get a lot of answers at Walmart, but you don’t have a one-to-one relationship, and there’s a disconnect between the brand between manufacturing and the time it takes to get into the brick-and-mortar channel. Then it sits on the shelf and you don’t have direct feedback. But with Instacart, you get the numbers the next day.”

For some companies, one of the best Instacart mechanisms is Instacart Deals, where shoppers can view and redeem coupons on the spot – a powerful alternative to the outdated coupon model in which the preponderance of paper coupons go unredeemed by consumers and cost retailers and brands lots of money and inefficiencies.

“The coupon space has been an archaic system, and brands are constantly paying for this outdated distribution model,” Bourgault said. They blast out a million coupons and hope to God that one percent use them. Now we’ve flipped it to a redemption-based model. Brands don’t pay for the coupon program unless we’ve delivered a physical sale of their product. They already know what the ROI is before they place an order for us to run an offer.”

In fact, with Instacart Deals, the company reported, brands see sales lifts of anywhere from 25 percent to more than 1,000 percent, an average return on investment of about four times, and significant increases in aisle penetration, units per basket, and average basket size. 

As far as Unilever is concerned overall, Salpekar said the company is still sorting out how well various Instacart programs work for different brands and categories under the parent-CPG umbrella.

“We have seen better results with ice cream than our personal-care products,” he said. “We expected personal-care products to be big, but they haven’t been as big as I expected them to be. It’s unclear whether it’s just because we’ve only started our engagement with Instacart, so it’s going to take a while to build. What we’re trying with ice cream really takes off. But we need to figure out the true potential for our personal-care categories.”