Artificial intelligence is playing a sizable role in Instacart’s efforts to grow different arms of its business, from advertiser capabilities to customer tools.
For example, Instacart has leveraged AI to improve its product replacements, CEO Fidji Simo told investors last week, noting that the company made 300 million replacements with a 95% satisfaction rate in 2024.
Instacart plans to start testing advanced store-shelf scanning using AI to analyze videos from its workers, then to do the same with Caper Carts in the future, according to the shareholder letter. Using its own workers to track on-shelf inventory is “much more real-time than what we get from retailers,” Simo told investors, adding that accurate product availability data is essential to making faster, more accurate substitutions and boosting customer adoption of grocery e-commerce.
“We use AI in everything that we do across the business,” Simo told investors.
Instacart has also used AI to tag all of the products in its catalog to allow for greater personalization with dietary preferences, CFO Emily Reuter said during the Morgan Stanley Technology, Media & Telecom Conference on Tuesday. Nearly three-quarters (73%) of Instacart’s customers have at least one dietary preference, Reuter said.
Simo listed AI among the four major ways Instacart is looking to drive ad revenue growth, which includes diversifying its roster of advertisers and scaling where it can serve ads. The newly launched AI-powered landing pages are showing “very strong results,” Simo said, adding that energy drink brand Celsius saw a 20% sales increase for its campaign using the pages.
The landing pages mark the first in a series of AI-powered advertiser tools Instacart said it plans to deploy.
For fiscal 2024, Instacart’s advertising and other revenue grew 10% compared to the prior year, to $958 million, representing 2.9% of gross transaction value.
“[We]’re constantly tuning our AI and [machine learning] models to enhance search relevance and contextual recommendations, in addition to new types of targeting, measurement, and optimized bidding tools on our platform,” Simo said in the shareholder letter.
Instacart has worked with OpenAI on the research organization’s AI agent called Operator, which can do computer tasks for a user, such as placing Instacart orders. Instacart is in good company, with two-thirds of organizations pursuing AI agents, according to BCG research cited by sister site CIO Dive. Walmart, for example, is utilizing an AI agent to help merchants identify causes of supply management issues.
Last fall, Instacart integrated its Caper Carts with NVIDIA’s Jetson platform, which uses edge AI applications to improve the smart carts’ product recognition.
“[W]e have innovated massively in the last year across new formats, new measurement capabilities, new metrics, incorporating AI into our products, and that remains a big area of investment for us that is paying off,” Simo said.
