Where food was concerned, home delivery of meals and groceries won out over in-store purchasing during the pandemic over the past year. Two companies that benefited greatly in that period have been Instacart and DoorDash, whose services were invaluable to customers who were averse to leaving home to dine or shop for groceries. The question remains, how will they navigate a post-pandemic market after social distancing measures are lifted? It appears that credit cards may be the way forward.
In an effort to expand their services, both companies have recently announced that they will be rolling out their very own credit cards. Working with banks to provide what will most likely be co-branded cards, both companies will be offering these to customers with a rewards incentive bound to using the card with their services. If successful, there is a lot of potential to grow the market. Both companies operate in highly competitive markets where their online sales only represent 7% of the overall grocery market for 2020 (after a 54% surge). While details have been rather scarce, we do know that Instacart will be collaborating with major bank J.P. Morgan for its in-house card. As far as DoorDash’s card, it is only known that 10 major banks are bidding for the rights to partner with the company, J.P. Morgan being one of them.
J.P. Morgan has previously been known to be highly discerning when it comes to partnerships for cards, and yet it is bidding for two of the food service collaborations. Where banks have most often collaborated with airlines and hotels, the change in travel and uptick in home delivery services has clearly resulted in a pivot. It appears the banks are also betting on consumers being more reliant on home delivered options for food and groceries even after they can leave the house safely. Working with DoorDash and Instacart to develop cards that encourage consumers to keep their delivery habit is likely a lucrative turn. No doubt the availability of these cards to their enormous database of users will bring new customers to the banks as well.
Offering meaningful rewards such as cash back will make it easy for users to remain dependent on home delivery as the easy and safe alternative to going out, saving time for a slight premium. Perhaps the incentives will also encourage more customers to use credit for their food and groceries. A recent bankrate.com survey shared that only 28% of grocery shoppers pay with credit, while 51% of rewards cards holders will use their credit. For the food service app providers, moving into financial services is a clever move to convert the newly dependent customers from the past year into loyal ones who’ll outlive the pandemic.