The Caper AI deal is Instacart's fifth acquisition, following its FoodStorm announcement earlier this month.
Instacart is making a $350 million investment as it looks to become the omnichannel savior for retailers looking to transform the shopping experience for their customers.
The company announced on Oct. 19 it is acquiring Caper AI (“Caper”), a leading AI-powered shopping cart and checkout technology platform. With this latest acquisition, Instacart says it aims to help retailers unify the in-store and online shopping experience for customers, supporting their businesses no matter how customers choose to shop.
"Caper AI fits in with the strategic priority for us to be the technology partner that grocers turn to whenever they need technological capabilities to advance the future of grocery," said Instacart CEO Fidji Simo in an interview with Progressive Grocer. "And we think that's particularly important in a world where Amazon is obviously making a lot of strides in grocery, and they obviously have the capabilities and financial strengths to create a lot of these new technologies, and we want our grocers to have the same advantage. We see Caper as a way to give them that advantage."
Caper is reimagining the in-store shopping journey by developing AI-powered shopping carts and automated checkout counters that bring together online and offline shopping to create a new in-store shopping experience for customers. Caper’s object recognition system lets customers place items into their cart such as fruits, vegetables and other items without having to scan or weigh them, and check out right at the cart. The company also develops smart checkout counters that use cameras and a weight sensor to auto-detect items placed on its counter, creating an easier and faster express checkout flow for customers at grocery and convenience stores.
"It's a great technology to help facilitate much faster checkout using a form factor that consumers are already used to. They don't have to do anything different. They have a cart. They can just drop the items into the cart and the Caper cart magically detects what is flowing into it," Simo said.
In addition to streamlining the in-store shopping and check out process, Caper helps create unique and more personalized shopping experiences. Caper’s carts feature touch-enabled screens that let customers navigate brick-and-mortar grocery store aisles more seamlessly. The screens also make product suggestions based on what’s in a customer’s cart. Over time, Instacart says it expects to integrate Caper’s technology into the Instacart app and the e-commerce websites and apps of its retail partners, allowing customers to build online shopping lists and browse recipes ahead of time and check off their lists as they go.
"The digital screen is going to be really helpful to power personalized experiences, whether it's recipe suggestions with the items you put in your cart, product suggestions to add with something you just put, and a lot of other interesting things like wayfinding where you can go find a list of items if you have a shopping list that you're trying to get through," Simo said.
And, for Instacart shoppers who shop on behalf of customers, they can also utilize the carts to find items more efficiently and bypass long checkout lines.
"The wayfinding can tell the shopper where to find the items in the store," Simo said. "We already have artificial intelligence that really optimizes the best path within the store to go pick them up, so having that on the cart itself is going to make it so much more convenient for shoppers to do their shopping. And then, a big part of what shoppers tell us is the least enjoyable part of the experience is sitting in line and waiting for checkout, and it does take some precious minutes away. So the fact is we skip that part, you are able to just do your usual shopping and then walk out. That's going to make the experience for all shoppers, and obviously consumers as well, much more enjoyable."
For retailers, Caper’s smart cart technology provides them with a plug-and-play solution, requiring little capital expenditure, according to Instacart. Caper’s technology enables brick-and-mortar retailers of all sizes to quickly and easily deploy this technology in their stores, creating compelling experiences for customers and driving meaningful growth for their business by increasing average basket sizes relative to traditional shopping carts.
"We're hearing from retailers that they are seeing consumer habits changing and that post-pandemic, there's a new resting heart rate, both on the Instacart marketplace and on retailer's websites, where consumers are expecting a variety of options across online delivery, pickup, etc.," Simo said. "What retailers are asking us is to really make sure that we continue to help them compete and help them serve a new range of consumer needs. For example, when you see the rise of quick commerce, for example, and the fact that there's a lot of growth in the convenience sector, a lot of retailers were asking, 'What can we do together so that we can approach these consumer needs?' And that's why we have the Kroger partnership, which is a new offering for retailers to be able to capture that consumer trend."
Caper’s smart carts are currently deployed at some of the leading North American retailers, including Instacart partners Kroger and Wakefern, as well as Sobeys in Canada and Auchan in France and Spain. This is in addition to their smart checkout counters in convenience stores. Caper’s smart carts were the first carts in the United States approved by the federal government’s NTEP (National Type Evaluation Program), which certifies that it can accurately sell items that are priced by weight and measures, like produce and bulk items.
“At Kroger, our goal is to connect customers to food – no matter how they want to shop or when they need it,” said Stephanie Jenkins, Kroger’s VP of strategic partnerships. “Kroger is proud to be leading the industry in the adoption of new innovative technologies, including Caper AI smart carts, as well as partnering with Instacart on other industry-leading innovations like Kroger Delivery Now. These offerings are advancing Kroger’s thriving seamless ecosystem and providing our customers with more ways to shop with us through strategic collaborations.”
Earlier this month Instacart acquired FoodStorm, which offers a comprehensive SaaS solution that covers multi-channel ordering — e-commerce, phone or in-store kiosk — order management and payment and fulfillment. Its technology also integrates with a large variety of third-party systems, including point of service systems (POS), and offers CRM capabilities that help grocers collect feedback, market their offerings and leverage promotional features.
FoodStorm, founded 14 years ago in Australia, has developed strong partnerships with a number of Instacart’s existing retail partners including Albertsons Cos. banners Balducci’s and Kings Food Markets, Bi-Rite Market, Mollie Stone’s Markets, Uncle Giuseppe’s and Roche Brothers. Instacart will make FoodStorm’s technology available to more retailers through Instacart’s enterprise technology offering.
Instacart, which is valued at over $50 billion, is rumored to be planning an IPO during the fourth quarter.
"We're very focused in building a company for the long run," said Simo, who was named CEO in September. "I always say that I came here because I see a need that everyone has to eat, you know, and so in my mind the vision is very big, very long-term, and an IPO is just one point on that journey. Of course, we want to be a public company someday, but we are really focused right now in building the business."
Instacart’s enterprise technology today powers the comprehensive e-commerce platforms for local, regional and national grocers across North America, including Aldi, Costco Canada, Heinen’s, Kroger, Publix, Sprouts, The Fresh Market, Walmart Canada and Wegmans.
"We’re excited for Instacart to join forces with Caper AI to help scale their technology and make it more accessible," said Bob Hardester, chief information and supply chain officer at Schnuck Markets Inc. "Caper AI's smart carts are the most technologically advanced carts out there. We believe the ability to place items in the cart naturally – without having to scan barcodes or weigh items – will be a game-changer – especially for Instacart shoppers who shop on behalf of customers. We’re proud to continue working with Caper AI and Instacart to unlock even more innovative solutions that reimagine the in-store grocery shopping experience at Schnucks stores."
Instacart first began offering enterprise technology to grocery partners in 2017. Since then, the company has continued to make significant investments in its enterprise business, scaling its engineering team and developing new technologies for grocers. Instacart has partnered with more than 600 national, regional and local retailers, including unique brand names, to deliver from nearly 55,000 stores across more than 5,500 cities in North America. Instacart’s platform is available to over 85% of U.S. households and 90% of Canadian households.
"Our strategy is very different from the other companies joining this space because we are fundamentally answering consumers' needs hand in hand with our retail partners," Simo said. "We are not going to own inventory. We are never going to compete with our retailers. And so we really see Instacart as being in the business of growing grocery retailers' business, and that's very different from some of the others in the online delivery space."