How Instacart CEO Fidji Simo helped find new revenue streams for the company, including via expanding its ads and software, which made $406M in H1 2023 revenue
Context & Ripple Effects
Instacart had been building beyond delivery for years: Simo outlined an expanded consumer-products ad platform in 2021, and the company later positioned software for grocers alongside in-app ads as a strategic shift.
That diversification mattered as advertising had already become a material business, with prior reporting putting 2022 ad revenue at about $740M and nearly 30% of company revenue in Instacart's 2022 ad business. The reported first-half contribution shows the strategy moving from plan to a meaningful revenue mix.
First-order effects
- Instacart gains a larger revenue base from advertising and software, reducing its immediate reliance on delivery-related revenue alone.
- Brands and grocery partners have more reason to use Instacart as both a consumer-marketing channel and an operating-software provider.
Second-order effects
- The combined offer ties retailer relationships more closely to Instacart: partners using its software can also become more accessible to its advertising business, potentially strengthening cross-selling.
- Competing delivery and grocery-technology providers face pressure to show comparable non-delivery revenue products rather than competing solely on transaction volume.
Third-order effects
- If this mix continues to scale, grocery delivery platforms may increasingly be valued as retail-media and merchant-technology infrastructure, not simply logistics marketplaces.
- The model also makes partner alignment more consequential: a platform that sells both software and advertising must sustain retailer participation while monetizing brand demand.
The trend: Consumer marketplaces are broadening from transaction-dependent delivery businesses into platforms that monetize merchant software and advertising alongside fulfillment.