The Wall Street Journal this morning reports that Instacart and DoorDash both are planning to launch their own credit cards. The move allows both companies to build on both the business boom that their delivery offerings have experienced during the pandemic, and the relationships that they are directly developing with customers of their retail clients.
According to the story, Instacart "has chosen JPMorgan Chase & Co. to issue a credit card that will reward frequent users, according to people familiar with the matter. DoorDash Inc., which specializes in delivering takeout, is also looking to launch its own rewards credit card and received offers from more than 10 large banks and financial-technology firms to issue it, people familiar with the matter said."
The Journal offers some context:
"Both Instacart and DoorDash have benefited from the surging popularity of at-home delivery for groceries and meals. They are betting that at least some of the increased demand will remain after the pandemic ends and hoping that the cards will stoke customer loyalty and attract new users.
"Banks, for their part, see these new partnerships as a way to diversify beyond travel rewards cards, which fell out of favor with some consumers when the coronavirus pandemic brought travel almost to a standstill. Travel co-branded cards, such as those issued for airlines or hotels, have traditionally drawn affluent consumers who are also big spenders."
- KC's View:
So let me get this straight. Retailers outsource their e-commerce functionality to Instacart, which is able to put them into that segment fairly quickly and easily, with a minimum of expense. Retailers give Instacart a piece of the action, plus total access to all the customer data generated through e-commerce. This allows Instacart to then solicit promotion dollars directly from manufacturers, and even weaponize retailers' own data to market against them if necessary. Instacart also is able to open dark stores that will serve its markets without the benefit of a local retail partner (though it hasn't done so yet). And now it will be able to market its own credit card and loyalty schemes directly to those retailers' shoppers, getting an even bigger piece of the action on transactions.
I think that's a pretty fair assessment of the situation. (Feel free to correct me if I am misunderstanding.)
Seems to me that not only have the foxes have been allowed in the henhouse, but they're pretty much having their way with the flock.