What is Instacart?
Instacart is a company that was founded in San Francisco in 2012 by entrepreneur Apoovra Mehta who previously worked in Amazon.com as a supply chain engineer. It is now the second biggest startup in the US behind SpaceX, Elon Musk’s company. It allows customers to buy goods at local grocery stores via a mobile app or their website. The groceries are usually delivered by a personal shopper the same day and within five hours for people who want to have the products immediately.
What is more, there is the pick-up option for those that want to drive to the store to pick up their order and they do not have to pay a delivery fee. Customers are notified when something that they bought is out of stock or unavailable. They, also, have the opportunity to subscribe to have a paid membership for $9.99 per month called Instacart Express that offers free delivery on orders over $35 and reduced service fees. In general, shoppers can make an order if the products’ price is at least $10 in total.
Instacart is widely popular and it operates in the United States and Canada. It partners with many grocery store chains such as Albertsons, Aldi, Costco, CVS, Kroger, Publix, Sam’s Club, and Sprout. The company’s main competitors are among others Shipt, Walmart Delivery, and Amazon Fresh. It collaborates with nearly 600 retailers and delivers from more than 45,000 stores across 5,500 cities in North America.
Cost
Some goods may be more expensive when they are ordered through Instacart than by shopping directly from the store because of delivery and service fees. Customers pay a higher delivery fee when their order consists of many items. In the cases that are many orders from different customers, the latter may encounter ‘busy pricing’.
It is still unavailable in many rural places but it serves lots of metro areas. Instacart Express is useful for those that want to use the grocery delivery service regularly. With the monthly or annual subscription, customers save almost $7 per order.
Funding
In March 2021, it was announced that Instacart has raised $265 million as part of a new financing round led by existing investors such as Capital Partners, Fidelity Management & Research Company LLC, and T.Rowe Price Associates, Inc. The company is now sitting at a nearly $39 billion valuation. It will invest to enhance its growth plans and improve e-commerce. The new capital will go towards increasing its headcount by 50% in 2021 and investing in areas like Instacart Marketplace and Instacart Advertising.
The company has seen every piece of its business explode over the last 12 months. Because of the pandemic and the significant adoption of grocery e-commerce, Instacart experienced rapid growth. In a short period, more and more products were added to the online baskets and there was a rise in the number of orders. Instacart now owns roughly half the market and it makes money from delivery fees and partnerships with retailers.
Furthermore, Instacart has expanded its offering over the past year to include not only groceries and everyday goods, but also alcohol, beauty products, prescription delivery, and general merchandise. The company was expected to go public early in 2021 through an initial public offering (IPO) but is considering, at the present, a direct listing. Direct listing means that a company does not create new shares and sells existing ones to the public, while in an IPO new shares are created and the company receives additional funding.
To conclude, grocery delivery is a convenient option for a variety of people. It is ideal especially in this pandemic time, as it is a socially distanced way to buy groceries. Instacart is a company with a massive opportunity to build the future of online grocery for millions of consumers. The only question is if this kind of e-commerce will continue to be so essential to the public once the world overcomes Covid-19 and start shopping again in the same way as before.
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