Five Things You Need to Know About Grocery Delivery Startup Instacart
By Tricia McKinnon
With only 3% of food and beverage sales taking place online in the US it is one of the least penetrated eCommerce categories. But that is poised to change with intense competition in the grocery industry leading to more innovation. Customers are taking notice with grocery apps amongst some of the fastest growing apps in the US. Instacart, is one of many food delivery companies that is contributing to the growth of online food sales. Launched back in 2012 by ex-Amazon engineer Apoorva Mehta, Instacart allows customers to order groceries from a selected number of grocery stores and receive their order in as little as one hour. The company has heralded itself as a way for bricks and mortar retailers to compete against Amazon. Here’s what you need to know about the growing company.
1. Investors have confidence in the company. With a nearly $8 billion valuation it is the 13th largest venture capital funded start-up in the US.
2. Instacart is a partner of six out of seven of the largest grocery stores in the US. By the summer of 2018 70% of households in the US fell within Instacart’s service area with the company planning to increase its reach to 80% of households in the US and Canada by early 2019.
3. Instacart faces heavy competition from Amazon, Walmart and Target. In December of 2018 it was announced that Instacart’s partnership with Whole Foods was ending. This is not surprising given that Amazon purchased Whole Foods in 2017 and has its own delivery capabilities. Walmart is ramping up its grocery delivery business and uses a number of partners for grocery delivery including DoorDash, Deliv, Skipcart and Postmates. Instacart does not have a partnership with Walmart in the US but has partnered with Walmart Canada. Target ended its partnership with Instacart when it purchased rival Shipt in 2017 for $500 million.
4. Instacart’s business model includes a mix of employees and contractors called “shoppers” who pick grocery orders and then deliver them to customers. In total it has 70,000 shoppers, 300 grocery partners that service 15,000 stores.
5. Recently Instacart began offering curbside pickup of groceries which is aligned with the click and collect trend that retailers such as Walmart are focusing on. Click and collect sales in the US, which are sales where the customer orders online then picks their order up in-store, increased by 47% in November and December 2018 vs. the same period in 2017.