Instacart in Talks to Raise $400M at $3B Valuation
bloomberg.com
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I just checked, and one of the smaller chains (4 stores) has their own online ordering platform.
See #6 here http://a16z.com/2015/08/21/16-metrics/
grocery stores usually can pull this off as they tend to have pharmacies they want you to use and other services
And unless they actually need them for some reason (lack of mobility, don't have a car, etc.) most people don't buy a lot of unsubsidized personal services. They don't have gardeners, lawn care, drivers, etc. Some do but it can be hard to build a business out of just them.
Aggravates me a lot..which is an understatement.
Of course, I wouldn't use them much anyway. Assuming the thing being delivered is available locally (which is more the issue), hopping in a car and picking it up isn't a big deal.
[ADDED: Well, I can use Peapod (and have when I had an injury) but didn't particularly care for it.]
Webvan existed in 1996.
Dozens of variations of these delivery & order services have existed spanning 20 years in the US, at start-ups and at large companies.
It's about perfecting the concept, deploying fully across the nation at high quality, acquiring access to 300 million people and owning the US market (worth tens of billions in sales in total once it's saturated).
I think pretty much few of these unicorns are proven not to be profitable, despite exploiting their employees (read low wages, no tips) [0], [1]. What's to make perfect on a business plan already broken?
[0] http://www.recode.net/2017/2/20/14503128/instacart-service-f...
[1] http://www.cbsnews.com/news/travis-kalanick-uber-ceo-apologi...
Taxis suck? -> Uber Hotels super shit and your rent is super high? -> AirBnB Restaurants don't deliver -> various delivery services Wholefood et al doesn't deliver -> various delivery services No laundry in your $5000 rental apt -> laundry by app
A lot of those problems don't exist in more developed places. (Yet other problems do). But these big startups grow due to it's ecosystem and Marketing/PR focus on the Bay Area.
San Francisco must be a paradise on Earth then? I've never been.
But your local stores-that-deliver doesn't argue against Instacart. Isn't it in their interest to outsource that chore to someone instead of paying their own drivers?
Amazon, on the other hand, I would be worried about id I were instscart.
Apoorva Mehta used to work down the hall from us at SomaCentral, a shared office space retrofitted out of an old law firm on Townsend. He and his buddy would be heads down in their laptops every time we walk past their bullpen corner.
They were busy building out a legal tool slash social network slash law something slash annotation something slash whatever. The plan didn't so much change but rather morph every time I said hi.
They were smart though, so I figured they would hit it whenever they get to it. Though they've been at this for awhile now.
While most others tried to keep a social factor going on at the space, they tend to be so busy they would avoid it. Though and now then I do remember getting to grab a drink with them.
A few years later, settling in my new job in Berkeley/Oakland I called up Instacart to deliver me some groceries. But it was only last year I finally looked up the company profile and soon realized it's the same Apoorva Mehta.
From being that dude to 3 billion dollars in a matter of five years is--to quote another commenter--insane.
But he's keeping the silicon valley dream alive.
That's pretty nifty in itself.
The rest of us are just hanging out here writing comments.
Why Instacart is gonna get crushed by Amazon
https://medium.com/@a13n/why-instacart-is-gonna-get-crushed-...
Also everyone already has a relationship with Amazon so it's just easier to go that route.
I like the idea of warehouses, though the requirement to stock items seems restrictive, kinda like when Google Shopping Express launched - it had such a small selection of products. One potential middle ground... why not use a warehouse/centralized location to aggregate the requested groceries, then have a separate system to dispatch the groceries to the customer? By aggregating from multiple grocery stores, you minimize the risk an item is not available.
The idea of hooking into some kind of warehouse management network makes a lot of sense. Does an API exist? Probably not. But there's an opportunity right there. Partner with a major warehouse management system, preferably one that works with Safeway or Stop n' Shop, and figure out a way to cut out the store visits altogether.
Of course this would mean automating away the shoppers :/.
Seems inevitable. :/
You select your local supermarket, and it has a pretty good idea of what they actually have because it's an official service. You can also specify per item whether substitutions can be made, and if necessary they'll try to find a good alternative (like your "different salsa") if they can. The times you end up with a substitution or no item sound VERY low compared to your experience with Instacart. You might order 40 items and get a couple of subs if you're unlucky.
It also sounds cheaper than Instacart. It costs around $10USD for delivery (depends on how much your order), or around $3.50USD if you want to collect from the store,which is still super convenient because you just go in and wheel out your already-full trolly.
I'm kind of surprised that supermarkets doing delivery doesn't seem to be a big thing in the US. Usually we're the ones who are a few years behind.
The experience wasn't terrible, but it certainly wasn't sticky. We never used it again.
Tech: The Dash Wand [1] puts Alexa on your refrigerator and every time you scan an item, Amazon is building up a database of the most popular SKUs they should add to their warehouse.
Scale: Scale is the name of the game and Instacart is playing with a losing hand. Vans/trucks are more efficient than cars, warehouses > grocery stores, robot shelves > store runners.
Anecdote: Instacart was popular in Boston until Fresh opened last year. There is now a large pile of Amazon bags for pickup everyday in my front lobby.
Price: Amazon has many of the exact same items as Instacart/wholefoods but at lower prices. My grocery bill went down about 20%
[1]https://www.amazon.com/Amazon-All-New-Dash-Wand/dp/B015YEXOR...
I initially used Instacart. But then started to notice my orders would often need replacement items. So I opted for no replacements, and it was even worse... because items that were very relevant in my order were left out and I had to order again. In addition, prices were very high compared to the store.
Then, they wouldn't show up on the scheduled times. Then, if you canceled the order and talked to customer support, they would try to uncancel the order and schedule it for a completely arbitrary time where you might not even be home, a lot of decision making on your behalf with no confirmation.
After all that chaos and constant fighting with customer support I switched to Amazon. They show up on time, the use durable packaging that is refrigerated if necessary, the prices are reasonable, item availability is "what you see is what you get" with no replacements, the delivery fee is a flat yearly fee... In all the time I have using Amazon Fresh or Prime now, I have had ZERO arguments with them.
Now I only order from Amazon. In addition to that, they have the Amazon Dash, which I can use to scan the barcodes for the products I need to reorder to quickly add them to the cart, or set reminders for items I need to buy using Amazon Echo.
Note that I am not affiliated with Amazon in any way.
If I had to use Instacart again, I would probably use it to order 20 gallons of water, and then go to the store myself to buy the rest. The website is very incompetent at reflecting the effective stock and the system is not good at finding/suggesting replacements. The last time I used Instacart was to literally see what my last order was, so I could order the same things via Amazon.
Wholefoods just opened a brand new chain called '365' that has all sorts of sophisticated nonsense like a programmatic tea-bot and yet there is no online ordering. Even the made to order stuff is driven by an interface which could just be made publicly accessible and they'd be done but no, into the store you go.
Supermarkets and e-commerce are entirely different competencies and I have no trouble believing that being good at one doesn't give you a tonne of advantage at the other.
Putting some startup's tea-bot into a store is far easier than integrating that tea-bot into an online ordering system.
For example, all supermarkets in South Africa provide online ordering and delivery. Sometimes without even a delivery charge.
WFM never wants to be a virtual distribution center for Instacart.
That said, from what I'd read (and it's been a while), WFM's strategy with Instacart sounded like a way to steal market share and convert customers to shop IN their stores. If I recall, Instacart pickers were getting bonuses for (choosing) WFM stores, and WFM was offering food to pickers with no markup.
I don't know if it'll work out. WFM's been under fire for it's pricing for a while. Maybe Instacart will drive incremental sales growth (as you're alluding to). I'm skeptical as it might cannibalize the value of their high-cost experience locations.
Tesco had this in the UK since 1996(!), with a CD-ROM ordering system that synced new products over dialup in batches.
Now all (apart from Lidl and Aldi, I imagine their margins are too low) offer online shopping and have done for a long time.
Really can't understand why the US stores don't do this and instead have allowed Instacart, which has little/no proper supply chain knowledge, to build a $3bn business in it's place. Very odd.
Meanwhile, in other countries, small to medium-sized companies have had online groceries ordering for many years, local taxi unions have had websites and recently apps, and still... it's like OMG so much innovation from US companies let's give them crazy valuations.
What gives? Is it market size?
But as for Uber/Lyft, the reason they're vastly more valuable than whatever local taxi website/app is convenience and lack of friction. When you get an Uber, you don't have to worry about payment or directions; it's all handled for you. When you get to a different city, you don't have to google the local taxi companies and pick one; you just open Lyft and get a ride.
Why do people say things like this as if Silicon Valley is the only place that's heard of collecting data on customers. You are aware that's what those supermarket savings cards with the barcodes do right?
I guarantee you that Instacart has like the 178th best database of what supermarket customers purchase at best.
And there is a big difference between having access to a database of customer sales, and actually having those customers...
The company he came from, Amazon, has more cash than anyone could raise. They have logistical expertise and are perfecting same day shipping at a national scale.
They also offer Amazon "Fresh" which is essentially the same service except they don't skirt labor laws by classifying their employees as contractors.
And non-tech people actually trust Amazon and order quite a bit from them.
For them to succeed outside of a few big cities would require gross negligence and incompetence by Amazon, which isn't impossible. But seems unlikely.
At least in DC, the Amazon Fresh (and Prime Now) drivers are definitely just random people in their own car, the same as Instacart.
I actually agree that online grocery shopping should be great. It's mystifying to me that it isn't: if you go to the UK, the experience is fantastic: order direct from the grocery store, easy to order, cheap and efficient delivery.
I don't really understand why US chains can't do the same thing.
It's exactly what you're describing, but doesn't have a hugely PR engine because it's a profitable arm of an existing store that doesn't require a 10x exit.
I've used it when I was on crutches for a few months because of a broken foot. I didn't love it but it was better than trying to do a full grocery shopping when I couldn't walk.
In general, in the US, people mostly use delivery services if they can't easily go to the store and shop. Or if it's just a hassle because of kids, etc. I'm not sure if there are cultural differences from other places or it's just because, for most people in the US, hopping in a car and parking in the large supermarket parking lot just isn't a big deal.
In any case, it doesn't seem like a market that's ripe for disruption except in the minds of Silicon Valley types. Adequate services exist. It's just that very few people have an interest in using them.