Instacart raises another $150M | Hacker News Reader

Instacart raises another $150M

techcrunch.com

53 pointssmaili47 comments

Last time this happened I said Instacart is a middleman and I didn't see their opportunity to break out and be a market maker.

But I just realized a potential endgame: Instacart will be Amazon Prime (the subscription delivery business) without the need to be Amazon (the retail, global-scale logistics, and marketing company).

Do I want to pay 30% extra on every individual order from local stores to have Instacart handle the delivery? No.

But would I consider paying something like Amazon Prime fees, every month, to have 'free' delivery on orders over $100 from my grocery store, Costco, Trader Joe's, pet store, J. Crew, etc? Very likely.

I don't understand, you said you wouldn't use Instacart, but do you see them surviving?

I said I would probably not use Instacart in one set of circumstances, but probably would in another. Especially if the perceived value was higher.

I think this is better stated as "consumer behavior does not always map to MY logic". Paying for Instacart is a logical decision for some people (or at least they think it's a logical decision). I would never be a customer but that doesn't inherently mean it's a bad business or people that are customers aren't being logical.

Prime is such a success because it triggers more Amazon purchases, such a hypothetical offering from Instacart would trigger more money losing deliveries for Instacart.

instacart express is 150/year or 15/month for unlimited free delivery over 35.

the few times ive used it the experience hasnt been great though, so couldnt imagine using it enough for that to be worth it

I had Instacart express for a year (it was $99/year).

I cancelled it after a year. If I want nothing but dry goods, I'll get them on Prime Now: the Instacart shoppers couldn't buy the produce at the quality that I would expect it to be for that price...so, I just go to Whole Foods and buy my own groceries now.

I used Prime Now and Prime Pantry to do my return-from-a-long-trip grocery shopping and it was fantastic. The product quality was really good and it was the first time I thought one of these convenience services was not a rip off.

> would I consider paying something like Amazon Prime fees, every month, to have 'free' delivery on orders over $100 from my grocery store...

Wonder if you realize Amazon just rolled out exactly that for Whole Foods. Free 2-hour delivery for Prime members -- via Prime Now, not Amazon Fresh. Just launched in SF like a couple weeks ago. And it's a $35 minimum.

Major advantage over Instacart is vastly superior direct integration with their inventory system. Way less substitutions. Also Prime ($99) is obviously a higher-value bundle than Instacart Express ($149).

Instacart's opportunity is to serve all the other retailers that are crapping their collective pants over this. Whether it's a short or long term opportunity... remains to be seen.

>Wonder if you realize Amazon just rolled out exactly that for Whole Foods. Free 2-hour delivery for Prime members -- via Prime Now, not Amazon Fresh. Just launched in SF like a couple weeks ago. And it's a $35 minimum.

It's worth noting that Instacart has been doing this for years now, and has massive amounts of operational experience in this area which Amazon lacks. They also have lower or no minimums and a greater selection.

Instacart does not have better selection at WF, due to the inferior inventory system.

Amazon’s minimum is $35 for free 2hr delivery.

Not too worried about Amazon’s operational experience with deliveries.

"way less substitutions" we had three no-ask substitutions on our very last order and arugula that spoiled in two days time. Canceled our trial. Instacart, at least in NYC, is a mess IMO.

thats what he said. AMZN is better

Right now I wouldn't say prime now's inventory integration is any better, but I'm sure it eventually will be. Both instacart and prime now seem to have trouble determining if an item is actually in stock.

It’s still better. Instacart has a completely separate “crowdsourced” database. Amazon at least has comprehensive SKUs and prices.

> all the other retailers

this is a big pool, with not only deep pockets but millions of customers who are not ever going to shop at Whole Foods. Think Target and Costco customers, and think of every other local retail experience they have that can be delivered.

Making it profitable is a whole other can of worms but I definitely see opportunity.

"Think Sears customers. Think Macys. Think JC Penny."

- equivalent sentiment 20 years ago.

> Making it profitable is a whole other can of worms but I definitely see opportunity.

Great, so there's an unprofitable opportunity for Instacart. Fantastic.

In all seriousness that's why I said short vs long term.. I probably agree Instacart can exploit some of the retailer panic here in the short term. But in the long term large scale vertically integrated players have massive cost and customer experience advantages.

I don't disagree. I'm just trying to imagine what investors are thinking pouring all this money into Instacart. And none of this rules out Instacart being gobbled up by Amazon after some down rounds.

Update: I didn’t realize Instacart has already rolled this out. I think it’s genius, and a strategy where not being Amazon is a big advantage b/c Amazon is trying to replace the businesses Instacart is signing up as partners.

I haven't had much luck using Instacart at all. At my last job we would order normal sized bottled water for our office fairly regularly and 9/10 times they would bring the tiny bottles. Also they claim on their website that "Fresh produce picked perfectly" but this couldn't be further from the truth. The produce you get seems to be chosen at random and is often mediocre or bad.

Seems likely that the shoppers are under too much pressure to rush so that they can barely earn a living and this leads to much lower quality for the customer.

"Picked perfectly" was appalling to me. Literally the reason we cancelled was because that there was no concern for what was purchased. We regularly had the wrong brands, claims that store didn't have the items (they 100% did) or the produce was extremely over/under ripe.

I am interested in other peoples experience with Instacart as a provider. Their model is interesting but in NYC my anecdotal experience with them has been really poor. In this market their are several viable alternatives and I would rank them near at the bottom. I don't intend this as a flame, I really want to know if they run a tighter ship in other markets that don't have some of the challenges that NYC presents. Thanks.

Unfortunately it seems like it's really hit or miss depending on which worker handles the order.

Some days I get exactly what I ask for really quickly, when other days I'll have my shopper switching 25% of my requested items with alternates (some of which are wildly off base).

My biggest frustration is that it seems like the shoppers aren't intimately familiar with my local grocery stores. I'll request an item that I know exists, they'll swap it out for something completely different and not what I want, yet if I personally go to the store, I'll easily find the item I requested.

I've had a great experience in the Bay Area, however that's primarily ordering from larger stores like Whole Foods/Costco where their inventory systems seem to be pretty up-to-date.

I used them for 2 years and then cancelled my subscription. They made a change to how the workers were paid which lowered the hourly compensation the shoppers got and pressured them to make more trips/hr.

Prior to the change we'd get a call to confirm all substitutions, the produce was higher quality, and they call to let me know they were on their way.

After the change substitutions happened with no warning till it was delivered if they even marked it as a substitution. Anything large or not quick to get would be marked as "not available", such as soda or specific cuts of meat that required talking to the butcher. That one isn't even a speculation as I'd have to go down to the store and get the items myself if I wanted to prepare my meal I had planned.

The shoppers would also knock on my door and drop the bags on the floor at best. I had several occasions where they just left the bags without knocking or calling and I had frozen items dethawing outside.

All in all I felt like I was paying extra for a product that was inferior to the results of me purchasing the items myself, and was no longer convienant as the substitutions, low quality produce, and wrong cuts of meat were leading to me having to go to the store myself after every order.

If they could get the quality back to where it was the first two years I would have been willing to pay 50% more because it saved so much time, but I don't think they are headed in that direction

I used Instacart in the past, and ran into many issues with them.

There may not be enough stock for one of your choices, and in that case it is up to the delivery person to pick a replacement.

Even if you ask for no replacements, or to be called in order to pick one over the phone, they may ring you (just to comply with the requirement of calling you) and then select a random replacement. If you happen to have allergies or dietary restrictions: good luck winning the replacement lottery.

I canceled an order because I was notified that 80% of my order wasn't in stock, and they unilaterally reactivated my order for another time, which happened to be a time where I was not available.

This is when I finally decided to switch to Amazon Fresh. To this date, I have had no incidents with them, especially with respect to stock. The only problems I've had with Fresh are:

- Once, they delivered slightly late and I got $10 credit for my next order.

- A few times some items were damaged. Got in contact with customer support and got a refund for all the damaged items.

My wife just noticed Costco is offering same day shipping, I thought it odd that they could get the logistics down and it turned out to be Instacart.

I have personally used it but might now so I don't have to brave the traffic/chaos that a suburban Costco can be. That being said I haven't heard great things about IC in my area.

It, admittedly just now, strikes me that taking away the headache of Costco would be pretty welcome. We get mostly the same things and rarely go there without a list/goals for the trip. Additionally, their sales don't change often. Making online ordering much easier than going to the grocery and planning for the week/scoping the sales.

This really turned into a costco related comment.

If feasible, the best possible time to hit Costco is weekdays right when they open (10AM here.)

I understand that’s hard for folks with regular jobs, but might be more doable for the Hacker News crowd.

Instacart has been my sole interface to Costco over the last year (Sunnyvale area). I think the selection online/in-app is far less than the typical Costco, but the experience boost is legitimate.

Finding a parking space at that particular Costco is ridiculous within about 30 minutes of the store opening.

Is there really a parking problem, or is it more of a walking problem? I've yet to see a costco parking lot that doesn't have tons of empty spaces if you're willing to walk 2 minutes

Parking problem. My local Costco is perpetually full front to back unless you go within 30 minutes of opening or closing, and parking in a neighboring business lot will get you booted.

This is very much a regional problem. Others I've been to in the US have half-empty lots the size of football fields.

That particular one is very bad, I've gone at 2PM from the work office to that Costco and left because I didn't want to sit and wait for a parking space. This was not the case ten years ago for the exact same store. The one closer to my home in Mountain View is OK for at least an hour after opening, haven't been at other times. I've been to one in San Diego where a friend lives and they parked half a mile away.

I would have trouble trusting produce selection. Don't think the average bag/box of fruit/vegetables at Costco is acceptable, for extended periods even in California one has to carefully inspect leafy vegetables/berries to make sure the stuff hasn't started wilting/molding already, otherwise much of the savings in quantity buying is gone by wasteage.

Are the costco prices based on their warehouse pricing or their online pricing? I've seen lots of items that are up to 50% cheaper in the store than what they advertise online.

We've done it exactly once (a month ago), and my wife noted that the products we often get were 25-30% more expensive via delivery.

That was my very first caveat to my wife, be careful b/c it isn't always obvious where the surcharges for delivery are slipped in.

Each store has a different pricing policy. Plus delivery fees/tips.

https://www.instacart.com/store/costco/about

Prices vary from in-warehouse Prices are higher than your local warehouse. Costco members also do not earn 2% executive reward on Instacart.

Ralphs & Vons (both Kroger brands) offering the same in LA near me

How is this different from Google Express? Google Express has somewhat recently eliminated the need for a subscription and deliver products from many local stores including Costco and Walmart, although admittedly the Walmart selection isn't quite everything I would hope for.

>Instacart, the grocery delivery startup that has a partnership of sorts with Whole Foods, is raising $150 million in funding, Axios first reported. This is on top of Instacart’s $200 million raise at a $4.2 billion valuation in February.

>Instacart has since confirmed the raise, bringing its total Series E round up to $350 million with a valuation of $4.35 billion.

Read: this is an additional $150M at the same pre-money valuation as the previously reported raise.

To me this looks like investors are wanting Instacart to bulk up in preparation for competition [1] from Amazon

[1] Amazon has already had their Prime Now service, but I mean their incorporation of Whole Foods into it.

This company uses some incredibly scummy dark UX patterns.

See https://news.ycombinator.com/item?id=13702128.

Agreed. When I discovered this in the app I immediately deleted the app from my phone. I’ll never use the again. Coupled with the lousy service, instacart is a no go for me. amazon prime now is a vastly superior product.

Hopefully this means I'll get more investor subsidized groceries!

They've raised $1 billion dollars. How does their business model survive a economic downturn ~ where their service might be deemed unneeded?

Well they cater to the wealthy. Who else could afford adding 30% to their grocery bill every week? And the wealthy are better equipped to weather a downturn than anyone else.

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