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Comment by abalone | Hacker News Reader

Exactly. Prime Now is the Instacart killer with respect to Whole Foods, not Amazon Fresh.

In the SF store where they first rolled it out you could literally see them just set up shelves and fridges upstairs and duplicate Instacart's model. Except for two advantages:

(a) Free 2 hour delivery to Prime members / absolutely no fees apart from tip.

(b) Better inventory data. This is huge. It's directly integrated with WF's logistics backend. It radically lowers the missing item / substitution problem that is the source of the worst outcomes with Instacart.

Having said that, all the other grocers are freaking out about this so there may still be a growth opportunity for Instacart.

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Not to mention the biggest problem with Instacart—the prices they charge you are completely made up and not the grocery's price. I understand paying a flat fee for delivery, but certainly not random and opaque markups.

Instacart and Shipt (who was recently acquired by Target) make money from the price slew between what they're paying (which, might not even be the cost that's on the grocery shelf -- it may be lower), and the price that they're charging you.

Yes, they have to pay the Shoppers a per-item fee, but, for the most part, the price that Insta is paying isn't the price that's listed on the shelf.

Well that's true sometimes but it depends on the store. Instacart actually matches in-store prices in certain stores. In the app these stores are noted as having "everyday store prices." If there's a markup it will say "view pricing policy" instead.

Their Whole Foods deal delivered everyday store prices so that's why I didn't list this as a difference. In SF Costco and Safeway have markups but for example Bi-Rite, Rainbow, Smart & Final and Mollie Stone's do not.

I know Instacart used to mark up everything and people hated it. So they've taken to hiding the cost somehow.. Maybe they're asking the smaller stores to take it out of their margins, and they just can't get Safeway & Costco to do it. Maybe they're tricking customers into paying a 10% markup with their "service fee". That fee reportedly does not get passed on to the workers and is optional but most customers probably don't realize this.

Amazon doesn't have as much of a cost problem here because they have the Prime membership fee, plus economies of scale.

> Maybe they're tricking customers into paying a 10% markup with their "service fee". That fee reportedly does not get passed on to the workers and is optional but most customers probably don't realize this.

Ha! “Optional service fee” sounds like the reverse of “mandatory tip.

It's kind of a paradox. I can see what you're saying, but at the same time, I don't expect e.g. a retailer to be transparent with me about their supplier costs, and phrase their prices as "$2 unit wholesale cost, $0.50 retail storage fee."

The difference is that to get that $2/unit wholesale cost I need to buy 10k units and to get the regular price from the thing on Instacart I just need to go to the store. The latter feels far more achievable.

a tip that is mandatory is a fee with a more pleasant sounding name.

Is it possible by forcing this in the early term they may make tipping obsolete in the long run? It appears to remove any question of how much to tip... You won't have to think about it when the goods arrive... I wonder if in the long run I would prefer this towards an unknown expectation of the delivery person

WholeFoods delivery is instacart killer, not Prime.

That’s what Prime Now is. They added support for Whole Foods in select markets.

Maybe I was not clear - the point that I was making the instacart killer is not a specific whole foods product. It is whole foods doing order picking/delivery using its own trained workforce that knows that specific store and is fully integrated into the logistics pipeline of WF. In the race to the bottom WF does not even need to charge more than a nominal fee for delivery with zero upcharge on the product (of course it would right now since Instacart showed that people will pay markups even for inferior service, which means they will definitely pay such markups for the superior service)

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