Instacart (YC S12) aims to be the Amazon Prime of grocery delivery
news.cnet.com
news.cnet.com
For now though, please expand up to Marin!
[Edit in response to comment below: I do not believe it is right to try something in a store and then go buy it online. Even if you believe that is okay, it actually proves that the purely-online consumer experience is sub-standard, otherwise why bother go to a store at all?
While Amazon is great at issuing refunds for, say, non-functioning electronics, they don't issue full refunds if you buy a hat and there's nothing wrong with it but it doesn't quite fit/look right, and you have to pay for return shipping. Contrast this with the Zappos approach where returns are both free, and hassle-free].
Do you have specific pain points, or is it the innate difficulty in online shopping for clothes?
Because so many of us (including myself) now behave in this manner, I'm fairly convinced that most brick and mortar stores will have to assume an "annual dues" model a la Costco to survive. (and offer some form of competitive advantage over Amazon, of course -- ex: focusing on item discovery rather than cookie cutter merchandise, etc.)
I do think Amazon has improved on this a lot. In the past I would find multiple listings, for the same product, from different merchants, under different names.
As an example, if I am looking for a specific Diesel jean I have waist, length, wash, and cut. The wash might be either described correctly, "0073N", or incorrectly "Dark blue." Looking at it now, this is much improved over where it was just a year ago.
On the other side of things, Amazon has a problem with fake products getting in their inventory by third party sellers being labelled as genuine -- another issue that has been getting better (The iPhone Charger listed as by Apple but priced like an iPhone app, was there for years.)
I pray that Newegg's diversification from computer hardware won't have the same adverse effect, but it's probably a law of retail that it will.
I compare my experience with Newegg, and although I've bought some stuff from Newegg, I will generally go with Amazon, even if it's a few dollars more expensive, because I trust Amazon so much more, and the entire experience is so much better. I'm basically their model customer, and they have me hook, line, and sinker, especially with Amazon Prime.
I cringe every time I have to order something outside of Amazon, dreading a MasterCard secure card, frozen order, mis-packaged products, and any number of other issues that affect my physical goods purchases outside of their system.
It seems that I only have good results when I search for a specific $productname, and even then I get results for products with user comments reading something like "its not $productname but..." or "get a $productname instead". More frustrating is that these seem to be ahead of what I'm actually searching fairly often.
Don't even get me started the self-published ebook spam -- is Amazon just ignoring it?
That's one of probably a dozen reasons why what works (or doesn't) for Amazon might be different for Instacart.
Also beer. Carrying cases of beer home sucks. ;)
If it bombs, it won't be because they can't keep the lettuce fresh from the field to your door, it'll be because you just can't do Ultimate Delivery for $99/yr.
Alternatively, if you're going to be doing this, you can purchase and register an IR beacon that is more permanent than a piece of paper.
And where exactly would you place the indicator? In your front yard? Normally, delivieries are made to your porch, but the drone would have difficulty finding an optical indicator on the porch from above.
And what about groceries that need to be refrigerated? Those will need to be dealt with specially.
In the foreseeable future, I think you'd have better luck delivering groceries by catapult than by UAV.
If those are the actual operations, it appears like it would be very difficult to turn a profit. However, it does seem like there are plenty of good ways to make the operations more efficient once demand is high enough while still remaining light on assets like warehouses, trucks, etc.
But I wish them the best of luck, it would be wonderful for them and their customers.
If your order twice a week for 50 weeks than customer gets 100 deliveries for $99. So net/net Instacart would have gap of 40 deliveries = $33. So in essence they would eat up $33 per customer as loss which you can simply be viewed as customer acquisition/retention cost.
I think this is brilliant model. $99 for 3 hour deliveries would be very attractive to upper middle class. It also illustrates class of powerful business models which are simply based on swapping time for money and leveraging the exchange rate between time and money to be minimum wage.
1) The target audience is definitely those people who are too busy to get their own groceries. If they are too busy to get their own groceries, aren't they too busy to cook a meal? I would think that take-out or going out to eat would be their #1 competitor in this area. When both my wife and I were working full-time, at the end of the day we were so exhausted that the last thing we wanted to think about was what we were going to eat, and then actually cooking it. We ate out probably 5 days out of the week. Ordering take-out will be quicker, and less of a hassle.
2) If the delivery person selects items such as meat, eggs, milk, etc that are expired or very close to expiry, it will likely cause a complete lack of confidence in the service. It will only take 1 bad experience buying meat, or a couple of busted eggs in a dozen, and they could potentially lose a customer forever. I'm not sure what their return policy is, but if they have one, it will likely be pretty costly for the company. There also could be incentive for people to return their close-to-expired food to Instacart, claiming that the delivery person selected it. It may seem petty, but for example very high chargebacks rates are one of the biggest challenges that Square faces right now.
3) Free delivery is interesting, but the 3hr delivery window I think will turn out to be pretty inconvenient for customers. It means that they need to deliver their goods at home, because who wants to be stuck at work waiting for their groceries to be delivered? I'm not sure what the delivery times were during their beta testing, that would be interesting to know, but my best un-educated, armchair-analyst guess is that the highest amount of deliveries will be from 7 to 10pm, and on weekends. If Instacart takes off, it means a disproportionate about of work required between 7pm and 10pm, and a lot less at other times. This sounds like a lot of people sitting around waiting for deliveries.
4) Safeway has their own delivery service as well, with a 1hr time window. What exactly does this service provide that Safeway can't? Is it cheaper? Or just faster?
1.) The reason I get them delivered isn't necessarily that I'm too busy, just that pushing my way around a busy supermarket on Saturday afternoon is boring! Honestly, when we haven't done an online shop and end up having to go to the store I find myself wishing I could just "search" for items, like with the web/iPhone app.
2.) Ocado (the service I'm familiar with here) never chooses items near the expiry date, it's as simple as that. They must recognise that if people were consistently getting nearly-spoiled goods, they'd just stop using it. Products nearing their expiry date usually have their price reduced in their store, so it's not a problem shifting that stock.
3.) Agreed, Ocado lets you choose 1-hour slots and that's about the longest I'd want. Unless nearer the time they can be more specific based on the van's progress, e.g. send a text saying "we should be with you between 8.00 - 8.30".
Honestly, if I was building this service I'd be looking at someone like Ocado. For me, they've nailed the whole product (including awesome iPhone/iPad apps). If the InstaCart folks would like more info about them (guessing you can't use it outside of the UK?), let me know and I'd be happy to help.
I absolutely loved Ocado when I was living in London. Tesco's was four blocks away, and Sainsbury's a kilometer. Getting groceries home on the bus is no fun.
Damaged goods were refunded no questions asked (the yogurt pots had a habit of bursting).
If I could get the same service in this area, I'd do it at the drop of a hat.
For those who've not experienced Ocado weekly deliveries:
It's fantastic - they automatically create an order for us every week for delivery on Friday between 6pm and 7pm. The order includes items we've said to always include, excludes items we've said to never include, but other than that they create a "recommended" order based on our past shopping patterns. Usually it's a very close match and we just tweak some quantities if we've used less or more of something or want to wary our menu.
We then have until about 1am on Friday to amend the order via the web interface or their mobile apps as our needs change through the week. It cuts down my total grocery shopping time to about 5 minutes a week.
Everything comes sorted into color coded bags for the freezer, fridge or cupboards, and the invoice (and web site) lists the minimum number of days until the use by date of each item.
I hardly shop offline any more - between Ocado and Amazon, 99% of my shopping needs are taken care of.
Our metrics to date seem to disagree with your speculation about people not having the time to cook. There are also a host of products that Instacart carries for occasions other than dinner, like sundries, snacks and beer. These are our most popular items. Also, I agree that it would be a terrible experience for the customer if items arrived expired or broken - which is why we take such great care to make sure that those things don't happen.
We've also found that a 3-hour delivery is very convenient for most customers, and it's by far the most preferred option. With regards to delivery from grocery stores themselves: please try ordering something from one in the next hour.
He seemed to insist the reason WebVan couldn't be profitable was because fulfillment was too expensive, which served as inspiration for Kiva. Having people walk around was too slow and too big a cost center.
Obviously this is biased, but still an interesting point to throw in here, since it doesn't look like something they've addressed.
I'd pay $50/wk for someone to go to storage freezer (deer, beef), the butcher in Alameda (other meat), Berkeley Bowl (produce), Tokyo Fish Market (fish, japanese stuff), Whole Foods (365 is a decent deal, failthrough for anything not at the above), Costco (specific bulk items, like ito-en green tea and san pelligrino), and Trader Joe's (frozen food) to get groceries. Unfortunately, I think I outgrew Safeway some time ago. The other problem is I often want to buy highly seasonal items, based on availability, price, and quality. I don't think there's a good way to get the quality I want at a single store at a decent price; Whole Foods comes closest, but is expensive. Add BevMo for liquor, too.
Webvan had basically one or two steps better quality than Safeway (on par with Andronico's), and all in one place.
A service to get stuff for a party during the party (e.g. if you run out of beer) in 1h for $10 would be awesome. I don't think I'd use 3h Safeway delivery even if free. I would use a higher end service with great quality food (by going to the right shops) if the ordering experience exposed current inventory status.
The only sticking point for me is price and selection. I want options when choosing products and I want the prices to be comparable to what I see in the store. I don't want prices that are twice as much as in the store PLUS delivery fees.
Hopefully Instacart Express tackles that problem. The only concern I had after reading the thread is that it sounds like they have an employee go to an actual grocery store to pick up the order and deliver it. That method of doing things sounds painful once the service really starts to grow, but perhaps they've got an alternative strategy for when that happens.
Good luck, Instacart!
It was an operational nightmare.
Picking one order for a customer at a grocery store quickly is hard enough. Two orders requires using two carts and care that you don't mix up the orders. Picking more than two orders at a time is almost impossible, which limits your productivity.
We routinely had customers who would order more than a cart worth of groceries at a time. Offices would order 20 cases of soda pop and several boxes of munchies. Picking, transporting, and delivering these orders often took well over an hours' worth of time each.
If the average customer is ordering once a week, the $2 they receive won't be enough to cover their costs, and they'll have to charge significantly more than shelf price for the groceries if they are to be profitable. But this will discourage customers who believe they are paying an annual fee in return for "free" delivery.
We pay $5 for next-day delivery or $10 for same-day (for orders of at least $50, otherwise add another $5 to delivery).
It's a huge time saver, we have groceries delivered every Sunday and they have good selection and produce. The prices are a little more expensive, but it's totally worth it for us.
The startup I'm working at also uses it periodically to have soda and snacks delivered. Much easier and more reliable than having to send someone out every few weeks.
Let's face it, you can't pay delivery people as good as, say, Costco does it's hourly employees and only charge $4 or $10 for delivery. It's even worse if these services are just 1099ing these people without any benefits, gas money, etc. (I have no idea if this is the case).
Maybe these services use student workers. Maybe I'm way off. But I do know that I'm as pro-capitalism as anyone but felt a little dirty after paying someone on TaskRabbit $15 to walk around SF for 2 hours and get me some restaurant information.
I'm still getting a lot of use out of my old Webvan tubs!