Instacart Launches Costco | Hacker News Reader

Instacart Launches Costco

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73 pointsapoorvamehta58 comments

Can someone tell me how exactly Instacart is working this? Do they have an agreement with Costco? (I'm guessing not.) Do they have individual shoppers who just do their thing as though they were individuals, and then deliver? Are those individuals employees or freelancers?

I'm guessing Costco would be a bit reluctant to formally allow something like this, as I also presume that one reason they get lower prices from suppliers is that they only sell to members, so there is less of a perception that a supplier is undercutting other retailers by letting Costco sell at a reduced price. A sort of price discrimination... but if stuff gets resold without a markup to bring the price in line with other retailers it would make their negotiations more difficult.

I don't know the answer to your question, but isn't Instacart free to resell anything they bought at Costco? So would they even need an agreement from them?

Because Costco is a paid membership service. I assume reselling is against their membership agreement. It'd be difficult to enforce, especially on the scale they probably operate at, but still.

EDIT: It's not. I somehow assumed it would be. Interesting to know it isn't.

Former Costco employee here - nope. A lot of the point of the store is reselling large items to small companies. Not many families need gallon jugs of butter or 100lbs bags of rice, but tons of restaurants do.

That being said, the reselling is normally for people who do something with it (ie cook the food, print with the ink, etc), not turn around and sell the exact same product.

When I lived in the Mission the guys who ran the bodega across the street bought half the stuff they sold from the SOMA Costco.

Ahh, good to know. I figured doing another retail transaction would be against the TOS. Thanks for clarifying.

"Reselling against their membership agreement"?! Uh, not likely - I think half of the corner stores, and most of the low-end restaurants and delis, around here buy at least some of their inventory from Costco.

I'm guessing Costco's business is at least somewhat dependent on having successful resellers buy from Costco!

The first and obvious concern might be over using Costco's name.

They're free to resell anything they manage to buy from Costco, but first they have to buy it. To buy it, they must have a valid Costco membership. Looking over the membership agreement, Costco reserves the right to terminate a membership at any time, see page 14 of http://content.costco.com/Images/Content/Misc/PDF/09EX0308_S... , in the "Membership Cards and Fees" section. If they decide they don't like this, they've already got the verbiage to lock any given shopper out. (I do not know if they will or not, or if Instacart has a negotiated deal with Costco, which would be wise of them.)

I was wondering the exact same thing. I'd imagine that they'd use shoppers who have personal memberships and then reimburse. If they had Instacart-only memberships, it would be much easier for Costco to target and cancel those accounts.

Any agreement between Costco and Instacart would basically be endorsing a method of skirting the annual membership fees, something Costco would most likely never be interested in. However, as a Costco member, I would absolutely love this. No more "Cart" rage on Saturdays!

I was wondering the same thing. Why have a personal membership anymore when I can just utilise instacart to deliver it. Personally, incorporating Costco's selection is a big plus for me.

Now... if anyone is interested in insta-gas delivery, hit me up. ;)

Costco allows you to buy items for resell and even uses your Tax ID so they don't charge you sales tax on items for resell.

Yes, this. Many small businesses and restaurants use and resell products from Costco.

Costco is probably getting a cut (hence the higher fee), but I'd love to hear some concrete info from Apoorva (the founder), who already commented in this discussion.

Costco executive membership offers 2% rebate on everything you buy - this is probably a non-trivial source of revenue for Instacart.

I'm guessing there is no agreement with Costco since there was no response from "apoorvamehta" who has answered questions in this thread.

I used Instacart for the first time yesterday to have Trader Joe's delivered. It was awesome! Their website shopping experience could use a little TLC, but other than that it was solid.

Thanks! Would love to hear your feedback: happycustomers@instacart.com

Wow, this is awesome. It works even better for Costco than most places since Costco inventory is fairly consistent, so ordering in advance is fine.

As someone who lives outside the valley, I feel so weird seeing articles like this. I think they bother me because they illustrate just how much this whole universe of tech is totally rooted in a single geographic area.

In anything else, changes in a business that had such a tiny area of influence would not make the news next to stories on international business. I shouldn't feel so bothered about this, but I do.

As another person far, far outside the valley these kinds of stories annoy me too. But, they make it up the list because they get voted up. So we're on a valley centric site, so it's the price we pay.

Rooted in doesn't mean intrinsically limited to. Apple and Google are also rooted in the Valley in the sense that their original users were here. But anything sufficiently good becomes ubiquitous.

And incidentally, Instacart may well be such a thing. The effect it's had on my life is almost entirely a function of having small children rather than being part of the startup world.

Having typed my previous comment on my phone, I think I'd like to expand on what I was feeling:

When I read HN, I think of it as a place for news that appeals to the mind of a "hacker". That's the "box" that it inhabits in my mind.

When I see posts like this one though, I'm reminded that there's a very large bias towards things going on in a relatively small area or set of areas (SF, NYC, Boston, Austin, maybe Seattle). I think my feelings on seeing this post are just facing the reality of these natural biases.

Also, I'd like to say that these biases aren't a bad thing. It's natural when lots of people with the same interests live in just a few places. But it does exist, and it gives me a bit of a mental jolt when I run across them.

-----

Also, I agree with the sentiment that "anything sufficiently good will become ubiquitous." I've live(d) in the Seattle area all my life, and services like Amazon Fresh are wonderful for more than just people living the startup lifestyle.

I don't think this concept is appreciated enough. Sure, the valley is a microcosm of people who are both willing to adopt early and willing to invest in some lifestyle changes in order to use clever technology.

However, as pg points out, to know if something is good you have to have someone volunteer to use it. While people in the Bay Area may use something nobody else does, the number of things they won't use that a larger portion of the population will is a small number. So when Steve and Steve were pushing their "friendly" computer at the Computer Club it was to a group of people would would spend $1,000 on something they didn't have an immediate use for, but they found uses for it, and from those uses inspired other people to see uses for it.

I've got a Zaurus Wizard, a Psion handheld, an HP Pocket Computer, a Palm Pilot, a Handspring, a Newton Message Pad, REX organizer, and an iPad. A lot of people have the iPad but much fewer have any of the other gizmos that led up to it.

One thing you could do is implement this service for your own area. If you see a need for it, chances are other people need it to.

I'm really curious as to how successful this will be in areas that don't have a big startup community of early adopters to get the service off the ground and convince their non-early adopter neighbors/friends to try it out as well.

I live in SV, but just outside the boundary for InstaCart (West SJ). I'm on the Google Shopping Express beta, but that service doesn't do perishable groceries so it's not nearly as appealing as InstaCart.

So my options are Safeway delivery ($75 minimum delivery) or go to the store.

I am desperately waiting for them to increase their reach. Pretty please, Instacart? Any love for the south bay?

Send your zip code to us and we'll see what we can do!

How do they get the inventory of a costco if it isn't officially sanctioned by costco? Do they buy the stuff on their corporate card then charge you on yours and bank off the $10 fee? I don't live in an instacart location, so am not sure how their biz model works (sounds like peapod).

I love Instacart... that is all. Please branch to NYC soon!

We in SF really do take for granted that we get all of these services at launch.

Agreed. I'm moving to NYC and I'm realizing this fact just now knowing Instacart isn't in NYC yet.

freshdirect is in nyc, i hear its fantastic.

yah it totally is. It's cheaper than most of the supermarkets too and stuff is fresh (per the name). Plus they'll carry your groceries up the stairs for you, which is great if you're on a third-floor walk-up during the summer.

Instacart isn't but Fresh Direct is and is honestly usually cheaper, even with delivery fees, than it would be buying from the local grocery store. And since the city doesn't have many regular grocery stores -- in Brooklyn you have some of the various NSA (National Supermarket Association) stores, but frankly most of them suck. If you ARE lucky enough to live near a Trader Joe's (and keep in mind, you'll need to be in walking distance or be willing to take the subway with your bags), prepare for lines from hell.

I wouldn't go to Costco without a car -- and since you've really only got Long Island City, the one in Brooklyn Heights and the one on 117th Street, traffic is going to SUCK.

To that end, I'm not even sure if a thing like Instacart would work with NYC because most of our grocery stores -- aside from Walgreens/Duane Reade and CVS are local bodegas that you're lucky if they take credit cards, let alone have a consistent inventory system. In the suburbs like Long Island or maybe parts of Staten Island, but not in Brooklyn or in Manhattan (can't speak for the other 2 boroughs but I assume Queens and the Bronx would be hard too).

Anyway, long comment short -- Fresh Direct. Oh, and ZocDoc for finding a doctor. Those are the two startups (aside from Seamless and GrubHub) that totally made my first two years in NYC.

Thanks! That was super helpful! I'll be sure to check them out.

Hm interesting that you don't need an existing Costco membership. I hope they are able to expand service beyond SF!

We plan to have Costco available as we launch other cities wherever it is logistically practical.

You can buy off costco's website without a membership. They just tack on a 5% fee for doing so.

This is excellent news for Chez JJ. Thank you Instacart, you just made our hacker house network more scalable.

This alone would have me as a customer in Portland, but I agree with titlex that forcing a signup modal before I can peruse the site is really unfriendly.

In Portland you can use http://www.indigomart.com/costco-products/ I had added limit Costco & Bob Red Mill products few months back and I can try to meet your needs. Try us out.

Awesome, thanks!

Ugh I can't even look at the Instacart page without having to sign in. I don't even live in the valley, I just wanted to check out their page.

Do the terms of costcos membership agreement allow them to do this, or did they negotiate a separate agreement?

"the fee associated with delivery from its stores will be higher, clocking in at $9.99 for your collection of items, stiffer than the normal $3.99 rate."

I'm sure Costco is getting a portion of that fee.

I'm not. It takes a long time to make it through a Costco, and the higher cost may simply be passing on the extra labor cost to customers. Also I think the distance to travel would be longer on average than, for example, Safeway.

Why do they force you to sign up? That could potentially turn away customers.

Probably the increase in revenue from having people signup is more than (or is expected to be more than) the loss from people opting out. They look like they're doing well so I'll assume it is working out for them.

Will you deliver non-food items from Costco? Are there weight/size limits?

as a user I have never been more excited!! this is so awesome :)

Hurry up and come to Seattle!

So.. it's 1999 again?

What?

I think they're referring to the dotcom era when other companies tried same-day delivery.

I think that was a typo and what he really meant was that the future has arrived! I'm never wondering around Trader Joe's looking for shit again. Instacart rules.

kozmo.com reference

Oh my god. If this includes berry ice cream delivery I will be a happy man.

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