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Instacart: A new model for home grocery delivery?



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Food collage 2Instacart offers a novel twist on handling the last mile of home delivery for grocery products: Use a single cart to order online from three stores – Safeway, Trader Joe’s and Whole Foods – and get a single home delivery within three hours. There’s a $10 minimum per grocer and a $3.99 delivery fee (unless you go for the Prime-style $99/year unlimited delivery offer).

Instacart is not affiliated with any of the grocers; instead, it describes itself as a software company that connects customers with personal shoppers. Items are marked up “a touch,” they say. Enough Bay Area residents are finding value (no fighting traffic, finding parking, or standing in lines) to result in a successful launch for this third-party distribution service.

If it gives shoppers access to products they want and a value they like, then Instacart may just have found a model that will work - at least in areas where there are enough folks who will use it. Alex Wilhem blogs about his Instacart ordering experience and the company’s addition of Whole Foods to the line-up at The Next Web.

Check out our more recent posts on Instacart:

 

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BlackBeltBob Sherlock said:
This is an intriguing step beyond Peapod in that Instacart is aggregating the items of multiple retailers.
Peapod's new fixed location will-call centers offer greater time flexibility than a home delivery time window. Wonder if Peapod will experiment with offering the use of its will-call centers to other retailers?
PJ Stafford said:
I love the innovation happening as grocery eCommerce goes from 2% to 5% over the next few years, or a growth rate of 25% a year. Obviously there is no profitable business for Instacart if their revenue is $3.99 per order (or less at a annual flat rate) so the interesting number is what "a touch" is as in "marked up a touch". I suspect once the participating retailers see the Instacart guys starting to move real volume they will look hard at doing it themselves to not have an intermediary in the relationship..and the data on specific consumer purchases can be really valuable. In the meantime there are a lot of interesting experiments in a category with one of the lowest eCommerce penetration levels. It's a great field to be in!
BlackBeltMike Spindler said:
This makes at least three different ways Whole Foods is offering online shopping access to their products. I find that explosion of interest.

As for Instacart quite an interesting development. A bit niche-ie as long as it is tied to delivery and specific grocers, but it begins to get at the dirty little secret in grocery which is that no store satisfys all of my consumable needs!
Chey Ritz said:
Agree with Bob Sherlock here that this is a step past what exists now, while still restricted to a couple cities in California. Instacart definitely has room to grow in the grocery delivery area. As it grows, I wonder how it will compare to Amazon with its Prime membership (free shipping) and Amazon’s ability to deliver just about anything, most groceries included? Customers have come to rely on Amazon’s high level of satisfaction and ease of ordering/checkout. Also, in terms of final-mile delivery (for anything, not just groceries), pair this Instacart announcement with the news that same-day delivery service Shutl is coming to the US from the UK and offering to give retailers the ability to serve customers with same-day delivery – clearly the Amazon Effect is heating up.
Bill Bishop said:
It’s good to see both the interest and the innovation in online grocery shopping, as well as, different fulfillment options. Several years ago I found a study in the Food Marketing Institute Information Service Library, published more than 30 years ago, that documented the then strong demand to shop from home and one of the conclusions of the study was that no one had yet found a profitable way to do it.

The emergence of Instacart shows we still have a ways to go before we come up with a system with the capability to provide everything reasonable that shoppers want and that has a viable business model.
Un said:
We've recently launched a new site with a twist on online grocery shopping. We have a platform that marries recipe search, meal planning, and online grocery shopping in one streamlined process. We have currently integrated online grocery shopping with Safeway.com and Vons.com. chopchopgo.com