I feel like I'm taking crazy pills. Every supermarket in Montrela offers phone orders and home delivery for a fee of less than $5 if your order is big enough ($50+). If you want to, you can even do your shopping in the store, and pay about two bucks to have them deliver to your house if it was in a few km.
I just checked, and one of the smaller chains (4 stores) has their own online ordering platform.
San Francisco is an odd place. And so is Silicon Valley and the big brands we all know. Most of what startups there do is to solve local problems of San Frnacisco (and there are MANY!).
Taxis suck? -> Uber
Hotels super shit and your rent is super high? -> AirBnB
Restaurants don't deliver -> various delivery services
Wholefood et al doesn't deliver -> various delivery services
No laundry in your $5000 rental apt -> laundry by app
A lot of those problems don't exist in more developed places. (Yet other problems do). But these big startups grow due to it's ecosystem and Marketing/PR focus on the Bay Area.
I've heard it called (I think on HN!) an assisted living community for people in their 20s - because all those services are subsidised by VC capital too.
Well, specifically they serve the perceived problems of well-paid tech workers in San Francisco, which isn't actually most of the population. San Francisco has its merits but it most certainly isn't paradise on earth.
Tech center of the world with a 1970's subway system that sucks in more ways than one (hurts your ears inside and out, dirty, not on time, not many stops, frequent maintenance issues, etc.).
Their revenue numbers must look absolutely insane, even if they're not actually profitable. I spend more money through instacart right now than any other software, and maybe all other software I use, combined.
Not appropriate to count entire cart/shopping spend as Instacart's revenue. Think of that as "GMV". Instacart's revenue is their delivery charges, service charges, and any money the stores pay them / % fees.
None of my grocery stores within the 60 minute range offer delivery. I wish they did. I live outside of a major city, in a pretty wealthy area. There is no instacart, no amazon fresh, etc. Uber doesn't even deliver here. It's pretty lame and the population exists to support even just one of these services.
You'd be surprised. I live 35 miles west of Boston/Cambridge, and there are none of these delivery services. Last time I looked, Uber was available but it looked very thin--not something I could depend on for a morning appointment. All of these offerings decrease greatly in availability once you get beyond the central Metro areas of certain cities.
Of course, I wouldn't use them much anyway. Assuming the thing being delivered is available locally (which is more the issue), hopping in a car and picking it up isn't a big deal.
[ADDED: Well, I can use Peapod (and have when I had an injury) but didn't particularly care for it.]
I doubt it. Their nearest store is at least as far away as Boston is for me. (Doesn't seem to be a way to actually check without registering on their site.)
I see, and you're right I can't think of any other options in the area. MA is great for a lot of things, but the lower population definitely means it takes a hit for services you'd see in NYC, Chicago or SF.
A lot of that kind of thing is available closer into metro Boston. But I'm out past any real suburbs and the small cities that are closer to me aren't the sort of places where people Uber and get Whole Foods deliveries.
Outside Philly, Upper Makefield. I think we have FreshDirect which some how manages to encourage people just to go the shops themselves due to how terrible their service is.
All my nearby stores offer this, I still use Instacart. It lets me shop from any store, their QC is amazing, and living in a small apartment I need to make 2 or 3 $35 trips (instead of one big $150 trip) and that becomes free on Instacart (saving me close to 5hrs per week of drudgery).
I really don't see that as sustainable for them. The fifteen percent they mention on $35 is not very much to work with. I understand buying market share but all of these services seem to follow the same route, incredible lead in pricing and then trying to find out how to raise it without driving everyone to another solution.
grocery stores usually can pull this off as they tend to have pharmacies they want you to use and other services
The problem with so many of these, what are effectively, personal services going back to the dot-com bubble is that they're effectively luxury goods for most people.
And unless they actually need them for some reason (lack of mobility, don't have a car, etc.) most people don't buy a lot of unsubsidized personal services. They don't have gardeners, lawn care, drivers, etc. Some do but it can be hard to build a business out of just them.
Dozens of variations of these delivery & order services have existed spanning 20 years in the US, at start-ups and at large companies.
It's about perfecting the concept, deploying fully across the nation at high quality, acquiring access to 300 million people and owning the US market (worth tens of billions in sales in total once it's saturated).
I think pretty much few of these unicorns are proven not to be profitable, despite exploiting their employees (read low wages, no tips) [0], [1]. What's to make perfect on a business plan already broken?
Also in my neighborhood: Google Express offers home delivery of lots of stuff. Amazon Prime Now offers home delivery of lots of stuff.
But your local stores-that-deliver doesn't argue against Instacart. Isn't it in their interest to outsource that chore to someone instead of paying their own drivers?
I get the sense Google is backing away from Express. Around me you used to be able to pick a delivery window (potentially same day), now you can only pick a day in the future with no time. Makes it virtually unusable if you live in a city and don't have a doorman.
Amazon, on the other hand, I would be worried about id I were instscart.
Some context, aside from the viability of Instacart itself.
Apoorva Mehta used to work down the hall from us at SomaCentral, a shared office space retrofitted out of an old law firm on Townsend. He and his buddy would be heads down in their laptops every time we walk past their bullpen corner.
They were busy building out a legal tool slash social network slash law something slash annotation something slash whatever. The plan didn't so much change but rather morph every time I said hi.
They were smart though, so I figured they would hit it whenever they get to it. Though they've been at this for awhile now.
While most others tried to keep a social factor going on at the space, they tend to be so busy they would avoid it. Though and now then I do remember getting to grab a drink with them.
A few years later, settling in my new job in Berkeley/Oakland I called up Instacart to deliver me some groceries. But it was only last year I finally looked up the company profile and soon realized it's the same Apoorva Mehta.
From being that dude to 3 billion dollars in a matter of five years is--to quote another commenter--insane.
But he's keeping the silicon valley dream alive.
That's pretty nifty in itself.
The rest of us are just hanging out here writing comments.
Tech:
The Dash Wand [1] puts Alexa on your refrigerator and every time you scan an item, Amazon is building up a database of the most popular SKUs they should add to their warehouse.
Scale:
Scale is the name of the game and Instacart is playing with a losing hand. Vans/trucks are more efficient than cars, warehouses > grocery stores, robot shelves > store runners.
Anecdote:
Instacart was popular in Boston until Fresh opened last year. There is now a large pile of Amazon bags for pickup everyday in my front lobby.
Price:
Amazon has many of the exact same items as Instacart/wholefoods but at lower prices. My grocery bill went down about 20%
I initially used Instacart. But then started to notice my orders would often need replacement items. So I opted for no replacements, and it was even worse... because items that were very relevant in my order were left out and I had to order again. In addition, prices were very high compared to the store.
Then, they wouldn't show up on the scheduled times. Then, if you canceled the order and talked to customer support, they would try to uncancel the order and schedule it for a completely arbitrary time where you might not even be home, a lot of decision making on your behalf with no confirmation.
After all that chaos and constant fighting with customer support I switched to Amazon. They show up on time, the use durable packaging that is refrigerated if necessary, the prices are reasonable, item availability is "what you see is what you get" with no replacements, the delivery fee is a flat yearly fee... In all the time I have using Amazon Fresh or Prime now, I have had ZERO arguments with them.
Now I only order from Amazon. In addition to that, they have the Amazon Dash, which I can use to scan the barcodes for the products I need to reorder to quickly add them to the cart, or set reminders for items I need to buy using Amazon Echo.
Note that I am not affiliated with Amazon in any way.
If I had to use Instacart again, I would probably use it to order 20 gallons of water, and then go to the store myself to buy the rest. The website is very incompetent at reflecting the effective stock and the system is not good at finding/suggesting replacements. The last time I used Instacart was to literally see what my last order was, so I could order the same things via Amazon.
tl;dr is that Amazon can deliver a better experience because they actually know exactly what they have in their own warehouses. Often times on Instacart you order something and it gets replaced with something else because it was out of stock, because they work with other stores like Safeway, Whole Foods.
Also everyone already has a relationship with Amazon so it's just easier to go that route.
I think you nailed it. I live in NYC and work too much, meaning I live and die by trading money for time. And every time I use instacart I regret it for the exact same reasons you describe.
The idea of hooking into some kind of warehouse management network makes a lot of sense. Does an API exist? Probably not. But there's an opportunity right there. Partner with a major warehouse management system, preferably one that works with Safeway or Stop n' Shop, and figure out a way to cut out the store visits altogether.
Of course this would mean automating away the shoppers :/.
Ocado in the UK did more or less this. They started out partnering with a large supermarket chain and then started building out their own automated warehouses. The big chains all offer online ordering and delivery, at times with scale that makes it worthwhile for them to run dark stores which are closed to the public and only fulfil online orders. At the other end of the spectrum there are companies like the one I work for offering online ordering and delivery services to smaller independent shops, we provide the website and logistics and they use existing shop staff to pack orders when the shop is quiet.
I read your article. In New Zealand the Countdown supermarket chain has an online ordering system: https://shop.countdown.co.nz
You select your local supermarket, and it has a pretty good idea of what they actually have because it's an official service. You can also specify per item whether substitutions can be made, and if necessary they'll try to find a good alternative (like your "different salsa") if they can. The times you end up with a substitution or no item sound VERY low compared to your experience with Instacart. You might order 40 items and get a couple of subs if you're unlucky.
It also sounds cheaper than Instacart. It costs around $10USD for delivery (depends on how much your order), or around $3.50USD if you want to collect from the store,which is still super convenient because you just go in and wheel out your already-full trolly.
I'm kind of surprised that supermarkets doing delivery doesn't seem to be a big thing in the US. Usually we're the ones who are a few years behind.
I used their delivery service in SF about five years ago. The delivery and item correctness itself was fine, but the online ordering system was atrocious and seemed to have either a very limited inventory or terrible searching/browsing (or both). I think we also had to have over $100, or maybe that was just to get free delivery.
The experience wasn't terrible, but it certainly wasn't sticky. We never used it again.
Integrating inventory across various grocery stores would be ideal, but it seems like a big undertaking not to mention it clashes with the shopping experience (e.g. customers keep items in their shopping carts for long times)
I like the idea of warehouses, though the requirement to stock items seems restrictive, kinda like when Google Shopping Express launched - it had such a small selection of products. One potential middle ground... why not use a warehouse/centralized location to aggregate the requested groceries, then have a separate system to dispatch the groceries to the customer? By aggregating from multiple grocery stores, you minimize the risk an item is not available.
I know nothing about grocery retail but my initial reaction is why can't Instacart tie into Safeway, Wholefoods, etc. inventory management system to get a more timely view on what's available? Are existing grocery inventory management systems more rudimentary so this is not possible?
My theory is that the inability of US chains to figure out online ordering is really some anti-competitive agreement to force customers to go into the store because the chains live and die by high-margin impulse buys.
Wholefoods just opened a brand new chain called '365' that has all sorts of sophisticated nonsense like a programmatic tea-bot and yet there is no online ordering. Even the made to order stuff is driven by an interface which could just be made publicly accessible and they'd be done but no, into the store you go.
Tesco had this in the UK since 1996(!), with a CD-ROM ordering system that synced new products over dialup in batches.
Now all (apart from Lidl and Aldi, I imagine their margins are too low) offer online shopping and have done for a long time.
Really can't understand why the US stores don't do this and instead have allowed Instacart, which has little/no proper supply chain knowledge, to build a $3bn business in it's place. Very odd.
Supermarkets and e-commerce are entirely different competencies and I have no trouble believing that being good at one doesn't give you a tonne of advantage at the other.
Putting some startup's tea-bot into a store is far easier than integrating that tea-bot into an online ordering system.
FWIW WholeFoods recently invested significant sums (~$30M) into instacart and made them the official online distribution channel. So WFM sees some value in being a distribution center, if that means moving more of their goods.
Yes. WFM has an equity stake in Instacart and has benefited (income diversification + investment appreciation).
That said, from what I'd read (and it's been a while), WFM's strategy with Instacart sounded like a way to steal market share and convert customers to shop IN their stores. If I recall, Instacart pickers were getting bonuses for (choosing) WFM stores, and WFM was offering food to pickers with no markup.
I don't know if it'll work out. WFM's been under fire for it's pricing for a while. Maybe Instacart will drive incremental sales growth (as you're alluding to). I'm skeptical as it might cannibalize the value of their high-cost experience locations.
I see Uber, Lyft, Amazon Fresh, Instacart, etc and I can't understand why they take the market by storm like that. They are not the first to ever think about that, their service isn't super great (except for Amazon, I'd say) and still, in the US, it seems like the market just sits and waits for them. Then a majority of people jumps in and the thing skyrockets.
Meanwhile, in other countries, small to medium-sized companies have had online groceries ordering for many years, local taxi unions have had websites and recently apps, and still... it's like OMG so much innovation from US companies let's give them crazy valuations.
I'm not on the Amazon Fresh/Instacart trend yet (and may not be -- I really enjoy grocery shopping and frequent different farmers' markets, so it's not a problem I need to have solved for me).
But as for Uber/Lyft, the reason they're vastly more valuable than whatever local taxi website/app is convenience and lack of friction. When you get an Uber, you don't have to worry about payment or directions; it's all handled for you. When you get to a different city, you don't have to google the local taxi companies and pick one; you just open Lyft and get a ride.
Just ended by Instacart subscription for Amazon Fresh. I hated how Instacart would mess with prices. So far, much happier with Amazon Fresh. Costco access gives Instacart a huge advantage, but they abuse it.
Instacart is building datasets right now on what people purchase. They can simply bypass their physical market place partners of today and become a retailer without the cost of running physical stores. They would only need to take care of fulfillment, and hey, maybe with machine vision there will be a little Instacart robot that delivers your groceries to you direct from the Instacart warehouse: cutting yet another cost and justifying their high valuation. Who know's if that's what they're up to.
> Instacart is building datasets right now on what people purchase.
Why do people say things like this as if Silicon Valley is the only place that's heard of collecting data on customers. You are aware that's what those supermarket savings cards with the barcodes do right?
I guarantee you that Instacart has like the 178th best database of what supermarket customers purchase at best.
Of course, I'm only painting a scenario that I think likely is being posed by Instacart to justify their valuation and future prospect, not the superiority or effieciency thereof.
And there is a big difference between having access to a database of customer sales, and actually having those customers...
One interesting counter to Instacart are services like grocerkey (http://www.grocerkey.com/) that exist as whitelabel instacart's for stores. That local chain that everyone knows probably doesn't want to send all their customers to instacart if they don't have to. I'm not sold on Instacart being something people use outside of a few major cities, but maybe that's enough for them.
Why? Grocery shopping is extremely inefficient and has to be done weekly by almost everyone in the world. It's not a small problem that they're solving, so large amounts of cash (and a high valuation) makes sense.
One doesn't deserve a high valuation just because the problem they are solving is hard.
The company he came from, Amazon, has more cash than anyone could raise. They have logistical expertise and are perfecting same day shipping at a national scale.
They also offer Amazon "Fresh" which is essentially the same service except they don't skirt labor laws by classifying their employees as contractors.
And non-tech people actually trust Amazon and order quite a bit from them.
For them to succeed outside of a few big cities would require gross negligence and incompetence by Amazon, which isn't impossible. But seems unlikely.
> They also offer Amazon "Fresh" which is essentially the same service except they don't skirt labor laws by classifying their employees as contractors.
At least in DC, the Amazon Fresh (and Prime Now) drivers are definitely just random people in their own car, the same as Instacart.
Because it's a terrible way to solve it and this company doesn't seem to be executing particularly well on it.
I actually agree that online grocery shopping should be great. It's mystifying to me that it isn't: if you go to the UK, the experience is fantastic: order direct from the grocery store, easy to order, cheap and efficient delivery.
I don't really understand why US chains can't do the same thing.
We do, it's a very successful service called Peapod that you haven't heard of because it's not used by people in SV.
It's exactly what you're describing, but doesn't have a hugely PR engine because it's a profitable arm of an existing store that doesn't require a 10x exit.
And Peapod is actually the only delivery service I can get where I live.
I've used it when I was on crutches for a few months because of a broken foot. I didn't love it but it was better than trying to do a full grocery shopping when I couldn't walk.
In general, in the US, people mostly use delivery services if they can't easily go to the store and shop. Or if it's just a hassle because of kids, etc. I'm not sure if there are cultural differences from other places or it's just because, for most people in the US, hopping in a car and parking in the large supermarket parking lot just isn't a big deal.
In any case, it doesn't seem like a market that's ripe for disruption except in the minds of Silicon Valley types. Adequate services exist. It's just that very few people have an interest in using them.
Unsubstantiveness and name-calling make for a bad kind of HN comment. If you have a substantive point, you're welcome it to make it thoughtfully. If you don't, please don't post here.
I just checked, and one of the smaller chains (4 stores) has their own online ordering platform.