  {"id":3534,"date":"2017-02-02T17:53:19","date_gmt":"2017-02-02T22:53:19","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-digit\/submission\/instacart-leading-the-way-for-grocery-deliveries\/"},"modified":"2017-02-02T17:53:19","modified_gmt":"2017-02-02T22:53:19","slug":"instacart-leading-the-way-for-grocery-deliveries","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/instacart-leading-the-way-for-grocery-deliveries\/","title":{"rendered":"Instacart \u2013 Leading the way for grocery deliveries"},"content":{"rendered":"<p>Instacart is an on demand platform for delivering groceries and other goods from the best super markets around you. Once an order is placed via an app, a free lance shopper (some are employees) is notified to proceed to shop for and deliver goods to the customer. The company has expanded rapidly ever since it was founded in 2012 and currently serves several cities including 21 metros in 20 states. It has also raised $275M from investors such as Whole foods, American Express Ventures and Andreesen Horowhitz, valuing it at $2B.<\/p>\n<p><strong><span style=\"text-decoration: underline\">Value Creation<\/span><a href=\"https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2017\/02\/unnamed.png\"><br \/>\n<\/a><\/strong><\/p>\n<p>There are several ways Instacart is able to create value for its customers, shoppers and the super markets it sources goods from.<\/p>\n<ul>\n<li>By not having to visit the super market, customers can save ample time by ordering straight from their smart phones or a web application.<\/li>\n<li>The groceries can be delivered within 1 hour or even at a later date<\/li>\n<li>The technical capabilities of the application allow for, among many other useful features, quick searches, recommendations, descriptions of products, show of discounted items and tracking orders\/history.<\/li>\n<li>This setup can be especially useful for the elderly or people with poor health who finds the process of getting to the super market, shopping for goods and then carrying them back too tiring<\/li>\n<li>Ability to combine orders from different super markets<\/li>\n<li>Crowdsourced model to help users connect with shoppers and delivery personnel<\/li>\n<li>Shoppers gain since they are flexible to work at any hour, any day and for any duration they desire<\/li>\n<li>Supermarkets get more visibility via the Instacart app which can result in their increasing revenues<\/li>\n<li>Supermarkets are able to showcase their best selling products<\/li>\n<\/ul>\n<p><span style=\"text-decoration: underline\"><strong>Value Capture<\/strong><\/span><\/p>\n<p>Instacart reported revenues of $100M in 2015 &#8211; this is generated via several different sources<\/p>\n<ul>\n<li>Customers pay a <u>delivery fee<\/u> that varies in the following way\n<ul>\n<li>Variable fee that\u2019s dependent on urgency of delivery. E.g $5.99 for a one hour delivery, $3.99 for 2 hour or greater delivery<\/li>\n<li>Variable fee that\u2019s dependent on minimum order size. E.g $9.99 for a one hour delivery, 7.99 for 2 hour or greater delivery for orders less than $35.<\/li>\n<li>Monthly\/ yearly subscription fee. E.g $99 for annual membership for free deliveries<\/li>\n<\/ul>\n<\/li>\n<li>Grocery <u>retailers pay a fee<\/u> that is based on volume of orders generated via the app.<\/li>\n<li>Consumer <u>packaged goods partners pay a fee<\/u> to Instacart for promoting their products.<\/li>\n<li>Some <u>products are marked up<\/u> (indicated) by ~10-15% on the app vs at the actual store and that difference goes to Instacart.<\/li>\n<\/ul>\n<p><span style=\"text-decoration: underline\"><strong>The operating model<\/strong><\/span><\/p>\n<p>While I do have concerns in scaling the operating model since, as opposed to Uber where not much employee training (driving is a common skill) is required, Instacart needs to ensure its temporary workers are well trained (to pick out groceries that aren&#8217;t too ripe or too raw) in order to maintain high ratings. However, with scale there is also a significant opportunity for Instacart as when\u00a0more people start ordering, the shoppers and delivery personnel will become more efficient due to serving larger volumes at once, enabling the company to cut down on its costs. Another advantage of the operating model is that Instacart doesn\u2019t hold any inventory since all the items on its listings are in the super markets and hence the company can avoid heavy capital expenditures in warehouses. Also, taking advantage of the crowd sourced model to connect users with shoppers\/ drivers, Instacart doesn\u2019t need to have any trucks\/ cars for the delivery of goods.<\/p>\n<p>Overall I believe the company has been on a great track since its start and given the basis and model on which it has been founded, there is a high chance of it emerging as a winner eventually.<\/p>\n<p>&nbsp;<\/p>\n<p>Sources:<\/p>\n<ol>\n<li>http:\/\/nextjuggernaut.com\/blog\/how-instacart-works-makes-money-revenue-business-model\/<\/li>\n<li>http:\/\/fortune.com\/2016\/09\/15\/instacart-apoorva-mehta-disrupt\/<\/li>\n<li>http:\/\/www.forbes.com\/sites\/briansolomon\/2015\/01\/21\/americas-most-promising-company-instacart-the-2-billion-grocery-delivery-app\/#a55d7cd48586<\/li>\n<li>http:\/\/fortune.com\/2016\/03\/24\/instacart-profits\/<\/li>\n<\/ol>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Instacart, an on demand platform for delivering groceries, is considered one of Americas most promising companies. The company was founded in 2012 and has rapidly expanded ever since &#8211; paving a new way for grocery deliveries  <\/p>\n","protected":false},"author":1221,"featured_media":3535,"comment_status":"open","ping_status":"closed","template":"","categories":[150,947,371],"class_list":["post-3534","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-consumer","category-consumer-data","category-smart-shopping-experience"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-digit\/assignment\/digital-winners-losers\/","yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Instacart \u2013 Leading the way for grocery deliveries - Digital Innovation and Transformation<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-digit\/submission\/instacart-leading-the-way-for-grocery-deliveries\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Instacart \u2013 Leading the way for grocery deliveries - Digital Innovation and Transformation\" \/>\n<meta property=\"og:description\" content=\"Instacart, an on demand platform for delivering groceries, is considered one of Americas most promising companies. 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