{"id":7570,"date":"2015-12-09T23:30:49","date_gmt":"2015-12-10T04:30:49","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/instacart-fresh-food-fast\/"},"modified":"2015-12-09T23:32:57","modified_gmt":"2015-12-10T04:32:57","slug":"instacart-fresh-food-fast","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/instacart-fresh-food-fast\/","title":{"rendered":"INSTACART: Fresh Food Fast"},"content":{"rendered":"

Business Model<\/strong><\/p>\n

\u201cInstacart is building the best way for people anywhere in the world to shop for groceries, solving problems and creating a magical experience for our customers.\u201d 1<\/sup> \u00a0Instacart, founded in 2012 by Amazon alum Apoorva Mehta, \u00a0provides an on-demand grocery delivery service, collaborating with supermarkets and crowdsourcing personal shoppers to bring customers food from their favorite stores in as little as one hour.\u00a0 The company is able to deliver value to its three primary constituents \u2013 customers, stores, and personal shoppers \u2013 because of its strongly aligned business and operating models.\u00a0 As a result, Instacart is experiencing reported double digit revenue growth, rapid geographic expansion, and plenty of VC investment.<\/p>\n

Operating Model<\/strong><\/p>\n

Every element of Instacart\u2019s operating model is thoughtfully designed to drive toward implementing the business model and delivering on the company\u2019s value proposition.\u00a0 In addition, it has allowed the company to disrupt the food shopping\/delivery experience and scale rapidly.\u00a0 In two short years, Instacart has gained a foothold in 15 key urban markets across the U.S.<\/p>\n

Scope\/Boundary <\/em><\/p>\n

While its business model could support any type of brick and mortar retailers, Instacart kept its focus solely on the grocery industry.\u00a0 Mehta knew that most grocery store and food markets were not well-positioned to deliver this kind of on-demand service to its customers.\u00a0 Instacart spent three years refining processes and technology to streamline order fulfillment, building the company\u2019s expertise and reputation.\u00a0 Only now is the company branching out to other retailers \u2013 including pilots with Target and alcohol vendors.<\/p>\n

Facilities \u2013 Or Lack Thereof <\/em><\/p>\n

Like most companies leveraging the shared economy, Instacart has little to no PPE (no warehouses, vehicles, or heavy equipment.)\u00a0 This has allowed the company to focus its capital expenditures on developing its processes, technology, and human capital.\u00a0 Its major competitors, AmazonFresh and FreshDirect, serve as distributors and must build\/acquire costly infrastructure to support their operations.<\/p>\n

Technology & Processes<\/em><\/p>\n

The technology and processes are designed to maximize the customer experience.\u00a0 The website is simple to use, allowing customers to select their local market, search for items, and fill their cart.\u00a0 Before checkout, the customer can add notes about replacements should any of their items be out of stock.\u00a0 The customer then schedules their delivery timeframe, ranging from two hours to the next day depending on their<\/em> schedule.\u00a0 Once the customer has completed the purchase, the order is then passed along to a personal shopper.\u00a0 Shoppers are usually dedicated to one store and utilize the Instacart shopper app to quickly locate all items in the order.\u00a0 Many stores have a designated cash register for Instacart\u2019s use, allowing shoppers to avoid lines.\u00a0 Finally, the basket is delivered to the customer.\u00a0 In the past, the shopper delivered the product, but now Instacart is experimenting with dedicated shoppers and dedicated drivers.<\/p>\n

The entire throughput time per order has been streamlined to less than 2 hours. According to Mehta, other process improvements are in the works.<\/p>\n

Human Capital<\/em><\/p>\n

Instacart has close to 500 full-time employees, but the bulk of their operations are carried out by their thousands of personal shoppers.\u00a0 Shoppers are typically underemployed individuals seeking flexible part-time work, such as students or mothers.\u00a0 They have the potential to earn $15-30 an hour through base salary and shopper tips.\u00a0 Initially, shoppers were considered independent contractors, not eligible to receive any benefits. \u00a0However, as is the case with most companies leveraging the \u201cshared economy,\u201d many contractors felt a lack of loyalty to the company and turnover was high.<\/p>\n

Instacart launched a pilot in Boston to experiment converting shoppers to part-time employees. This allowed greater oversight and hands-on training, resulting in higher levels of service, both in quality of selection and efficiency, and a markedly improved customer experience. In June 2015, the company announced that they would make this opportunity available for any employee and anticipated 75% would make the switch.<\/p>\n

Quality and User Experience <\/em><\/p>\n

As a customer myself, I can attest to the easy ordering, laser-fast delivery, outstanding customer service, and perfect selection. Shoppers call to verify replacements and text to let you know they are on the way. Mehta designed the entire operating model to optimize the customer experience.<\/p>\n

Conclusion<\/strong><\/p>\n

What I find most interesting about Instacart is that its operating model constantly evolves to better support the business model. \u00a0In addition, they have iterated their pricing model several times, as well.\u00a0 This is the case for many innovative startups, I would imagine, as they pioneer, test, measure, iterate, and improve various aspects of their operations strategy.\u00a0 However, most companies could benefit from this startup mentality of continuous improvement, flexibility, and adapting to new technology and competition.<\/p>\n","protected":false},"excerpt":{"rendered":"

Crowdsourcing grocery delivery to get it to your door fast<\/p>\n","protected":false},"author":971,"featured_media":0,"comment_status":"open","ping_status":"closed","template":"","categories":[1195,33,357,1194,210],"class_list":["post-7570","hck-submission","type-hck-submission","status-publish","hentry","category-crowdsourcing","category-food","category-groceries","category-shared-economy","category-start-up"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/the-tom-challenge-tom-winners-and-losers-assignment\/","yoast_head":"\nINSTACART: Fresh Food Fast - Technology and Operations Management<\/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-rctom\/submission\/instacart-fresh-food-fast\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"INSTACART: Fresh Food Fast - Technology and Operations Management\" \/>\n<meta property=\"og:description\" content=\"Crowdsourcing grocery delivery to get it to your door fast\" \/>\n<meta property=\"og:url\" content=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/instacart-fresh-food-fast\/\" \/>\n<meta property=\"og:site_name\" content=\"Technology and Operations Management\" \/>\n<meta property=\"article:modified_time\" content=\"2015-12-10T04:32:57+00:00\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/instacart-fresh-food-fast\\\/\",\"url\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/instacart-fresh-food-fast\\\/\",\"name\":\"INSTACART: Fresh Food Fast - Technology and Operations Management\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/#website\"},\"datePublished\":\"2015-12-10T04:30:49+00:00\",\"dateModified\":\"2015-12-10T04:32:57+00:00\",\"breadcrumb\":{\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/instacart-fresh-food-fast\\\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/instacart-fresh-food-fast\\\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/instacart-fresh-food-fast\\\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Submissions\",\"item\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/\"},{\"@type\":\"ListItem\",\"position\":3,\"name\":\"INSTACART: Fresh Food Fast\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/#website\",\"url\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/\",\"name\":\"Technology and Operations Management\",\"description\":\"MBA Student Perspectives\",\"potentialAction\":[{\"@type\":\"性视界Action\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"INSTACART: Fresh Food Fast - Technology and Operations Management","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/instacart-fresh-food-fast\/","og_locale":"en_US","og_type":"article","og_title":"INSTACART: Fresh Food Fast - Technology and Operations Management","og_description":"Crowdsourcing grocery delivery to get it to your door fast","og_url":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/instacart-fresh-food-fast\/","og_site_name":"Technology and Operations Management","article_modified_time":"2015-12-10T04:32:57+00:00","twitter_card":"summary_large_image","twitter_misc":{"Est. reading time":"4 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/instacart-fresh-food-fast\/","url":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/instacart-fresh-food-fast\/","name":"INSTACART: Fresh Food Fast - Technology and Operations Management","isPartOf":{"@id":"https:\/\/d3.harvard.edu\/platform-rctom\/#website"},"datePublished":"2015-12-10T04:30:49+00:00","dateModified":"2015-12-10T04:32:57+00:00","breadcrumb":{"@id":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/instacart-fresh-food-fast\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/d3.harvard.edu\/platform-rctom\/submission\/instacart-fresh-food-fast\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/instacart-fresh-food-fast\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/d3.harvard.edu\/platform-rctom\/"},{"@type":"ListItem","position":2,"name":"Submissions","item":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/"},{"@type":"ListItem","position":3,"name":"INSTACART: Fresh Food Fast"}]},{"@type":"WebSite","@id":"https:\/\/d3.harvard.edu\/platform-rctom\/#website","url":"https:\/\/d3.harvard.edu\/platform-rctom\/","name":"Technology and Operations Management","description":"MBA Student Perspectives","potentialAction":[{"@type":"性视界Action","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/d3.harvard.edu\/platform-rctom\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"}]}},"_links":{"self":[{"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/hck-submission\/7570","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/hck-submission"}],"about":[{"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/types\/hck-submission"}],"author":[{"embeddable":true,"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/users\/971"}],"replies":[{"embeddable":true,"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/comments?post=7570"}],"version-history":[{"count":0,"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/hck-submission\/7570\/revisions"}],"wp:attachment":[{"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/media?parent=7570"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/categories?post=7570"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}