Disruptions in how people shop and buy groceries and food keeps on revolutionizing in today’s
Online grocery delivery startups have potentially reduced the inconvenience of grocery selection by eliminating the trips to visit physical grocery stores. This ultimately enabled consumers to shop much more quickly on occasions.
For others who are not so tired of food shopping, the on demand grocery delivery startups are more likely to seduce them once the super-fast on demand delivery becomes feasible and reliable (like Instacart), and online ordering processes are most likely to blend how people buy food.
Instacart, for example, is a popular on demand delivery platform that connects deliverers with consumers who want their groceries to be delivered at their door steps.
This technology driven grocery delivery app has become so famous in on demand economy that it boosts deliveries of groceries to consumers in about 1 hour, making Entrepreneurs curious to learn more about Instacart business model and its history to develop next big online grocery delivery startup(Instacart clone) in sharing economy.
Instacart was founded in 2012 by Apoorva Mehta (CEO/Founder) and Max Mullen (Co-Founder) and was incubated in YCombinator. It is one of the most successful startups that has
In fact, Instacart app is now considered as a leader in the on-demand economy.
Furthermore, the startup received its first funding on October 15th with $2.3 million as a seed investment.
Recently, Instacart has raised another $400 million in a new round of financing at a valuation of $3.4 billion. To this date, Instacart is operating solely in the U.S., but in last year, Instacart did raise a number of controversies after increasing the prices and cutting down rates for its workers.
Still, for Entrepreneurs, it’s still the same opportunity as Instacart, in the online grocery industry. In fact, according to most recent data from U.S. department of Agriculture, the U.S. consumers spend more than $727 billion annually on groceries as well as on food.
According to the latest report from TechCrunch, “Instacart has secured $600M in funding round at a $7.6B valuation.” The round was led by D1 Capital Partners.
Knowing this, it’s certainly hard to resist, but to enter the grocery market with a brand new grocery delivery app startup. Some of Instacart competitors have also significantly disrupted in different countries.
And, if you have the same thought in mind, it’s essential to first understand the entire working procedure of most popular grocery delivery app startup – Instacart.
How Does Instacart Work?
Consumers log onto the Instacart’s website or Instacart grocery delivery app to buy groceries they want. The deliverers then travel to the store, picks up the groceries for the consumer with Instacart’s prepaid debit card, and delivers to the consumer.
As simple as that!
Following are the 3 user segments of Instacart.
They have an app from which they can order their required groceries by choosing from one or more grocery stores. Consumers can also order from laptop or desktop using Instacart’s website.
After selecting groceries, consumers pay online and can also tip the shopper in advance while checking out. And, consumers can also schedule their deliveries for a specific date and time.
The shoppers basically receive orders on their smartphones. After receiving orders, they pick up the ordered items manually and deliver them. And, to save time they are often stationed near the stores.
Instacart has tied-up with major grocery stores across several cities. In fact, due to Instacart, they’re able to increase their revenue through online sales.
How Does Instacart Make Money?
While there has been a lot of discussions about Instacart revenue model, but as it turns out, Instacart’s way of generating revenue is quite simple.
Every order received by Instacart above $35 has a standard $3.99 delivery fee for a scheduled or 2 hour delivery and $5.99 for 1 hour delivery.
Orders that are under $35 are charged at $7.99 for scheduled or 2 hour delivery and $9.99 for 1 hour delivery.
For regular users, Instacart offers an annual membership program called ‘Instacart Express’ priced at $99. Users who purchase this membership can get free delivery on groceries for full one year with terms and conditions.
Mark Up Prices (15%+ More)
Some stores that have tied-up with Instacart sell their products on Instacart offering the same prices as their in-store price, while few stores have a mark-up of 15% or more from their in-store purchases.
Usually, revenue from this mark-up prices goes to Instacart which helps them pay to the shoppers.
While many grocery delivery app startups have been successful along with Instacart, but there is still one question tingling on most minds…
Will online grocery shopping behavior really grow both in adoption and in share wallet?
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