Blog Summary:

Are you looking to provide a grocery delivery service that makes shopping easier? That’s no problem. We’ll take a walk-through of the grocery delivery giant–Instacart. This blog is going to be the most interesting as we will cover the ins and outs of the Instacart business model. It also scrutinizes the inspiring story behind Instacart’s establishment. After that, it explores the company’s funding history and explains how Instacart works. Finally, it provides a detailed breakdown of the company’s business model and revenue streams.

Technology has become the driving force behind innovation, offering fresh solutions to a wide range of challenges. One such area where technology has made a significant impact is online grocery shopping. According to a survey by XStak, 87% of customers use their phones for online grocery shopping.

In this blog, we explore the world of Instacart, a leading supermarket delivery and pickup service operating in Canada and the United States. We delve into the Instacart Business Model, which has revolutionized how customers access groceries online. We will also explain the considerations surrounding starting your own grocery business and what steps to take to develop a grocery delivery app.

Let’s get started!

What is Instacart?

Instacart is a prominent grocery delivery app that offers same-day delivery and pick-up services. It serves a wide range of stores, including grocery stores, supermarkets, pharmacies, pet stores, and more. Instacart users can conveniently shop from multiple stores at once. However, each store has its cart, delivery fees, Instacart shopper, and minimum order value.

Moreover, did you know that Instacart does not keep the store inventory? There is no implied relationship between the 1400+ different retailers and grocery owners (80,000+ stores) that customers can shop with through Instacart.

Users can shop through the Instacart platform using a free account or a paid Instacart+ membership. Sign up using the email ID and enjoy delivery from local stores. Prices are based on the store, order size, and membership status.

Success Story Behind The Idea of Instacart

The success story goes like this: In 2012, entrepreneur Apoorva Mehta (a former Amazon.com engineer) collaborated with Max Mullen and Brandon Leonardo to launch Instacart. The trio’s participation in the Summer 2012 batch of Y Combinator, a startup accelerator program, proved beneficial in getting Instacart off the ground.

The company’s expansion to San Francisco immediately saw substantial growth. In April 2015, Instacart’s employee count crossed 200. Soon, they recognized the need for flexibility.

As a result, they implemented a pilot program in June 2015 that offered part-time options for shoppers, initially in Chicago and Boston, before expanding to Atlanta, Miami, and Washington, D.C.

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Interesting Facts About the Instacart Funding History

Instacart has had a significant fundraising journey that reflects the expansion of the on-demand economy. Here are some key funding milestones.

  • Seed Round (October 2012): Instacart raised $2.3 million to kickstart its operations.
  • Series A (July 2013): The company secured $8.5 million to expand its services and reach.
  • Series B (June 2014): A significant funding round of $44 million helped Instacart scale its operations and establish partnerships with major retailers.
  • Series C (December 2014): The company raised $100 million, valuing it at $2 billion.
  • Series D (February 2016): Instacart received an undisclosed amount of funding in this round.
  • Series E (February 2018): The company raised $200 million to expand its reach and services further.
  • Series F (December 2018): Instacart secured $871 million, valuing the company at $7.9 billion.
  • Series G (June 2020): The company secured $225 million in funding, which valued it at $13.5 billion.
  • Series G (July 2020): Instacart raised an additional $100 million, increasing its valuation to $13.7 billion.
  • Series G (October 2020): The company raised $200 million, reaching a valuation of $17.5 billion.

How Does Instacart Work?

How Does Instacart Work

Wondering how Instacart connects you to groceries without leaving your home? Let’s explore the process.

Sign Up and Create an Account

Download the Instacart app or visit the website. Provide your name, email address, and other necessary information to create a free account.

Browse Local Grocery Stores

Once you’re logged in, you can browse a list of local grocery stores that partner with Instacart. Narrow down your search by specifying the store name, type of store, or how far away it is from you.

Add Items to Your Cart

Select the store where you’d like to make a purchase. Browse the store’s walkways and add items to your cart just like you would in a physical store. You can also search for specific items or browse by category.

Select Delivery or Pickup

You can choose whether you want your groceries delivered to your home or if you prefer to pick them up from the store. If you choose delivery, select a delivery window that works for you. You must specify when and where you want to pick them up.

Checkout and Payment

Once you’re ready to checkout, review your order and make any necessary changes. Enter your delivery or pickup information. Choose a payment method (credit card, debit card, or Apple Pay). Complete your purchase.

Receive or Pick Up Your Order

If you choose delivery, an Instacart shopper will deliver your order. Through the app, you can track your order’s progress in real-time. When ready for pickup, simply visit your chosen store at your scheduled time to collect your groceries.

Instacart Business Model – Explained In Depth

Instacart Business Model

Instacart’s business model revolves around connecting customers with personal shoppers who procure groceries from local supermarkets and deliver them directly to customers’ doorsteps. Let’s have a complete breakdown of its business model.

Customer Segments

  • Busy Professionals: Individuals with demanding jobs or lifestyles who value convenience and time-saving solutions.
  • Families: Parents with young children or elderly relatives who find grocery shopping cumbersome or time-consuming.

Value Proposition

  • Convenience: Customers can order groceries online and have them delivered to their homes within hours, eliminating the need for physical trips to the grocery store.
  • Time-Saving: Instacart saves customers valuable time by handling the entire grocery shopping process, from selecting items to delivery.
  • Variety: Customers can choose from a wide range of products available at local supermarkets, ensuring they have access to their preferred brands and items.
  • Flexibility: Instacart provides convenient delivery choices, such as same-day and scheduled options, to cater to customers’ needs.

Key Partners

  • Grocery Stores: Instacart collaborates with local supermarkets to access their inventory and leverage their existing infrastructure.
  • Personal Shoppers: Independent contractors who shop for groceries on behalf of customers and deliver them to their homes.
  • Technology Providers: Companies that provide Instacart with the necessary technology platforms for online ordering, route optimization, and payment processing.

Key Activities

  • Online Platform: Building an intuitive online platform for easy product discovery and purchase.
  • Personal Shopper Network: Recruiting and managing a network of personal shoppers who are trained to select and procure groceries efficiently.
  • Delivery Operations: Optimizing delivery routes, coordinating deliveries with personal shoppers, and ensuring timely and accurate delivery of orders.
  • Customer Service: Providing excellent customer support to address inquiries, resolve issues, and maintain customer satisfaction.
  • Partnerships: Building and maintaining strong relationships with grocery stores and technology providers.

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How Does Instacart Make Money? A Look At Its Revenue Streams

How Does Instacart Make Money

Instacart offers a range of delivery options, including groceries, same-day items, and alcohol. Thus, Instacart makes money through a variety of revenue streams, including:

Instacart Advertisements

Instacart uses targeted advertising to reach customers on its website and app. These advertisements can be for a variety of products and services, including food, drinks, and household items. Instacart charges advertisers for the opportunity to display their ads to its customers.

Instacart Subscription

Instacart offers a subscription service called ‘Instacart Express’. This service provides customers with free delivery on orders over $35. Customers can also receive discounts on their first order and exclusive deals. Instacart charges a monthly fee for Instacart Express.

Instacart Delivery Services

Instacart charges customers a delivery fee for each order. The delivery fee varies depending on the distance between the customer’s location and the grocery store, as well as the size of the order. Instacart also charges a service fee for each order.

Instacart Partnerships

Instacart partners with various grocery stores and other retailers. These partnerships allow Instacart to offer its customers a wider selection of products and services. Instacart charges these partners a fee for using its platform.

Instacart Technology Solutions

Instacart also offers technology solutions to grocery stores and other retailers. These solutions can help these businesses improve their operations and increase their sales. Instacart charges these businesses a fee for using its technology solutions.

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Sum Up

Instacart’s success story has inspired many startups in the grocery delivery market. The company’s efficient workflow and innovative business model have paved the way for others to capture this growing market.

Instacart provides a convenient and time-saving experience for customers. If you’re looking to launch your on-demand grocery delivery service, our mobile app development team can help. They create unique solutions that meet your specific needs and deliver exceptional results.

Our grocery app development experts are proficient in developing an app like Instacart that perfectly aligns with your brand and business goals. Our developers efficiently integrate your app with existing systems, such as your inventory management and payment processing platforms.

Additionally, we build scalable solutions for your business so you can handle increased demand as you expand. If you’re ready to expand your grocery delivery business, contact us today to learn more about our mobile app development services.

FAQs

01

How does the Instacart business model work?

The working architecture of the Instacart business model is quite simple: 1. The customer places a grocery order. 2. The platform connects customers with nearby independent contractors. 3. Partnership with grocery retailers to provide inventory. 4. Instacart charges delivery fees from customers. 5. Shoppers and the Instacart platform both receive a commission on every order they complete. 6. Instacart pays the grocery store for the purchased items.

02

How does Instacart make money?

Instacart generates revenue through fees charged to customers and grocery stores. Customers are responsible for paying service and delivery fees associated with each order. Stores also pay Instacart a commission on each order placed through the platform. Hence, Instacart profits from the convenience it provides to both customers and stores.

03

What type of business is Instacart?

Instacart is a grocery delivery app. It allows partnerships with local grocery stores to enable online grocery shopping and delivery services. Customers can place grocery orders through the Instacart app or website, and personal shoppers will pick up the items and deliver them to customers’ doorstep.

04

How does Instacart address the challenges of the grocery delivery industry?

Instacart addresses challenges like inventory management by partnering with various grocery stores to ensure a wider selection of products. They also use technology to optimize delivery routes, reducing costs and improving efficiency. Additionally, Instacart's flexible delivery options, including same-day and scheduled deliveries, cater to diverse customer needs.
About Author

Jayanti Katariya is the CEO of Moon Technolabs, a fast-growing IT solutions provider, with 18+ years of experience in the industry. Passionate about developing creative apps from a young age, he pursued an engineering degree to further this interest. Under his leadership, Moon Technolabs has helped numerous brands establish their online presence and he has also launched an invoicing software that assists businesses to streamline their financial operations.