Instacart - One Stop Destination For All Your Daily Grocery And Beverage Requirements
With the COVID-19 pandemic forcing people to stay indoors and depending upon the home delivery services for everything, the revenue of many home delivery companies has increased manifold. Let it be grocery delivery or food delivery; these companies are gaining popularity and establishing market dominance. Such is a company called Instacart.
Instacart started off as a grocery delivery business but has now diversified into other verticals like food delivery, alcohol delivery, and pet supply delivery. It currently operates in 25 major cities across the US and Canada. Since the start of the pandemic, i.e., March 2020, Instacart has captured 50% of The online grocery delivery market. In this article, we will discuss the business model of Instacart and how they make money.
Brief History Of Instacart
Apoorva Mehta founded Instacart in 2012 along with Max Mullen and Brandon Leonardo. This Sans Fransisco-based company launched its app in 2012 for iOS users only and later launched its Android app in 2014. With a wider variety of goods delivered by Instacart, the platform is constantly adding categories like office supplies, wellness products, sports equipment, etc.
Interestingly, Instacart currently has the ability to reach 85% of households in the US and 70% of Canadian households due to its availability of 5,500 stores. According to the latest reports, Instacart has a 57% market share in the grocery delivery market, making it the most profitable consumer delivery US company.
Working Model Of Instacart
As we all know, Instacart is a grocery and food delivery platform that allows consumers to order groceries online using its in-app platform. To fulfill its users' requirements, Instacart has partnered with leading grocery retailers and local stores. This also helps the company to provide a diverse range of products that can be found in local markets.
If we look into the working model of Instacart, after you place your order, a personal Instacart shopper will visit your preferred store and pick up your orders. More than 300 retail brands like Target and various local grocery stores have joined Instacart to provide services. After placing an order, a shopper who is available nearby to your location will be notified so that they can deliver your order within 1 hour. Like so many giants Swiggy, Zomato & Big Basket are also giving these services, Instacart manages to show their specialty & good customer service in this grocery delivery business.
Revenue Model Of Instacart
To understand the complete revenue model of Instacart, we need to know what are the stages from which Instacart makes money. Revenue sharing, delivery fees, premium subscription fees, in-app advertising, etc., are the top revenue streams for Instacart.
- Revenue Sharing
With every order placed on Instacart, it charges a commission from the retail stores. The platform has a revenue-sharing agreement with all its retail partners, and the commission amount is negotiated according to the retailer's transaction volume.
- Delivery Fees
Almost all food or grocery delivery companies charge delivery fees for every order placed on their platform, and Instacart is no exception. Its delivery fees depend on the user's location, city, and time of order placement. Instacart's delivery fees range from $3.99 to $9.99, and by using Instacart Promo Codes, you can avail free deliveries and additional discounts on various products. The platform also follows the surge pricing model, which depends on the weather conditions and demands.
- Subscription And Advertising
Instacart also comes with an Instacart Express subscription model. In this model, you can avail unlimited deliveries for orders above $35, cheaper service fees, etc. You can also get no surge pricing for annual and monthly plans that are priced at $99 and $9.99, respectively. Instacart also allows sellers and brands to do promotions, and the prices will depend on the product category and search items.
Conclusion :
Instacart is currently one of the most popular food and grocery delivery companies that are using a great business model to provide high-quality services. They have invested a lot in their technology, and this has enabled them to offer fast and reliable services to their customers. In the future, Instacart is likely to grow even more as they continue to expand its operations to more areas and attract more customers.