Coronavirus boosts Instacart sales, makes grocery app profitable for first time

Instacart Revenue and Usage Statistics (2021)

Coronavirus boosts Instacart sales, makes grocery app profitable for first time

During the COVID-19 lockdown, Instacart became an essential service for millions of Americans trapped at home. Even as early as February, Instacart started noticing unusual demand for items such as toilet paper, canned vegetables and long-life milk. 

The next few months accelerated the growth of Instacart, which in 2019 was losing $25 million every month. It recorded its first monthly profit in April 2020, netting $10 million, and CEO Apoorva Mehta said the company had passed its 2022 goals. 

While Instacart doesn’t publish usage statistics, it added 300,000 more ‘shoppers’, riders responsible for picking up and delivery groceries, in the first half of 2020. At the end of 2019, it employed less than 100,000. It hired 350,000 more in 2020, with $35 billion in grocery sales. 

Instacart was one of 20 businesses started by Mehta in the early 2010s, in a wave of entrepreneurial spirit in which he created a social network for lawyers and an ad network for gaming companies. Using his experience as a supply chain engineer for Amazon, Mehta built the system which took aim at his old boss. 

It wasn’t long before Amazon shot back. In August 2017, it acquired Whole Foods for $13.7 billion. At the time, Whole Foods was responsible for 10 percent of Instacart sales, and some investors worried that Amazon would end the partnership. 

Instead of shutting down the upstart, the Whole Foods acquisition scared the rest of the retail world, which quickly penned agreements with Instacart. What was considered an extension of the Whole Foods brand became a marketplace for all types of retailers, which were more accommodating to Instacart fear of the Amazon machine. 

The rise of a food delivery app would not be complete without several controversies. DoorDash, Instacart has been accused (and taken to court) for withholding tips and paying workers less than minimum wage. In 2019, Instacart workers set up a union and during the COVID pandemic, many walked out in protest of the lack of protective equipment. 

Instacart has since provided PPE and made it much easier for customers to tip.

Will Instacart remain an essential service after lockdown? The company has no doubt received one of the greatest boosts to its chances of survival, with an IPO planned for 2021. 

We have collected data and statistics on Instacart. Read on below to find out more.

Instacart key statistics

  • Instacart reportedly generated $1.5 billion revenue in 2020, with $35 billion worth of sales
  • During the coronavirus pandemic, Instacart hit its first profitable month, netting $10 million
  • Instacart has an estimated 9.6 million active users and over 500,000 shoppers who pick up the items
  • In March 2021, Instacart was valued at $39 billion

Instacart overview

Launch date1 July 2012
HQSan Francisco, California
PeopleApoorva Mehta (CEO, co-fonder), Sagar Sanghvi (CFO)
Business typePrivate
IndustryGrocery delivery

Instacart revenue

YearRevenue
2013$10 million
2014$100 million
2015$200 million
2016$350 million
2017$550 million
2018$780 million
2019$990 million
2020$1,500 million

Note: A few of the values are estimates. We expect to find out more once Instacart IPO’s 

Sources: Sramana Mitra, Forbes, Edison Trends, Toptal, Forbes

Instacart profit

YearProfit
2019($300 million)
2020$50 million

Note: Instacart does not publish profitability. Our 2020 estimate is The Information’s report that Instacart hit its first profitable month in April and Forbes interview, in which Instacart says it generated $3 profit per order in the mid-2020s.  

Source: The Information

Instacart users

YearUsers
20173.3 million
20184.3 million
20195.5 million
20209.6 million

Note: Instacart users use the app more than once a month. While peak users may be far higher than 9.

6 million, we suspect active shoppers has fallen since the US economy has opened back up 

Sources: App Figures, Progressive Grocer

Instacart shoppers

YearShoppers
20145,000
201620,000
201870,000
2019130,000 
2020500,000

Note: Shoppers are what Instacart calls its riders, who pick up the items from stores and deliver them 

Sources: Huffpost, Vox, Instacart

Instacart partners

YearPartners
2017165
2018210
2019300
2020600

Note: Partners refers to retail and grocery companies that operate on Instacart. 

Sources: Forbes, Instacart

Instacart valuation

YearValuation
2016$2 billion
2017$3.4 billion
2018$7.6 billion
2020$13.7 billion
2021$39 billion

Sources: Fortune, TechCrunch

Instacart cities available

YearCities available
201625
20184,000
20205,500

Source: CB Insights

What is Instacart’s gross merchandise volume in 2020?

It was reportedly on track to process more than $35 billion in grocery sales this year (Bloomberg)

How much does the average Instacart Express customer spend?

Instacart Express customers spend on average $5,000 per year and at double the frequency

Does Instacart benefit towns?

A study found Instacart generates $620 million in incremental state revenue (Supermarket News)

What is an Instacart users average spend?

Instacart annual user spend is $512 (Rakuten Intelligence)

How many products are available on Instacart?

Over 500 million products are listed on Instacart

More Delivery App Data

Источник: https://www.businessofapps.com/data/instacart-statistics/

Will the surge in grocery delivery be sustained in the long term?

Coronavirus boosts Instacart sales, makes grocery app profitable for first time

David Johnson, senior vice president of retail at Quotient Technology

The pandemic has been a watershed moment that will forever change the way groceries are bought and sold. As more consumers purchase groceries online, companies Instacart and Shipt have seen massive growth in demand—in fact, Instacart recently turned its first profit. 

While consumers have been placing more online orders than ever before, the need for physical stores still exists.

As of June 8, our COVID-19 Data Dashboard shows that some cities, including Tampa, Denver, New Orleans and San Francisco, have reached or are approaching pre-pandemic grocery spending levels.

This might suggest that consumer behavior is shifting, and their needs are realigning, which helps us better understand what the “new normal” for grocery shopping will look .

The unexpected ecommerce boost

Grocery ecommerce has been picking up steam over the last several years, thanks in part to Amazon’s acquisition of Whole Foods and its Amazon Fresh service. Researchers expected sales ecommerce food and beverage sales to increase by 19% in 2020 alone, and that prediction emerged long before the pandemic completely changed the retail landscape.

As the stay-at-home orders set in, March was particularly eventful, with approximately 39.5 million consumers (31% of U.S. households) using an online grocery delivery or pick-up service. Comparatively, that’s more than double the 13% (16.1 million consumers) that used digital grocery solutions in August 2019, according to consulting firm Brick Meets Click. 

Online grocery continued its upward trend in April, with 40 million consumers placing orders. This increased usage (and subsequent sales lift) highlighted consistently in-demand product categories, most of which center on health and personal care, household goods, and shelf-stable pantry staples.

Today, our analytics show purchases have moved toward summer essentials, including insecticide, ice, premixed cocktails, fruit juice, graham crackers, prepared salads, ice cream sundaes, beef, sports drinks and baked beans.

It’s worth noting that while ice has remained a popular item for several weeks, the demand for sunscreen—the leading product category by sales lift during the week of June 1—seems to have tapered off.

Mixed-mode shopping is the future

Social distancing forced consumers to rethink their daily lives – from where they work and eat to how they acquire everyday essentials, including groceries. It has led to a significant transition in both in-person shopping and online ordering. And while these changes may not be permanent, the benefits of grocery delivery are not ly to be forgotten.

As states open up and store traffic reverts to pre-pandemic levels, consumers may gradually return to retail while still using online options to fulfill the need for specific products.

For example, consumers may prefer to visit a physical grocery store to pick out individual pieces or packages of meat, fish and vegetables. Still, they may find that ordering toiletries online is more efficient for them.

The key to future success is to offer a variety of options that satisfy consumers wherever they are and whenever they need something.

Anticipating these changes, many retailers have already invested in developing a superior in-store experience. They’ve brightened their stores, widened their aisles and improved signage to make shopping an enjoyable outlet.

Many have developed apps to help consumers navigate to their desired items, while some cater to shopper needs with staff who eagerly help in any way they can. These traits are going a long way toward the evolution of what it means to shop in person.

At the same time, grocery delivery offers a level of simplicity and convenience that many consumers took advantage of during the pandemic and will continue to crave as states open up.

That’s why grocery stores must offer a mixed-mode approach to shopping, even though consumers may still lean in favor of in-store grocery purchases. Online market share has hovered in the low single digits for several years, but it is now ly to remain higher than it has ever been.

The future of grocery shopping is both in-person and online

Recent events shifted how and when consumers shopped for their most essential items, strengthening the need for grocery delivery, which has become more than a nice-to-have offering that retailers should consider. It is now a core component for retailers to serve shoppers in multiple channels.

Most consumers who have ordered online during the pandemic say they will do so again in the future. The stores that “win” will be the ones that expertly combine in-store and digital experiences in a way that is equally convenient and effective.

By staying on the front end of this evolution in commerce, grocery stores can continue to satisfy their customers, regardless of their shopping preferences.

Quotient Technology Inc. is a digital promotions, media and analytics company.

Favorite

Источник: https://www.digitalcommerce360.com/2020/08/05/will-the-surge-in-grocery-delivery-be-sustained-in-the-long-term/

How to Build A Grocery App Instacart | How Instacart Works – Business & Revenue Model

Coronavirus boosts Instacart sales, makes grocery app profitable for first time

Coronavirus (COVID-19) has projected a significant impact on the grocery industry around the globe. The pandemic has showcased a drastic surge in the demand for contactless deliveries. In an attempt to dodge exposure, millions of consumers are relying heavily on grocery delivery services. Instacart is one such prime beneficiary that witnessed the heat of this boom.

  • The profit margins of the company soared for the first time as the online demand for groceries on Instacart during coronavirus broke all records.
  • The daily downloads of its app increased by 218% post-February till mid-march.
  • As per research conducted by The Information, coronavirus boosts Instacart’s sales as the company transacted business worth $700 million in the initial weeks of April.
  • The grocery giant announced hiring 3,00,000 additional delivery personnel recently. It seeks to onboard another 2,50,000 workers to meet the demand and fulfill orders successfully, within time.

As Instacart is reaching new heights during this pandemic, many entrepreneurs take inspiration and want to launch a business or delivery app Instacart. To draw a better understanding, let’s take a deeper look at Instacart’s customer retention strategies by dissecting its business model and revenue model.

Instacart’s 3-Tiered Customer Strategy

The Unique Selling Point (USP) of Instacart is to deliver grocery products to the customers’ doorsteps as early as possible.

The business model that Instacart follows supports a 3 tier customer strategy.

Not being the entity that directly maintains the inventory, the company acts as a host whereas the contractors are responsible for managing inventory and making goods available for delivery.

This unique “no-inventory” business model was an outcome of lessons that the company learned from the failure of its competitors. The 3 tier customer strategy focused on bridging the gap between consumers and contractors who are responsible for making timely delivery of goods.

Below is a detailed study of Instacart’s 3 segment consumer strategy. The key players are:

Retail Partners

Instacart has partnered with multiple registered stores that have the independence to operate under the name of their enterprise. The stores have to first enter into a special contract with Instacart to get listed on the website. Then, they can showcase the articles for purchase on Instacart’s website.

Instacart Shoppers

Instacart shoppers or delivery contractors shop for the products and later deliver them to the buyer. This segment of the 3 tier system works on a contractual basis. The Instacart shoppers are notified about the orders via a smartphone application. Upon receiving the orders, the shopping personnel collects the items from the nearest store and makes the delivery.

This segment is further divided into two categories:

  • In-Store Instacart shoppers: They are employed on a part-time basis with Instacart. The in-store Instacart shoppers are designated to prepare the customers’ shopping bags or they have to make an order ready for pick up. These shoppers do not require a vehicle as they do not make deliveries but they should always have access to smartphones to track the buyer’s arrival.
  • Full- Service Instacart shoppers: These shoppers are independent contractors who use the Instacart platform to shop and deliver orders for their customers.

Read More: How Does Instacart Shopper App Work?

Buyers

Buyers are the end customers who place orders for groceries using Instacart’s website or mobile application. Since multiple stores are listed on Instacart, buyers have the freedom to choose from their preferred stores. The buyers can also combine items from multiple stores and place orders.

Buyers can also schedule the date and time of deliveries respectively. Payment for the orders placed can be made online.

Read More: How Does Instacart Buyer App Work?

Decoding Instacart’s Business Model

Instacart has penned and adopted a business model that is an amalgamation of the gig-economy, eCommerce, subscription & aggregated business model.

How Instacart Grocery Delivery Works?

  •  The users must allow location access or manually enter their home address. The app will automatically enlist nearby local stores.
  • The users can simply choose from a wide range of items, make the payment, and select date and time for delivery.
  • Once the consumer has placed the order, the shopper (contractor) will receive a notification via the app. The shopper will then start collecting the articles as per the order received and prep the order for delivery.
  • Payment will be initiated by the shopper by swiping the prepaid debit card issued by Instacart.

Consumers can also opt for self-pickups directly from the store.

All you have to do is place an order for the grocery essentials that you require and select a pick-up time as per convenience.

Order Economics: Revenue Model Adopted By Instacart

Now that we have discussed the business model that Instacart runs on, let us learn more about the order economics of the grocery giant by enlisting the revenue streams.

Delivery Fee

Except for the first order, Instacart charges a delivery sum from customers for every order placed. The initial delivery amount is $5.99 if the order is to be delivered within 2 hours after placing it. The delivery fee for requesting a 1 hour delivery is $7.99. This may vary according to the minimum purchase requirements.

Partner Payments

Many SMEs and market leaders Kroger have partnered with Instacart to integrate its services within the website or platform for better customer reach. Instacart earns profits by charging commissions per order and a partnership fee.

Markup Fee

Instacart earns a markup fee priced at 20% of the net cost of the item. The prices listed by some retailers (wholefoods) on Instacart are the same as their in-store prices which leaves a marginal room for profits. However, some stores Costco list products at a 20% higher cost. The revenue generated from this set of items goes directly to Instacart.

Service Fee

Instacart charges a compulsory service fee of 5% on every order. Also, the customers have to make a mandatory 5% shopper tip for every delivery.

Membership Fee

Instacart also provides an annual membership priced at $149 known as the Instacart Express. With the membership, the customers can enjoy free deliveries for orders valued above $35, all year round.

Build A Grocery Delivery App Instacart

Designing and developing a grocery app Instacart from scratch requires a lot of investment both in terms of money and time.

Further, an entrepreneur has to consider factors such as addressing the pain points of customers, analyzing the strength and weaknesses of competitors, choosing a technology stack, intuitive UI/UX design & layout, necessary grocery app features to integrate, exploring monetization options, etc.

On the other hand, Growcer, a grocery software provides both ready-to-launch web portal and mobile apps, which can be customized (at an additional cost) to replicate the working of Instacart and can also adapt to any other business requirement.

Launch a grocery marketplace with Growcer

Disclaimer: The Blog has been created with consideration and care. We strive to ensure that all information is as complete, correct, comprehensible, accurate and up-to-date as possible. Despite our continuing efforts, we cannot guarantee that the information made available is complete, correct, accurate or up-to-date.

We advise – the readers should not take decisions completely the information and views shared by FATbit on its blog, readers should do their own research to further assure themselves before taking any commercial decision.

The 3rd party trademarks, logos and screenshots of the websites and mobile applications are property of their respective owners, we are not directly associated with most of them.

Источник: https://www.fatbit.com/fab/build-grocery-delivery-app-like-instacart/

Effects of Coronavirus Pandemic on Food Delivery Businesses

Coronavirus boosts Instacart sales, makes grocery app profitable for first time
Instacart's “Leave at My Door Delivery” feature, initially designed for customers not home at the time of delivery, is also a convenient feature for customers during COVID-19.

— Instacart

For as many people among us who are panic-buying toilet paper and toothpaste (and flipping out at the sight of empty shelves), there are thousands who are skipping the in-store experience altogether and shifting to delivery apps for everything from groceries to lattes and lunches.

In fact, there have been a record number of downloads in the past week alone, according to data from Apptopia, an independent research firm that analyzes the app marketplace.

At the same time, an unprecedented number of restaurants have shuttered across the country.

Analysis from the data science team at Womply of transaction trends year over year at 400,000 local businesses across the country, including 48,000 restaurants and 4,600 bars, revealed that revenue on March 13 was down 19.

6% year over year. “With many restaurants closed or only open for takeout, that number should continue to drop rapidly,” the firm found.

By contrast, “Driven by consumer panic, grocery stores saw their highest daily revenues for 2020 last Friday, with consumer spending up 87.4% year over year,” the analysts said. Relatedly, curbside pickup is also on the rise.

These huge swings on both sides beg the question: Can delivery apps not only help keep us healthier, but also help save the economy during the coronavirus crisis?

“U.S. consumer interest for restaurants has fallen by 54%, and for nightlife businesses by 69%,” according to Yelp’s data science editor Carl Bialik.

“Pizzerias, fast food restaurants, grocery stores, and fruits and veggies shops are all grabbing a much bigger share of the pie than they were a week ago (up 44%, 64%, 160%, and 102%, respectively, in share of daily U.S. consumer actions,” he wrote.

Apptopia’s data suggests that the surge in downloads may prove fruitful. Their report found that March 15 was a new record for Instacart, Walmart Grocery, Shipt and Target that represented an increase of 218%, 160%, 124% and 98%, respectively, over the average number of daily downloads in February.

Now that residents in major cities such as San Francisco have been directed to “shelter in place,” that is, stay home unless they have a medical reason or to obtain necessary supplies, those numbers may get a further boost.

Watch the replay from our latest Roadmap for Rebuilding event, where the panel offers the strategies you need to build a cohesive and productive team, even in this new normal of remote work.

‘Leave at my door’ deliveries surge

Instacart, for one, has taken extra measures to ensure that deliveries can be made as safely as possible.

In a Medium post, the company said, “We've worked closely with a panel of health and safety experts to develop a robust set of guidelines to ensure you’re able to continue shopping safely.

Our goal is to make sure you have the resources you need to take the appropriate preventative actions and make use of precautionary food handling measures.”

That includes its “Leave at My Door Delivery” feature, which the company said was originally designed to provide a more flexible option for customers that may not be home at the time of delivery. In the first week of March, for one, “we observed a significant surge in consumer adoption and opt-in usage of the feature,” Instacart said in a statement.

During that time period, more than 25% of all orders utilized this feature, the company stated.

The following weekend, “Instacart experienced the highest customer demand in its history in the amount of groceries sold on our platform,” the company said in a statement.

“The average customer’s purchase is up more than 20% month-over-month and includes items hand sanitizer, vitamins, powdered milk, diapers, face masks, and canned goods.”

[Instacart may have been making safety and convenience a priority for its customers, however, the company's gig workers, who handle the in-store shopping and delivery, are saying otherwise, planning a nationwide walkout on March 30.

They say Instacart is failing to provide hand sanitizer, disinfectant wipes and soap to them for free, nor will it provide hazard pay of an additional $5 per order, the workers say.

Until Instacart provides these things as well as extends paid sick leave to at-risk workers with pre-existing conditions, those participating in the walkout won't be reporting for duty.]

Hungryroot, an online grocery service has also experienced significant growth in both customer acquisition and reorder rates recently, and they expect the uptick in demand to continue.

“We're also making notable changes to both our supply chain and delivery model (e.g.

, same day delivery) to ensure we can continue meeting the demand for those customers in need,” the company said in a statement.

Meal delivery service Blue Apron has experienced stock surges and an increased demand for meal kits as a result of the coronavirus pandemic. — BlueApron.com

Blue Apron makes a comeback

Both Blue Apron and Waitr Holdings meal delivery services experienced stock surges, as demand has increased for their meal kits. Waitr stock increased tenfold.

To meet this demand, Blue Apron’s CEO Linda Findley Kozlowski said in an emailed statement: “We are hiring for temporary and permanent positions in our Linden, New Jersey, and Richmond, California, fulfillment centers and hope to create employment opportunities for individuals who may have been displaced by the restaurant or foodservice industry.”

For it’s part, Starbucks has moved to mobile ordering and takeout only as of March 15. The company declined to provide details on the number of app downloads or business metrics at this time.

Not all delivery options are experiencing this surge. Even with contactless delivery, Uber Eats, Grubhub, DoorDash and the are reportedly slowing down, in part as consumers reacted to both the expense of ordering prepared meals from restaurants and the relative safety of knowing how their food was prepared at home.

The upshot, according to Bain analysts, was that it’s unclear whether the economy of food will carry us through these uncertain financial times.

As Marc-André Kamel and Joëlle de Montgolfier wrote, “Few businesses could hope to predict the course of the pandemic with any accuracy.

However, retailers do have the power to quickly develop and roll out contingency plans to address the crisis head-on and ensure business continuity, while playing their role in minimizing the virus’s spread.”

For more resources from the U.S. Chamber of Commerce:

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you your individual situation.

Follow us on Instagram for more expert tips & business owners stories.

Published March 30, 2020

Источник: https://www.uschamber.com/co/good-company/launch-pad/coronavirus-pandemic-food-delivery-businesses

NEWS
Leave a Reply

;-) :| :x :twisted: :smile: :shock: :sad: :roll: :razz: :oops: :o :mrgreen: :lol: :idea: :grin: :evil: :cry: :cool: :arrow: :???: :?: :!: