
Instacart (YC S12) wants to be Amazon with 1 hour delivery - apoorvamehta
http://techcrunch.com/2012/08/01/instacart/
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cs702
I'd love to have this service at home, so I'm (selfishly) hoping Instacart
becomes hugely successful!

That said, I can't help but wonder whether the company will find a business
model with sustainable economics. A lot of really smart people have tried and
failed to accomplish this sort of thing before. For example, Amazon invested
$60 million in Kozmo.com back in the late 90's, and they couldn't make it
work. (Kozmo.com ended up raising a quarter billion dollars before shutting
down.)[1]

The main challenge is that same-day, point-to-point delivery is very expensive
-- a complex problem. (Most delivery systems in use today rely on some kind of
hub-and-spoke design.) Perhaps the wide adoption of smart phones will make
point-to-point delivery economically viable for Instacart -- e.g., by giving
the company cost-effective access to underused delivery vehicles as needed to
satisfy the ebbs and flows of consumer demand.

I'm curious to see if and how Instacart can pull it off.

\--

[1] <http://en.wikipedia.org/wiki/Kozmo.com#History>

~~~
apoorvamehta
While I agree that a lot of smart people have tried this before (Kozmo.com,
WebVan, etc), I believe that there are significant differences in the approach
that we are taking.

Specifically, Kozmo.com was founded in an era where you could IPO without
having profits. Having that mentality from day one allowed them to make huge
concessions to users such as give them free delivery on everything, and not
have a minimum order. For example, you could pay $1.50 for a gum on Kozmo and
get it delivered to you within an hour. WebVan, on the other hand spend $1B on
building it's own warehouses and fulfillment infrastructure.

Learning from those companies, we have done a lot of things differently. For
starters, there is a minimum order of $10. There is a delivery fee of $3.99
for 3 hours and $9.99 for 1 hour. (Would you not pay $4 for someone to do all
your groceries?) And, we do not hold any inventory - all of it is sourced
directly from local retailers.

It is also important to mention that the time that we live in is very
different. People are a lot more comfortable adding their credit card
information on web/mobile. Not to mention, the access to smart phones that
people have gives customers the ability to shop from anywhere - office, couch,
next to the fridge.

We believe we are different from the companies that have tried this in the
past. And, we hope we are live in your hometown very soon.

(edits to follow)

~~~
cs702
apoorvamehta: thank you for your prompt, articulate response.

The logistical challenges look daunting to me. My recollection is that the
problem of coordinating and optimizing deliveries in such a point-to-point
system with time constraints is NP-hard (I could be wrong about this, but
that's my recollection). Then one has to deal with all sorts of real-world
problems like order-fulfillment errors and substitutions (intentional and
otherwise), constant shrinkage of merchandise, etc.

Obviously there's some price at which the service can be profitable, but I'm
not sure it's $4. (Consider that the former CTO of Kozmo, Chris Siragusa, has
been running a one-hour, point-to-point $3 delivery service for a number of
years, MaxDelivery.com, but he has kept the service restricted to a relatively
small, dense area in lower Manhattan, making the economics worthwhile.)

In any case, I sure hope you're right!

~~~
apoorvamehta
cs702, your recollection is correct. Last mile logistics is a hard problem.
Not to mention, order-fulfillment errors and substitutions do happen. However,
we believe these are solvable. It comes down to two things - one is proper
training of the drivers and using technology as much as possible to eliminate
chances of errors.

That is too high level. Let me explain more clearly for one specific case of
order substitution. Since we are focusing on a niche (groceries), our system
has already calculated the substitutes of items. We know how to substitute a
Store Brand Ketchup to Heinz IF needed.

A lot of what I know about logistics is from my time at Amazon Supply Chain,
where I dealt specifically with the challenge of fulfilling packages to the
customer from AMZN FCs (aka warehouses). And, at Instacart we believe we can
have the same efficiencies IF we model the stores in a city just like AMZN
modeled warehouses across the world.

~~~
gav
> And, at Instacart we believe we can have the same efficiencies IF we model
> the stores in a city just like AMZN modeled warehouses across the world.

My supply chain experience comes almost entirely from third-party shipping
(somewhat) similar to this. In my opinion it's considerably harder and more
problematic than dealing with your own fulfillment centers. You give up a lot
of control.

There's a whole slew of problems: * Integration with other people's systems,
which are often horribly dysfunctional, require manual intervention (such as
re-keying), and can't give you the data you need (e.g. stock levels) * The
fact that you have to rely on staff that don't work for you, and either don't
care about you, or in some cases deliberately sabotage your orders * You're
often relying on a vendor who is also a direct-competitor in this or other
channels

I think a good model is Seamless. They act as the middleman just as you do,
however it's the restaurant's name you see, rate, and attach reputation to.
This gives them the incentive to provide good service. If you're shielding
your vendors from the effects of providing bad service, then there's less
incentive to provide good service.

I think it's an interesting problem to solve. Though here in NYC we're spoiled
by a large range of next-day options; I personally use services such as Fresh
Direct, Amazon (Prime and "Shop 'n Save"), Soap, and USQ Wines.

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jhuckestein
It'll be interesting to see how this plays out against Amazon's push into
same-day delivery. Amazon is setting up local distribution centers of their
own. Instacart is using existing distribution centers (i.e. retail stores).

Both companies need to figure out how to best deliver items locally. This is a
big logistical challenge (but luckily it's well researched). In addition,
Amazon needs to predict demand locally and ship items to a local distribution
center. Instacart can leverage existing supply chains but has to pay a premium
for it. If Instacart is willing to operate at a loss for a while, they might
actually have an advantage over Amazon and can fully focus on getting the
local delivery part of the equation right.

Very exciting stuff and congrats on the launch!

Disclaimer: I met Apoorva a few weeks ago and have been happily using the
service since. I'm extremely impressed by how he managed to do all of this
essentially alone and can't wait to see what's next.

Edit: typos

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kevinh
The techcrunch article title is misleading - they don't want to be Amazon;
they're not maintaining warehouses (which may prevent them from crashing like
Webvan). They're effectively delivery people that you hire to bring you
products from local stores, which is a _very_ different market.

Regardless, there are a lot of dead companies that litter the path for a
product like this. I'd be surprised if Instacart succeeds.

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vgurgov
This is the most useful service i discovered i recent months. period. I
seriously recommend this to anyone in SF. I dont remember the last time i went
shopping for groceries. It already saved me tons of hours and money. no-
brainer.

disclaimer: my company is in the same YC batch and I know Apoorva personally
and was happy to get early access to service.

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alanfalcon
I love that the website doesn't shoehorn me into a crappy mobile version when
I load it, but what happens now is that I get a picture of an iPhone and
apparently nothing else—it's not at all intuitive for me to think to scroll
horizontally to find the content of the web page, especially with the hidden-
by-default scroll bars on the iPhone. To clarify, the horizontal scroll bar
that appeared when scrolling vertically while "looking for the rest of the
page" was hidden by a thumb for me. I only barely thought to check horizontal
scrolling before giving up on the page as somehow broken on my iPhone.

Deatil of what I see (on the left) vs what I probably should see (on the
right, after zooming manually):

<http://i.imgur.com/1Yjfi.jpg>

~~~
apoorvamehta
fixed now. thanks for the heads up :)

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zeroonetwothree
If they were to do alcohol delivery this could be really big. Even if they
charge more for it (say $20) it's going to be extremely popular.

~~~
anthemcg
I've ordered alcohol with the app...

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rokhayakebe
This gets even better and it will save tons of money when I can create a bag,
save it, then simply press one button to re-order.

~~~
apoorvamehta
Coming up in the next iteration (i.e. in a day or two) :)

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applefanner
It's a great idea, in theory. But who's the target market? Wealthy
professionals have a wife to bring them stuff or have personal assistants
(hard to believe in the world of dual income households, but I have friends
that do just this). Young, less wealthy professionals just go pick up the
items themselves or have friends pick them up for them. College kids aren't
going to pay for such a service, they enjoy taking a break from studying to go
pick up something. And yes, I know, I'm sure there are stay at home husbands
that do errands for their wealthy professional wives, I just don't know of
any.

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sethbannon
Grocery shopping for the lazy AND impatient? Yes please.

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anthemcg
I have been using past few week while it was in Alpha and I got say, its my
favorite service for drink runs like sodas/juices/liquors. Def going to become
a regular user. Gonna be following with much interest.

Also, to add to the conversation.It all about timing, right? Now with Amazon
being as big as it is and we see companies like Rewinery, Exec, Postmates
smashing into this on-demand local delivery space. The time seems ideal for a
company like Instacart. I do miss WebVan though.

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SoftwareMaven
Monday I was having a conversation with a coworker about the looming major
showdown between Amazon and Walmart. My take was Walmart should offer
_exactly_ this, allowing them to leverage their massive supply chain and
warehouses in every city with more than 5000 people (aka "The Walmart").

Awesome to see a startup rising to the challenge.

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imjk
Wasn't there a documentary about this somewhere back in the day that came to
define the dot-com bubble?

~~~
apoorvamehta
The documentary was talking about Kozmo.com, which had several issues in their
business model including no minimum order size or delivery fees.

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makeee
I've been using instacart a lot lately and it's awesome. I really think this
is going to big.

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reddickulous
How can they make money delivering for $9.99? I guess the item prices are
jacked up a little.

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DanielRibeiro
Sounds nice. I know some people have been using Exec (YC W12) to do this, but
instacart is much cheaper. The only thing that takes all the excitement for me
is that it does not have a android version OR a web one....

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nukethefridge
This looks great. Today I'm sick WFH and could really use some meds delivered.
I signed up for an invite... what is the process/wait time like? I may have to
try something else if I'll need to wait too long.

~~~
danielweber
Unfortunately for you I would expect medicine to be something they won't
deliver. Alcohol, too.

~~~
nukethefridge
I was thinking more like cough drops and advil, not prescriptions... would
those still be outside the acceptable list of things to deliver?

~~~
dafnap
I ordered Advil through instacart. Really saved me.

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kfk
Have you looked at the financials of this? 10$ for 1 hr delivery means that
either the carrier is paid less than that hourly(and I guess at least 20% less
than that) or he is supposed to deliver more than 1 package per hour.
Considering transportation costs and idle time, I am not sure this will work
smoothly. It will work if there is a list of carriers ready to drop what they
are doing to go buy groceries and make some money. Basically, it will work in
cities with lots and lots of students...

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Philadelphia
Doesn't Amazon plan to be Amazon with 1 hour delivery?

~~~
apoorvamehta
same day is different than 1 hour. not to mention, you cannot order
perishables from Amazon.

~~~
jlgreco
<http://fresh.amazon.com>

~~~
graue
Only available in Seattle.

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RobAtticus
This kind of seems like a rip off of Postmates' "Get It Now", no?

<http://postmates.com/getitnow/>

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samstave
Kozmo.com of the new era bubble.

This will be interesting.

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antidaily
Peapod but faster?

~~~
tg3
Kozmo.com, but with a saner business model.

~~~
mmmmax
I remember Kozmo.com! The big difference now: Smartphones

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dinkumthinkum
I can barely get a pizza delivered in an hour, and they've been doing that
since the 1970s (I guess, I have no idea when pizza delivery started). Do I
have to worry about Instacart maniacs driving like banshees on the road?

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binarysolo
This feels like a specialized TaskRabbit kind of thing (like what they tried
to do with the $10 delivery for In-N-Out anywhere in SF). Could be workable if
there's enough customers.

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mochizuki
If something is located within an hour of me I could just drive and get it, or
use a local delivery service. I use the internet to buy extra weird stuff that
I can't get locally.

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tianshuo
Groceries+short delivery window... sounds like webvan ;-P
<http://en.wikipedia.org/wiki/Webvan>

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mthmohan
Love the idea.. Possibilities around POS data and Nielsen like services are
obvious extensions.. Good luck!!

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rahulnb
Better than Peapod and Kozmo, the time for such a service is definitely now in
the mobile driven world.

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endeavor
Are you guys limiting the invites? I'd love to check it out but haven't
received my invite yet.

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HorizonXP
Congrats Apoorva! Glad to see us 08 Elecs trying to change the world for the
better.

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chris123
Who delivers? Is this a P2P marketplace (like Taskrabbit, etc?)?

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tylerlh
Looking forward to giving this a try. Best of luck!

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shiftb
This is a brilliant idea. Hard, but worth doing.

~~~
bezaorj
I truly want this on my city, and I guess a lot of people are thinking the
same, so the model has a lot of potential!

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adv0r
Milkplease (refused by YC) is more promising and we are trying to be faster

[http://www.springwise.com/retail/italy-site-lets-users-
crowd...](http://www.springwise.com/retail/italy-site-lets-users-crowdsource-
small-last-minute-grocery-deliveries/)

