
Instacart (YC S12) aims to be the Amazon Prime of grocery delivery - apoorvamehta
http://news.cnet.com/8301-1023_3-57489629-93/instacart-aims-to-be-the-amazon-prime-of-grocery-delivery/
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thurn
Amazon has had, what, five years to expand its Amazon Fresh grocery delivery
service? The fact that they have chosen not to implies that they haven't
managed to make it cost effective. I think this speaks volumes about the
feasibility of grocery delivery.

~~~
greghinch
While I agree that Amazon not having much success in this market is not a
great sign, it seems like there are probably a number of other reasons they
haven't been expanding the service. Amazon is trying to be the one spot you
buy all physical goods, but it's been proven time and time again that getting
to generalized, or trying to be all things, means you can't do all of them (or
sometimes any of them) well. I think a new company with this focus definitely
has the best chance of success. At which point, Amazon will probably buy them.

For now though, please expand up to Marin!

~~~
Wingman4l7
Personally, I wish Amazon had stuck with books. IMO, their diversification has
made their site organization suffer -- especially when they allowed 3rd-party
sellers to create product listings (which led to maddening duplicates).

I pray that Newegg's diversification from computer hardware won't have the
same adverse effect, but it's probably a law of retail that it will.

~~~
steve8918
I completely disagree. I think Amazon.come is absolutely amazing, and I do the
vast majority of my shopping through it. Bezos's intention was to offer
everything under the sun when he started the company, hence the name Amazon,
because of it's diversity in terms of number of species that exists there.

I compare my experience with Newegg, and although I've bought some stuff from
Newegg, I will generally go with Amazon, even if it's a few dollars more
expensive, because I trust Amazon so much more, and the entire experience is
so much better. I'm basically their model customer, and they have me hook,
line, and sinker, especially with Amazon Prime.

~~~
Wingman4l7
Maybe that was his intention, but it's hard to deny that the main focus of
Amazon was (and may continue to be) books. I think it just boils down to
whether or not you believe in the aforementioned idea that it's only possible
to do one thing really well.

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ssharp
$10 for one-hour delivery and $4 for three-hour delivery seems extraordinarily
cheap, given the someone is actually going to a grocery store, buying this
stuff, and delivering it to you.

If those are the actual operations, it appears like it would be very difficult
to turn a profit. However, it does seem like there are plenty of good ways to
make the operations more efficient once demand is high enough while still
remaining light on assets like warehouses, trucks, etc.

~~~
streptomycin
Those prices are comparable to services like Peapod which take orders the day
before and plan out at least relatively efficient schedules. Especially if
they're moving to a yearly flat rate subscription to get people to make more
frequent orders, I don't see how this can work.

But I wish them the best of luck, it would be wonderful for them and their
customers.

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sytelus
Back of the envelop calculations: A typical delivery would cost 1 hour of
someone's time. At minimum wage this would cost ~$5. So $99 buys you 20
deliveries. If you batch up 3 customers every hour than $99 can pay for 60
deliveries.

If your order twice a week for 50 weeks than customer gets 100 deliveries for
$99. So net/net Instacart would have gap of 40 deliveries = $33. So in essence
they would eat up $33 per customer as loss which you can simply be viewed as
customer acquisition/retention cost.

I think this is brilliant model. $99 for 3 hour deliveries would be very
attractive to upper middle class. It also illustrates class of powerful
business models which are simply based on swapping time for money and
leveraging the exchange rate between time and money to be minimum wage.

~~~
danielharan
With a concentrated customer base and excellent logistics, they may be able to
do much better than 3 deliveries per hour.

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RandallBrown
Isn't Amazon Fresh the Amazon Prime for Groceries?

~~~
evanmoran
This is word for word what I was thinking. Well played Randall from 58 minutes
ago.

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steve8918
I hate to be overly negative against this startup, but I have a couple of
issues with this service, that haven't been addressed since Webvan in 2000:

1) The target audience is definitely those people who are too busy to get
their own groceries. If they are too busy to get their own groceries, aren't
they too busy to cook a meal? I would think that take-out or going out to eat
would be their #1 competitor in this area. When both my wife and I were
working full-time, at the end of the day we were so exhausted that the last
thing we wanted to think about was what we were going to eat, and then
actually cooking it. We ate out probably 5 days out of the week. Ordering
take-out will be quicker, and less of a hassle.

2) If the delivery person selects items such as meat, eggs, milk, etc that are
expired or very close to expiry, it will likely cause a complete lack of
confidence in the service. It will only take 1 bad experience buying meat, or
a couple of busted eggs in a dozen, and they could potentially lose a customer
forever. I'm not sure what their return policy is, but if they have one, it
will likely be pretty costly for the company. There also could be incentive
for people to return their close-to-expired food to Instacart, claiming that
the delivery person selected it. It may seem petty, but for example very high
chargebacks rates are one of the biggest challenges that Square faces right
now.

3) Free delivery is interesting, but the 3hr delivery window I think will turn
out to be pretty inconvenient for customers. It means that they need to
deliver their goods at home, because who wants to be stuck at work waiting for
their groceries to be delivered? I'm not sure what the delivery times were
during their beta testing, that would be interesting to know, but my best un-
educated, armchair-analyst guess is that the highest amount of deliveries will
be from 7 to 10pm, and on weekends. If Instacart takes off, it means a
disproportionate about of work required between 7pm and 10pm, and a lot less
at other times. This sounds like a lot of people sitting around waiting for
deliveries.

4) Safeway has their own delivery service as well, with a 1hr time window.
What exactly does this service provide that Safeway can't? Is it cheaper? Or
just faster?

~~~
bhickey
Don't forget about people who don't have cars.

I absolutely loved Ocado when I was living in London. Tesco's was four blocks
away, and Sainsbury's a kilometer. Getting groceries home on the bus is no
fun.

Damaged goods were refunded no questions asked (the yogurt pots had a habit of
bursting).

If I could get the same service in this area, I'd do it at the drop of a hat.

~~~
vidarh
I second that. We have a standing weekly order with Ocado.

For those who've not experienced Ocado weekly deliveries:

It's fantastic - they automatically create an order for us every week for
delivery on Friday between 6pm and 7pm. The order includes items we've said to
always include, excludes items we've said to never include, but other than
that they create a "recommended" order based on our past shopping patterns.
Usually it's a very close match and we just tweak some quantities if we've
used less or more of something or want to wary our menu.

We then have until about 1am on Friday to amend the order via the web
interface or their mobile apps as our needs change through the week. It cuts
down my total grocery shopping time to about 5 minutes a week.

Everything comes sorted into color coded bags for the freezer, fridge or
cupboards, and the invoice (and web site) lists the minimum number of days
until the use by date of each item.

I hardly shop offline any more - between Ocado and Amazon, 99% of my shopping
needs are taken care of.

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rdl
I loved Webvan when it existed, and then Tesco's delivery service in the UK,
but never got into the delivery options in the US since then. (I also ended up
with >30 of their crates...)

I'd pay $50/wk for someone to go to storage freezer (deer, beef), the butcher
in Alameda (other meat), Berkeley Bowl (produce), Tokyo Fish Market (fish,
japanese stuff), Whole Foods (365 is a decent deal, failthrough for anything
not at the above), Costco (specific bulk items, like ito-en green tea and san
pelligrino), and Trader Joe's (frozen food) to get groceries. Unfortunately, I
think I outgrew Safeway some time ago. The other problem is I often want to
buy highly seasonal items, based on availability, price, and quality. I don't
think there's a good way to get the quality I want at a single store at a
decent price; Whole Foods comes closest, but is expensive. Add BevMo for
liquor, too.

Webvan had basically one or two steps better quality than Safeway (on par with
Andronico's), and all in one place.

A service to get stuff for a party during the party (e.g. if you run out of
beer) in 1h for $10 would be awesome. I don't think I'd use 3h Safeway
delivery even if free. I would use a higher end service with great quality
food (by going to the right shops) if the ordering experience exposed current
inventory status.

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brandon272
I would really like for online groceries to work, partly because I despise
going to to the grocery store. I'd much rather have someone else find a place
to park, locate all of their items, wait in line at checkout and haul the
groceries out of the store. I'm even willing to sacrifice things in order for
that to happen, like being able to inspect and pick my own meat and produce.

The only sticking point for me is price and selection. I want options when
choosing products and I want the prices to be comparable to what I see in the
store. I don't want prices that are twice as much as in the store PLUS
delivery fees.

Hopefully Instacart Express tackles that problem. The only concern I had after
reading the thread is that it sounds like they have an employee go to an
actual grocery store to pick up the order and deliver it. That method of doing
things sounds painful once the service really starts to grow, but perhaps
they've got an alternative strategy for when that happens.

Good luck, Instacart!

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watchdogtimer
We started and operated a grocery delivery service like this for some 15 years
as a sideline to our normal delivery business.

It was an operational nightmare.

Picking one order for a customer at a grocery store quickly is hard enough.
Two orders requires using two carts and care that you don't mix up the orders.
Picking more than two orders at a time is almost impossible, which limits your
productivity.

We routinely had customers who would order more than a cart worth of groceries
at a time. Offices would order 20 cases of soda pop and several boxes of
munchies. Picking, transporting, and delivering these orders often took well
over an hours' worth of time each.

If the average customer is ordering once a week, the $2 they receive won't be
enough to cover their costs, and they'll have to charge significantly more
than shelf price for the groceries if they are to be profitable. But this will
discourage customers who believe they are paying an annual fee in return for
"free" delivery.

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tednaleid
In Minneapolis, we've had grocery delivery for quite a while now through
Coborn's Delivers (<http://www.cobornsdelivers.com/>). It used to be Simon
Delivers (<http://en.wikipedia.org/wiki/SimonDelivers>), a startup that went
under and then was taken over by an existing local grocery chain.

We pay $5 for next-day delivery or $10 for same-day (for orders of at least
$50, otherwise add another $5 to delivery).

It's a huge time saver, we have groceries delivered every Sunday and they have
good selection and produce. The prices are a little more expensive, but it's
totally worth it for us.

The startup I'm working at also uses it periodically to have soda and snacks
delivered. Much easier and more reliable than having to send someone out every
few weeks.

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callmeed
I can't help but worry that services like Instacart, TaskRabbit and Exec may
perpetuate the problem of "underemployment" in the United States.

Let's face it, you can't pay delivery people as good as, say, Costco does it's
hourly employees and only charge $4 or $10 for delivery. It's even worse if
these services are just 1099ing these people without any benefits, gas money,
etc. (I have no idea if this is the case).

Maybe these services use student workers. Maybe I'm way off. But I do know
that I'm as pro-capitalism as anyone but felt a little dirty after paying
someone on TaskRabbit $15 to walk around SF for 2 hours and get me some
restaurant information.

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brackin
Do you not have these services already in the US? In the UK every major
supermarket will deliver to your home whenever you want. They all have mobile
apps, etc. They have the leverage, surely the same would happen in the US?

~~~
tkahn6
I imagine is has to do with the comparative sizes and population densities.

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damian2000
I thought this concept of grocery deliveries for free had died with WebVan
back in 2000 [<http://en.wikipedia.org/wiki/Webvan>]

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fourmii
"Instacart simply takes customers' $10 or larger orders, sends a staff shopper
to a local merchant to load up on fruits, vegetables, meats, and the like, and
then delivers them." How are they going to scale this? Sounds like it would
require a huge workforce in each of their markets. And what about the grocery
chains' delivery services like Peapod?

~~~
steve8918
If they wanted to scale, they would need to make deals with the grocery stores
to pack the groceries, or have their own food depots so that the delivery
people wouldn't have to waste to packing groceries.

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georgemcbay
I hope that while they exist they use heavy duty containers for the
deliveries.

I'm still getting a lot of use out of my old Webvan tubs!

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fluxon
As far as I can tell, Instacart works on phones only, not the web. Will there
be a web UI? And it's iPhone only. Q: Where does Apple get its 30%? All in-app
sales? Just the delivery charge? Will there be an Android version? If not, why
not?

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adebelov
those damn instacart addicts :)

