

Sequoia Leads $8.5M Investment in Instacart - hornbaker
http://allthingsd.com/20130710/sequoia-leads-8-5-million-investment-in-same-day-grocery-delivery-startup-instacart/

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adw
Instacart is a really interesting business (it's a logistics play, not a
retailer, and logistics is stealthily really sexy – it doesn't matter what
sells, you win), but the thing is, US is at least ten to fifteen _years_
behind the rest of the world in grocery sales:

[http://www.ocadogroup.com](http://www.ocadogroup.com)
[http://www.lse.co.uk/ShareChart.asp?sharechart=OCDO&share=oc...](http://www.lse.co.uk/ShareChart.asp?sharechart=OCDO&share=ocado)

(amongst many – every major UK supermarket has a popular home delivery
service).

It's up there with mobile and wireline Internet, and cable TV, for areas where
moving to the US has felt like moving back to the mid-nineties... there are
other areas where the US is unquestionably the leader, but yeah.

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jpdoctor
In case you need reminding: The reason this is funny is that Sequoia pissed
away $200M over WebVan.

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minimaxir
One could also argue that Sequoia now knows the difference between a doomed-
to-fail grocery delivery services and a successful one after experiencing it
first-hand. :)

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jpdoctor
> _One could also argue that Sequoia now knows the difference between a
> doomed-to-fail grocery delivery services and a successful one after
> experiencing it first-hand._

When did they experience a successful one?

Groceries are incredibly low-margin businesses that don't engender a lot of
interest from the end users (mutual funds for the IPO stock), not usually the
purview of VCs. But perhaps this $200M grocery investment will be _the_ $200M
grocery investment that pays off.

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urlgrey
Larger grocery store chains (i.e. Safeway) have a tremendous price markup,
often times reaching 50%. This markup contributes to their profits, of course;
but it also helps offset losses from the inefficient process of distributing
perishable goods to consumers. If they could improve that efficiency while
keeping prices constant, then grocery store chain profits could benefit
substantially.

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flipperypokery
That's $8.5M they're going to spend proving (or disproving) market viability,
at which point, if it's working:

\- The stores themselves will just roll out their own competing services. They
can't afford for a middle man to eat their margins.

\- Existing players like Fresh Direct will leverage their complete control
over stock and distribution to beat them on price and service. There's a lot
of wiggle room when you don't have to deal with stocking physical store
shelves.

I guess, thanks to AirBNB/Uber, that 'collaborative consumption' is the new
hot VC investment.

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grbalaffa
> The stores themselves will just roll out their own competing services.

Safeway already has their own online ordering & delivery service, however it
doesn't allow you to bundle items from other (possibly competing) stores.
Instacart allows you to pick (for example) 3 items from Safeway, 2 items from
Trader Joe's, 1 item from Costco, and 6 items from Target ... all in the same
delivery. It would take a joint venture / agreement among all the major retail
chains to make that happen with their own services. Instacart's model is
actually safer than it seems at first glance.

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flipperypokery
I'm not really convinced that this is an interesting feature.

People tend to choose store brands for a myriad of reasons, and stores tend to
differentiate themselves based on those market divisions.

Paying a premium to get a single delivery with items from both (which is
something that has a lot of logistical issues) doesn't seem like something
with substantive draw.

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eliben
I really wish Instacart or something similar succeeds. The state of grocery
delivery in the Silicon Valley is far from ideal.

The key, though, would get the supermarkets involved. The only way to lower
the delivery price and stay profitable is to convince the stores that it's in
their interest.

