Hacker News new | comments | show | ask | jobs | submit login
Instacart has raised another $200M at a $4.2B valuation (techcrunch.com)
126 points by smaili 10 months ago | hide | past | web | favorite | 145 comments

I have never had a good experience with instacart. I’ve ordered from them probably 10-15 times and every single time, without fail, they either forget an item or replace an item with another item that I don’t want. This makes the service unusable, because if I’m cooking dinner that night and want to order instacart, there’s a high likelyhood I’ll be missing something crucial for my recepie, meaning I’ll have to go to the store anyway.

Not to mention the shady fees. The last time I used instacart, there was a box checked called “service fee”, I clicked on it to see what it was and it said “this $10 charge is optional and helps us keep running instacart”. Meanwhile the tip for your driver box is not checked. I bet a large number of people assume the service fee is the tip, and leave tip blank. Blatant tip stealing.

Plus they mark up everything you buy, and obfuscate this so it’s impossible to really know how much extra instacart is skimming off the top.

Amazing prime now on the other hand has never messed up an order. They always deliver on time. The prices are actually cheaper in some cases than in store.

I can’t wait for instacart to go out of business.

A few more things instacart does that really bother me:

1. The time slot changes as soon as you click checkout, what I mean is while browsing I'll always see "Available Within 1 hour" then when it actually is time to checkout that option is gone. It happens virtually every time and I've never seen it happen the other way around or happen while shopping and refreshing or going back and forth between shopping and checking out. This leads me to believe it's an intended trick they are using to get people to shop even if the time they want isn't available.

2. They don't provide drivers with any sort of cart to actually deliver the groceries with. One delivery driver had to lug water bottles and other heavy items from down the street where he could find parking into my building and up to my apartment. Amazon Fresh gives their drivers a handcart to help with deliveries.

3. After several orders of mine were never delivered and Instacart offering a $5 credit (after wasting hours of my time waiting for their large delivery window) I had a driver tell me that drivers get to keep orders that are not delivered and sometimes they pick really good orders and say they couldn't be delivered.

I still use them because it's convenient but wish they would treat their users with more integrity and also manage their delivery drivers better by providing supporting tools like a cart or keeping tabs on drivers that may be taking orders for themselves.

Instacart not supporting their contractors - well, I guess they're still contractors, I don't know what happened to wanting to switch them to employees - is my biggest gripe.

While I was pregnant and stuck at home, I received a bunch of my roommate's 1-2x weekly Instacart deliveries. Without fail the majority of Instacart drivers tried to refuse to go up our one flight of stairs with 1-2 grocery bags. One cursed me out while bringing the bags upstairs. Some left the bags next to the gate. Mostly only women would bring it up without complaining, "you're sooo biiig giiirl go put your feet up!" And then fuck me, we misunderstood the $$$ Instacart fee as a tip so the people doing their jobs didn't get tipped :(

This is omitting the stupid shopping mistakes like 1 leek instead of 1 pound of leeks, and the amazing chat session I had with one shopper that asked me where to find something I'm buying for the first time, at a store I've never been to.

I have never had this problem with Good Eggs, never had this problem with Prime Now, only had it once or twice with Postmates and Caviar. Something's not being incentivized correctly over at Instacart.

Exact same experience. Instacart shopper cannot find extremely common items and tries to replace them with 2-3x more expensive options.

The whole model of the shopper walking the isles to pick the products is wrong. It's inefficient and a recipe for disappointment, because what you see on their web page is just a guess at what the store has and the shopper can find.

I too have used Instacart probably 10 times, but never will again. It is also all but guaranteed that Whole Foods will drop Instancart like a hot potato for their own in-house service, so the valuation is completely wrong in my opinion.

Amazon Prime Now is already starting this (https://goo.gl/fSF4DR) in select markets. I used this last weekend and the delivery was perfect! You can opt to have an out-of-stock item either left off or replaced with a similar item. They will even send an SMS to request confirmation if they need to use a substitute product, giving you an opportunity to provide more feedback.

That's exactly how Instacart works as well. The shopper is able to call or text the customer to discuss substitutions.

Correct - as well as choose from "best replacement", "replace with specific item", and "don't replace".

Since Instacart remembers these choices across orders, I've found this useful for making sure I get what I need.

I suspect the fact that Amazon is so good at food delivery is exactly why Instacart has been able to raise at such a high valuation. Amazon's purchase of Whole Foods, their Amazon Go store, and generally competent execution of grocery delivery has put the fear of $DIETY into all the incumbent grocery chains. They realize that they're late to the game and don't have the internal talent to develop an effective and convenient home-delivery competitor, so they're forced to partner with Instacart, who is hoping to commoditize them.

I feel like even Amazon doesn’t have enough internal talent to execute on all the projects they want. Grocery stores don’t stand a chance.

Similar experience, I hate to say it. Instacart's support has been pretty poor as well. If your delivery person gets an item wrong or delivers expired goods, good luck trying to get a refund because you'll be presented with a "you can return it yourself". Something go wrong with an alcoholic order? It's even worse because alcohol sales are non-refundable. I've had orders where the delivery person brought the wrong item and Instacart just ghosted me on my support emails and tweets until eventually they said my order was done too long ago to resolve.

Similar experience. The app is fine, but the quality of shoppers usually isn't. Lots of forgotten items, unacceptable replacements, or just getting the wrong thing entirely. Once had a shopper who didn't know cucumbers from zucchini. Another time, we ordered 2 pounds of shrimp and got...2 shrimp. Just two little shrimp! Honestly, who would even think it makes sense that we would've ordered two individual shrimp? I've had so many bad experiences that I don't ever plan to use Instacart again.

I routinely buy one shrimp because I don’t like shrimp but I cook it for my baby as part of getting her diverse foods.

I agree. I use instacart every few months, but I will NEVER use them to buy groceries for a dinner I'm preparing that day. I've had too many instances where they didn't have the meat I needed, so I had to order out. They are not useful for folks who cook a lot and care about their ingredients.

They really really need real to have real time inventory for users like me. The shopper model worked when they were just starting off because it allowed them to launch in tons of cities without even the groceries approving but now they need to move to a model where they get the grocery store's inventory; the current method is just plain inefficient.

Instacart is going to get slaughtered. If it was public, it would be in a GTZ (Go to Zero) basket. Its business has a critical flaw that was only kind of workable when Amazon did not own WF.

Amazon WF same day delivery would be picked from WF stores by the people who work in those stores and are trained in those stores, not Joe Random Gig Worker who does not know how swiss chard is different from the rainbow chard, and AMF would do it for no markup to WF price.

Vertical integration in the last mile grocery business would crush anyone who is not vertically integrated. The only way for non vertically-intergrated Instacart to complete is to pivot into SaaS business selling its platform to the independent store operators for something like $1 per order but there's just no way $1 per order software platform would command that valuation.

as an engineer at instacart, it's very disheartening for me to see the top-rated comment on HN is "I can’t wait for instacart to go out of business."

even if we did not provide value to you (which i apologize for -- it is a priority of ours to improve the replacement experience in particular as it is very frustrating to customers), i am not sure why that implies that we do not provide a valuable service for others and why you would wish ill on us.

perhaps it is because you think of us as an overall unscrupulous company ("shady fees", "mark up everything you buy"), which i would contest -- we strive for transparency when possible (see [1] for screenshots around how we describe the pricing of our service). but the larger point remains -- why do you think that there can only be one victor here, and that is has to be amazon? (or "amazing" as you put it).

right now, amazon is very explicitly coming for the grocery industry -- an $800+ billion industry that is almost 100% offline -- and we are attempting to be one of the (hopefully many) independent companies that enables it online. grocery companies have built amazing fulfillment pipelines and relationships with both farms & customers that we are building a front-end and logistics system for.

anyways, i do not speak for instacart as a company, just for myself as an employee who usually enjoys HN.

[1] https://imgur.com/a/j47ls

Saying “we charge markups, but we won’t tell you what they are” is still not sufficiently transparent, in my opinion. Yes, Amazon and grocery stores do the same thing (at face value, anyway) by not disclosing their COGS. But the key difference is that my next-best alternative to Instacart is to just go to the grocery store myself. My next-best alternative to getting something delivered from Amazon isn’t to get it more cheaply from a brick-and-mortar Amazon store, or to buy it directly from their suppliers - it’s to get it from a different retailer entirely, and I can trivially compare all-in prices between other retailers and Amazon. So I can easily assess whether it makes sense from a cost/benefit perspective to buy something on Amazon, but I can’t make the same assessment for Instacart.

I do think the service creates value. But I still hope that, at the very least, it soon faces enough competition that it’s at least forced to be fully transparent about the cost of its service. I want to see one number - the difference between what an order of groceries costs me on Instacart all-in, and what it would cost me to go to the grocery store and purchase the same items myself. As long as I can’t trivially find or calculate that number, I won’t use Instacart again.

i am very confused why you have a higher bar for this than other services. would you actually create a spreadsheet that values your time (against other alternatives), gas/lyft/train fare to and back from the store, the extra costs associated with actually being in a retailer (and seeing the specials in store etc) and compare that against our offering?

and again, we aren't the ones doing the markup -- those are coming from the retailer directly, who may (or may not) mark up prices, which is their prerogative. we put all of our costs in the checkout screen transparently.

>> and again, we aren't the ones doing the markup

So you claim, but since you refuse to list what the IC markup is then it's impossible for us to tell. You're essentially using the retailer markup as an excuse to hide instances of when you do it yourself.

Thus the lack of transparency.

In any given transaction, I have NO idea what the actual % that was added by IC. I do not have this problem with Amazon Prime.

again, in 99.99% of the cases, we aren't doing the markup.

and, in the one case where we do not have a signed relationship with the retailer, we do explicitly note the percentage.

we aren't hiding anything. and, you have that precise problem with amazon prime -- what markup are they charging?

If any markup exists, and if Instacart splits some of that markup with the retailer, it seems like obscuring the facts to state that Instacart does not charge a _separate_ markup.

> again, in 99.99% of the cases, we aren't doing the markup.

I find that hard to believe. That's the retailer markup? So you're just relying on the 0.01% (I know, arbitrary) where you do, and the opt-out $10 Service Charge to make money?

Are you responding to the same screenshot that tfehring is commenting on? https://imgur.com/a/j47ls It says:

> "A mark-up is added to item prices at this retailer to cover the cost of the Instacart service. Prices are based on data collected in store and are subject to delays and errors."

There is no good, ethical reason why a delivery service should show me an item price that's different from what's in the store. It's completely ethical if the company wants to say, "The service fee for this store is X% (as a percent of item prices)", or "This store has an additional $X service fee". That is honest and reasonable. I expect a delivery service to quote me the same item price as the retailer quotes in its store.

The reason I have this preference is because of a delivery service's value proposition: shopping in my store, on my behalf. I have access to the same products and can buy them directly. So I want to directly consider the service's value proposition, by considering the service fee I'll need to pay versus buying things myself. (EDIT: Simplify)

as i have noted elsewhere in the thread, that is a message -- from the retailer -- that the prices are different from in-store (and again, online pricing is their prerogative).

instacart is not marking anything up.

edit: it seems clear that we can do better in terms of communicating this, so i've passed that feedback on to the team.

That's in no way relevant. I want to know how much more it costs to use Instacart vs going to the store, and I don't care what their costs are just what mine are for using the service.

some constructive feedback: i had no idea that the markups were from/by the retailer, as opposed to instacart.

consider changing the messaging there? until now, i was under the impression that the markups were just another way for y'all to make some money off of me.

Why is it that grocery stores charge an Instacart shopper more than a regular customer? What extra work does the store have to do for the Instacart shopper that they wouldn't for a regular shopper?

Intuitively it seems like the store should be more incentivized to offer lower prices to Instacart since they provide a steady stream of business, reliable payment, etc.

Shh, its the cost of the kickback they are trying to talk past. Its just another fee.

Eh, their shoppers sound dumb from the anecdotes here, are likely tending to be picking up larger orders a lot, and generally plugging up the store at a higher rate than other shoppers.

Thanks for the clarification. I always assumed that this markup was from instacart and not the retailer. I guess I always found this very frustrating because instacart always says “we’re super transparent” but they never actually tell you what the mark up is. I guess instacart doesn’t even know what the markup is, which would explain why it isn’t communicated.

Excellent - so it's not a lack of transparency, but bad copywriting/marketing.

The paragraph reads like IC is responsible for the increase, not the retailer itself.

No, I wouldn’t perform that calculation exactly and explicitly - but I absolutely think about my purchasing decisions in that way. I can give you ballpark estimates of how valuable my time is, how much time it takes and how much it costs to physically go to the grocery store, etc., and give you a ballpark breakeven point. I’d probably pay $20 for a grocery delivery, but I probably wouldn’t pay $50. But I have no idea where the all-in cost of the service actually falls, so I can’t compare. And I do hold other products and services to that same standard - for example, I regularly compare prices between retailers, except for trivial purchases for which comparison shopping isn’t likely to be worth my time.

As for the source of the markups, that really doesn’t matter to me. I care about the total difference in cost between using Instacart and going to the grocery store myself, irrespective of who that additional money goes to.

thank you for context, and sorry if i sounded snippy in my response.

i was mainly noting the source for markups as we cannot tell you that delta -- it's up to the stores to tell us what they want to charge online. we do want to be as transparent as possible! ("possible" being the operative word here)

No problem at all - thanks for sharing your perspective. It’s helpful to know that grocery stores themselves are responsible for those markups, not because it affects the value that the service creates for me now, but because it impacts how the service could evolve in the future. If Instacart is currently subject to higher-than-retail prices, there’s even more room for it to potentially benefit from setting up its own warehouses, relationships with wholesalers, etc.

Never used Instacart, but your link to show transparency, doesn't actually state what the mark up is.. 2%, 10%, 25%, order minimum or there's fee..

Transparency to me, would mean I place order and know how much it will cost, instacart mark up, service fees and if a tip is included.

we used to provide specific percentages, but phased that out over time as it was obvious that wasn't providing real value -- where on amazon.com do you see their markup?

additionally, for virtually all stores on instacart.com now, we are simply passing on the pricing that the retailer has given us (which may or not be marked up from their internal prices -- but we do not control)

edit: to be crystal clear, that means that you are getting exactly what you are asking for -- the prices are simply what the retailer sets (which may be marked up from in-store -- that's their prerogative), and then we show our fees on top of that on checkout. we aren't "hiding" anything, and it's your decision whether the fees are worth your time.

>additionally, for virtually all stores on instacart.com now, we are simply passing on the pricing that the retailer has given us (which may or not be marked up from their internal prices -- but we do not control)

IC is responsible for signing the contracts they have with retailers, IC is also the most visible partner for the end-user. As you can see from this thread, attempts to kick the blame down(up?) the supply chain will only fall on deaf ears.

I don't think it's comparable to Amazon's mark-up. The alternative to Amazon is walmart.com, ebay.com, etc., all of which can be directly compared. Instacart provides a delivery service. It's comparable to Uber Eats or Eat24. I agree with the others that it seems shady to provide a delivery service but obfuscate how much you're charging for delivery.

I know Uber Eats bans restaurants from marking up orders placed through them. You can look at your phone and decide exactly how much extra the delivery costs and then decide if it's worth it to not have to go pick up the food yourself. I've never used instacart but if you're telling me that the price of the service is a secret from me I have a problem would that and would not use it. I don't want to pay $50 to have someone pick up my groceries. But I'd gladly pay $10 on certain days. But I have to know beforehand. I'm not going to sit around and hope Instacart doesn't screw me over today.

My concern is the price of getting the product at the store verse instacart delivering it.

If you can get a discount directly from the store, great! You are providing value to them.

I agree. There are really only three things I can imagine caring about:

1) Receiving the exact items I ordered. 2) The time it takes to show up at my door. 3) The total price beyond what it would cost me in the store.

I know what I pay at the store, I know the value of my time, and I know the cost of driving my car. All I need from Instacart is the total cost for the service presented as simply as possible.

There are a subset of users on HN that can be hyperbolic. I've worked at a few well known companies and every time they come up here you get some vocal minority outraged about the product/pricing/culture/tech/anecdotal experience etc. I think it's truly toxic (yet entertaining) and definitely deflating as an employee. There is a lack of empathy for other people, companies and a deep inability to disconnect the two. I've noticed a hyper-rationalism here that reduces every company and product into the sum of it's parts and deems it outrageous- which to me comes across as unhealthy (reminds me of going to lunch with an engineering team that optimizes the route, their orders, seating, etc).

Congrats on the raise and good luck with everything.

Overall I really like Instacart and quite frankly, I've come to depend on it. Shopping with kids is difficult... it's much easier to plan ahead and shop when I have a little free time. So congrats on the funding!

I understand some of the frustrations about replacements. Originally the shoppers were pretty good about calling. Recently the app was updated for 1-1 chat and interactive replacement choices. However, it seems the shoppers are to busy to use the feature... I've had a few notifications for replacements, only to click on it and find the shopper has already checked out.

Personally, I accept that limitation of the platform and make sure I choice "no replacement" if there's any chance I'll be disappointed.

thank you for the kind feedback -- we love to hear from customers who we help like this! and, we are constantly trying to improve the experience (especially the replacement experience!)

Isn't it illegal to offer a "store credit" instead of a refund in cases where IC forgot my items and I paid debit? Seems like a really shady way to bring customers back.

Don't get me wrong, I enjoy the whole concept of online ordering but the IC UI forces users into choices that benefit IC by default.

I believe when the refund is not the customer's fault (though some choose to do it then), that the refund is typically "by the medium paid" (with some waiting, or such, for things like uncleared checks, etc.), but I'm not sure if that's a product of merchant regulation, consumer law or 'policy'.

My experience with Instacart has been pretty great so I was shocked at the GP vitriol as well. In my case, Instacart has been a huge help - my brother, who is unable to drive for medical reasons, uses your service considerably to get his weekly groceries. Once I figured out the substitutes scheme, it worked like a charm.

I don't have stake in this one way or the other, but will you argue in favor of Instacart's '$10 service fee' (as mentioned by parent commenter)?

i am not entirely sure what they mean by that. the service fee goes 100% towards the shopper fleet and is an essential part of a reasonable compensation structure for all of our shoppers -- if we switched entirely to tips, the folks that (e.g.) actually picked out your groceries, checked out & staged your groceries at the store, would not be compensated. this is because tips have to go 100% to one person, which would only be the delivery person -- and in our case, any one order is handled by many people to be efficient.

This is a blatant lie combined with omissions.

I’m a “full-service shopper” in a zone without any in-store teams, meaning that I do the shopping and the delivering. Since I’ve started, I have only seen the order commissions steadily deteriorate to the point that they are now about half of what they used to be a year ago.

I can assure you and anyone else reading that the so-called service fee is not going to any of us in the field. And many customers have stopped tipping assuming that the service fee is a tip.

I suppose OP's point wasn't that a service fee wasn't justifiable, just that it's a bit odd to make it optional and have it auto-selected, though given someone else's comment it seems like now it's mandatory.

i know there has been a lot of changes with that recently -- i agree also that is odd. there are a ton of legal nuances here that i do not want to get into, but suffice to say we want to be clear and transparent to customers while at the same time providing a compelling wage to all the folks who touch your order during any part of the lifecycle.

It is really hard to believe that instacart wants to be clear and transparent as possible (although I'm sure you do, personally).

If "service fee" was renamed "instacart fee", people would no longer assume it is the driver's tip. But instacart would never do that, would they?

Which is why Instacart is going to get crushed. Fee exists because instacart is not an integrated service. Supermarket margins are thin. They will only shrink more.

There's no reason why grocery store employees cannot fill orders - in fact grocery stores that do their own deliveries do exactly that. What those grocery stores lack is a platform to synchronize active inventory in a store and what is displayed which is exactly what Amazon brings to Whole Foods in addition to "intelligent" order routing:

There are three whole foods in Manhattan that are convenient to downtown - however, during the rush our one needs to be an idiot to send an order to the one on 7th Ave rather than the one in Tribeca, which is definitely not the case during the late afternoon.

What really amazes me is that both executives and people who work for companies like Instacart simply stomp their feet and say "But we are different! Why do you hate us?!" rather than address deficiency of the business model. Want to have a shot at competing with AmazonWF? Become a sub of Ahold, Kroger, Albertsons or SuperValu. Otherwise you die.

P.S. I dislike Amazon. I do, however, have to admit that buying WF was a brilliant move.

You’re right, this was a bit harsh. I’m sure lots of good people work at instacart, and this was not intended to seem like I’m excited for anyone to lose their job.

I guess a more accurate statement would be “now that I’ve discovered amazon prime now is available in my area, I’m excited for the competition between these services to offer me a better quality product at a better price”.

Sorry if I offended. Cheers.

just saw this -- no worries, and thank you for your response. i think that is very reasonable and we are excited to go head-to-head with amazon on all fronts (delivery experience, quality of jobs offered, retail offerings/selection/etc).

In order for instacart to survive, it needs to partner with regional grocery chains by providing them with the 'ecommerce' side while the grocery chains provide delivery. I live in a metro area where a local chain now provides excellent delivery service (and the employed delivery people won't accept tips) and hope they succeed long term. I don't use Amazon for groceries although it might be available, and I never shop at Whole Foods because their stores are way too large. Whole Foods would dominate if they roll out 'whole foods Express' stores which would be much smaller (think 7-11) so that people can get in and out without feeling like they are walking through the Natural History Museum. Families buy the most groceries and are the most time constrained, but I'll never use instacart until they drop the whole gig-economy frontline workers as contractors bullshit.

>> why do you think that there can only be one victor here, and that is has to be amazon?

Historically, online businesses have 1/2 winners that "take all". That's assuming the winners could build a warehouse near each city. seems possible.

So the question who will be the one besides Amazon?

From one point of view. Walmart will likely win in the low-cost grocery pickup business. And on top of that they will do deliveries. The way Walmart will choose that delivery is: is it cheaper than delivery costs for Walmart(for chilled deliveries)? and can it scale ? . Does instacart fit ? it seems not.

So it's hard to see how instacart wins.

groceries are unlike pretty much every other online segment, which is why it has resisted being moved online (until very recently). the model of having a warehouse simply "near" a city is a model amazon has tried for 10+ years without success -- you must have many warehouses within the city to make it work.

i am not entirely clear how you arrived at "Does instacart fit ? it seems not.", so it would be good to understand that. we have spent 5 years with hundreds of engineers building a fulfillment/logistics network just for groceries that any grocer can just leverage off the shelf.

I think he's saying a customer will ask "is Instacart cheaper than Walmart" and the answer is "no", so there isn't a place for Instacart to fit, assuming Amazon owns the high-end side with Whole Foods (although I wouldn't assume Amazon would settle for just that).

Walmart already has grocery warehouses with their stores, so bolting on pickup/delivery to those makes sense. I don't know how much pickup/delivery could potentially negate the need for the store, but I'd assume the pickup/delivery load of a store has huge room for growth before you start questioning why the store needs to be open to the public.

I haven't used their grocery delivery service but their pickup service is well-executed and convenient, in my experience, so I'm assuming they can figure out how to be competent in delivery as well.

right now, whole foods is something like 1 or 2% of the grocery market in the US. we plan to be the partner to the rest of the nation -- my initial question was how on earth you can just assume amazon (by default) owns the rest of the high end market, and, why you think "bolting on delivery" is easy/trivial.

>> why you think "bolting on delivery" is easy/trivial

For someone in the position of Walmart, and with the many startups that doing delivery, it seems realistic.

As for why do i think Amazon will win the high end? really, the biggest reason is that it's Amazon. But yes, that's not a good enough reason, but still, they win an awful lot.

But maybe there's a chance for instacart to win the higher end, especially by offering the largest variety any merchant can offer.

I appreciate you as an engineer, and to weigh in against an Amazon troll, but like please keep hn neutral

i am not entirely sure what you mean by this -- sorry. i was not trying to be divisive and offer a personal perspective as an engineer. can you clarify please?

For me, the worst grocery delivery service is still miles better than going to a store and shopping for groceries.

I'm OK with missing items, I'll just get a refund and deal with it. It's still far far better than dealing with a physical grocery store.

I'm sure there are millions of others like me.

Really don't know why you're being downvoted, but I agree.

I prefer protecting my time whenever I can (read: I'm lazy) and I've personally found instacart to be an invaluable service. Whether it's a late night wine delivery from BevMo, bulk shopping from Costco (I don't have a membership and almost never remember to bring bags with me to their store), or just the weekly stuff from Safeway/Wholefoods, it's really been a godsend from the POV of saving time that I can repurpose for anything else.

I don't know about the millions comment, but if you're willing to pay a premium for the convenience then it's certainly worth it. I certainly feel that way.

But there are so many services out there, and instacart isn't a particularly good one. There are services like fresh direct/amazon fresh which are based on delivery as a primary concept, and there's the services spun up by the individual grocery stores (which don't have the same crazy fees as instacart, and generally have more accurate listings).

Especially given that wholefoods is now going to deliver direct which was one of the primary uses of instacart (delivery from premium stores), demonstrates that their utility is fading.

> I'm OK with missing items, I'll just get a refund and deal with it. It's still far far better than dealing with a physical grocery store.

Curious. Why do you say that? I use Instacart as a timesaver, or as a way to accomplish what I can't due to other obligations.

I can't agree. If you're missing an item that you needed for that night's dinner, then you now are doubly inconvenienced, first by having to pay that convenience fee, and now second that you have to spend your time to go to the store anyways and get what was missing.

I don't agree but to each their own. Now with self checkout, 4 major supermarkets near me and I tend to go later at night.. I really don't see the problem

Don't you have stores that will do the deliveries themselves? That's got to be a better system than using a third party like Instacart.

>I clicked on it to see what it was and it said “this $10 charge is optional and helps us keep running instacart”.

I have never used Instacart but it boggles my mind that such an option would exist. It's the sort of thing I might expect to be asked entering a museum or a non-profit community health clinic but why on earth would anyone feel inclined to pay extra to fund a for profit private company beyond any required charges?

I used them as my sole source of groceries for about 3 years and had no problems with products or deliveries at any point.

I do agree about the fees, which I always unchecked and I always tipped the driver in cash despite Instacart urging me not to. In my case the driver was also the shopper on every delivery, but I understand that's not how it always works and tipping cash is a bad idea when they're different people.

For our anecdotal evidence, what area do you have these experiences?

> Amazing prime now on the other hand has never messed up an order.

Not sure if it’s possible in prime now (could not find it) but I like the option in Instacart to describe an item you need which is not present in their directory, it saved me lots of times when something is not listed on prime now and I can just request it using Instacart, worked perfectly for me every time

I've never used instacart but all the problems you've described I've had with Prime Now (Bay Area). Instacart also appears to have cheaper prices on some whole foods 365 items than Prime Now does...

Not to mention the shady fees. The last time I used instacart, there was a box checked called “service fee”, I clicked on it to see what it was and it said “this $10 charge is optional and helps us keep running instacart”. Meanwhile the tip for your driver box is not checked. I bet a large number of people assume the service fee is the tip, and leave tip blank. Blatant tip stealing.

To be fair, Amazon Prime also does this.

The service fee thing sounds like a class action lawsuit waiting to happen. Lawyers, start your engines...

I've had the exact opposite experience. Instacart worked really well for me, and Amazon Fresh was well, never that fresh. I suspect the quality of the service varies on geographic location

Amazon Fresh is a different service from Prime Now. Prime Now also delivers from local grocery stores (e.g. in LA, I can order groceries from Sprouts and Bristol Farms).

This has been exactly my experience too, and I've been using Instacart since day one. "Apologizing" for them often. A combination of Amazon prime now and Amazon fresh has seemed to work out.

I occasionally use Instacart just to see if its improved. But I hardly trust them to get everything I want, and I'm surprised when an order goes without a hitch. Probably not the surprise they are looking for when trying to "surprise and delight".

I really like how Favor includes the receipt from the restaurant with your order. So it's crystal clear how much extra you are paying.

Similar experience here. Walmart is also terrible at this. Amazon Fresh/Prime Now is reliable 90% of the time. But I've had them cancel deliveries just 1 hour before scheduled time once. Would never trust any of these services for any important items. Not to mention the ridiculous markup on some items.

I've never had an issue with Instacart. I order from them.... occasionally. Great service.

The fee structure is weird, agreed.

>The last time I used instacart, there was a box checked called “service fee”

i used it a few months ago, and there was no checkbox (it was mandatory)

Why are you excited for Instacart to go out of business? Why not just stop using it?


>Blatant tip stealing.


>Plus they mark up everything you buy, and obfuscate this


Yeah, I've had the same experience with Instacart vs Amazon Prime Now

> Plus they mark up everything you buy, and obfuscate this so it’s impossible to really know how much extra instacart is skimming off the top.

Do you ask Whole Foods what they pay for bananas? Do you care what the markup is at Walmart? Who cares how much InstaCart is charging.

If you're pinching pennies, InstaCart isn't a service for you.

I’m not against companies making money. Instacart should be compensated for the service they provide. So just tell me “this delivery costs x dollars” or show me the percentage you’re charging me for the order “10% of total” so I can make an informed decision about how much I’m paying to have my groceries delivered. Instead they hide the true cost of the service that I’m paying for. I have no idea if I just paid $10 or $50 extra vs going to the store myself. Really this is the least of my complaints. If the service worked well (ie actually told me what was in stock/out of stock instead Of replacing items with a bunch of stuff I don’t want) I would have a lot less of a problem paying a little extra.

Imagine that Netflix launched as a courier service that would take your order and then go to the video store and try to get it and bring it to you. That seems kind of crazy even with the knowledge (in hindsight) that videos would later be digitized and Netflix would be in a position to move from middleman to market-maker.

But I just don't see any opportunity for Instacart to get out of the middleman role. Maybe they can make a lot of money helping grocery conglomerates try to spend their way out of a technology deficit vis-a-vis Amazon. But if that were true they would they need hundreds of millions of VC dollars?

From an outsiders perspective this looks like a bad investment. But I'm an outsider, so I know I don't have all the information. I would love to get an insiders perspective on why this is a good investment.

My two main concerns:

1) Amazon and Whole Foods: Are they not a concern?

2) Economic downturn: Will people still order groceries at a premium?

I assume instacart has a liquidity event (IPO) lined up for the near future (next 12 months), and a few late stage and previous investors are laying down a cash runway to get the company there. Notably this round ($200m) was less than their last round 1 year ago ($400m) so it seems growth has slowed and its time for an exit.

So its not a bet, its a holdover cash infusion until the IPO, and is not exactly risky given how mature and well-capitalized the company is at this point.

The only real bet is that they'll be able to IPO before a market downturn, which seems pretty safe, I have yet to see anyone put forth and truly plausible triggers for another large global recession - there are no debt and enforcement chains I can see that would drag the system under again. But I'm not a financial expert, just an armchair economist, and if I knew what would trigger the next recession I wouldn't be posting here ;)

>I have yet to see anyone put forth and truly plausible triggers for another large global recession - there are no debt and enforcement chains I can see that would drag the system under again

that's not an indication of anything. has there been anyone who were able to predict the last few recessions with reasonable accuracy?

ok, and yes there were a few traders and economists who did ("the big short" follows 3 of these traders' stories), but in order to trade you need to have a thesis for what and when to buy.

there are tons of gloom and doom traders and economists (usually trying to sell "safe" or alternative assets) but i have yet to read any clear, compelling cases laying out what and when to buy when the first domino falls that will set off the next recession. i'd be interested to read anything you've found noteworthy

The typical advice for the beginning of a market downturn is to buy bonds, which usually act as a safe haven from those fleeing stocks (perhaps untrue currently though). Alternatively, some propose purchasing blue chip dividend yielding stocks, as money moves from risky stocks to tried and true ones.

During a recession/large market correction, you're looking to hold all cash and just buy stocks cheap after they drop all the way to their lowest point (think Ford or AIG in 2008).

The problem with these strategies is that market events usually occur over sufficiently long time frames to obscure their size and direction. Looking back at 2007/2008, Lehman was the obvious "moment" but the market and economy didn't nose-dive instantly to their nadir on the collapse of Lehman Bros. It feels like there was a "moment", but it was only obvious in hindsight.

I'm not talking about safe assets, I'm talking about what to buy now in advance of whatever crash is coming :)

For example leading up to the 2007 crash the pros that saw weakness in the mortgage market created and bought "credit default swaps" allowing them to bet against mortgage-based securities

Ah, well if you could go back in time to last week, you could have made a fortune with put options on VIX ETFs before some of them failed. Volatility being at such a tremendous low is definitely unusual and the possibility of ETF failures was baked in. Maybe in a few years we'll see a movie about people with foresight making money off of that event.

From one armchair economist to another I suspect the Federal Reserve will have something to do with what I wouldn't call a "recession" per se, but a slowing of growth through interest rate hikes.

Fed doesn't have much room to play with interest rates currently, and won't until we see a meaningful pickup in productivity, or else they risk further depressing investment into productive assets and rerouting it into speculative assets (high interest rate = high cost of borrowing/lending = high friction = slows economy down).

We would observe a productivity increase through wage growth, as would be expected in a high employment environment (high demand for labor, low supply sets price of labor [wages] high) but I don't see anything from my viewpoint within the embedded and IoT industry that will meaningfully increase productivity in the near future. So more of the same we are experiencing now

Unless you see some new tech that will improve productivity, in which case please do share!

Ah - that's an interesting perspective I had not considered. I was basing my prediction on the stronger than expected job gains, GDP growth forecasts, and how the Fed is cutting back on quantitative easing.

Keeping an eye on the US inflation report coming out this Wednesday should provide more guidance on what the Fed may do - if it's higher than expected I think the Fed will probably raise rates by another .25%.

Yep, I think the more interesting question is: if labor market is so strong (low unemployment) then why aren't wages increasing meaningfully?

Here's one of my favorite practicing economists giving a bit more insight into the Fed and its interest rate strategy: https://www.newsmax.com/finance/narayanakocherlakota/fed-dri...

It's really important to point out here that market downturn =/= recession. They often occur simultaneously but some market downturns are unrelated to recessions.

>>1) Amazon and Whole Foods: Are they not a concern?

I think they are a concern, not necessarily to Instacart but to all of the grocery chains that need to compete with Amazon/WF. Since Instacart already has the tech/infra/domain knowledge to build this service out, Instacart's value goes shooting up.

3) The grocery stores in my area (midwest) already provide this service at no additional markup and free delivery if you spend over $100.

>2) Economic downturn: Will people still order groceries at a premium?

My wife and I have found that online ordering saves us money. Delivery from one of the local stores (Save-on-foods) costs $8-15. Instead of grabbing random items off the shelves because we're hungry or the store put up an enticing display of sugary cereal, we plan out our meals for the week and only buy what we need. That easily offsets the cost of delivery, while also giving us extra leisure time and saving on gas/vehicle wear & tear.

"1) Amazon and Whole Foods: Are they not a concern?"

I'm guessing this raised happened because of Amazon/Whole Foods [1]


competition is a good thing, it encourages all competing parties to strive for a better product.

from an investment point of view, its a bit similar to Lyft vs Uber ... pretty much the exact same business, but there is always room to eat market share.

Competition is good for consumers but not investors. Investors want monopolies.

opinions: 1. instacart gives companies besides amzn/wf a logistics platform to ship out retail goods. It makes these other companies more competitive. This is why you see a company like Target acquire Shipt. 2. it won't be a premium if self-driving cars exist. it might be a waiting game for investors, just like how uber and lyft are floated right now.

> 2) Economic downturn: Will people still order groceries at a premium?

I'm not sure about the data and large trends for this, but here's my anecdote: Right now Instacart is the cheapest way for me to get groceries. Someone with a gun took my driver's license from me a few months ago, my bike was dismantled by thiefs, and I don't live within walking distance of a grocery store.

Lyft/Uber there and back is $20. Bus there and back is $6 (but with added time and stress). Instacart is $5-6.

Yes, eventually, it will be easier for me to bike there or to drive there, but not right now. Right now the cheapest way for me to get a large grocery trip done is Instacart.

So maybe they could survive. Not everyone is in my position, but someone who works two jobs, doesn't have a car and lives far from the store...that could describe a lot of people in the near future.

>Someone with a gun took my driver's license from me a few months ago

Unless this person was a police officer, and you're glossing over a lot of the story, you can obtain a new one at your local DMV and resume operation of motor vehicles...

> you can obtain a new one at your local DMV and resume operation of motor vehicles...

No, my driver's license was from another country. It would have required either thousands of dollars to replace or re-taking the test in the US. Neither options has been something I can do just yet. I'll take the US test soon.

If you're going to victim-shame and tell me, <<oh you just nearly got shot, what's the big deal, just hop on down to the DMV! It's your fault you can't drive a car right now>> that's not exactly such as simple thing to do and would be seriously rude.

Please don't be so mellow dramatic. Here, it took me about 10 seconds of googling to find out how you can replace your license after I figured out where you were from:


You are incorrect about how 'simple' it would be for me to replace the license. Please stop assuming you know everything about someone's life and telling them what to do. You are wrong - I cannot follow those instructions to get a new license replacement for a variety of reasons. I was not being melodramatic, I was being honest and real. Stop insulting me and stop being rude.

Might be time you move elsewhere, I think...

If you mean the crime, that was Oakland, and I have recently left. But I still don't currently live near a grocery store. Maybe next move.

Yeah, no way I'm sticking around an area after having my stuff stolen and being mugged at gunpoint. Unless you own property (and even then), I'd find somewhere else...

I'm currently 25 minutes walking distance from a grocery store (not counting the small convenience stores), I got used to just walking to it and buying a limited amount, enough for about a week. Driving is faster, but then I buy more, eat more and the rest goes bad...

As I remember, Instacart's main business was Whole Foods delivery. When Amazon bought Whole Foods they obviously lost that market, but there was some optimism presented because now suddenly every store has to compete with Amazon and would look to Instacart as a ready-made provider of this service.

But I am not so sure this will work out. Instacart builds some of their fees into item prices. If you're shopping at Whole Foods you're already signaling some price insensitivity, and you likely won't notice a few nickels added to these already premium items.

However if you shop at somewhere like Safeway, this may not work. The price competition is way more intense and consumers are much more sensitive to the price of essentials.

Maybe the idea is that anyone who orders groceries from a hip mobile app like Instacart is someone who can afford the convenience premium? I am just not convinced that they can really ever recover from Amazon here. Plus these other chains may want to do business with Instacart today, but in the long term they'll probably invest in their own delivery services and cut out the middle man.

Instacart is a pretty legit business, but $4.2B is a lot for a middleman in an industry that is synonymous with low margins.

Instacart hasn't lost Whole Foods. You can still get deliveries. (Though who knows whether this will last, or whether it can compete on price with Amazon's own offerings.)

Surprised nobody has mentioned a different, sort-of competing model. Here in Nashville (and I assume other locations), Kroger offers ClickList[0]. Basically, order ahead of time via their website and select when you want to pick up from the store (w/o leaving your car).

It doesn't have the convenience of delivery, plus you typically have to order a day in advance, but it seems like the benefits would be that a) the people doing the picking are employees of the store, b) you're unlikely to not have a deliverable order, and c) you're probably out anyways and can schedule around your pickup.

Maybe this is more valuable outside of bigger cities, but I see people using it all the time around here. I haven't used it myself quite yet.

[0] https://www.kroger.com/topic/clicklist

Wow, so they've raised close to $1bn so far! Wonder how many of these delivery services like Doordash, Postmates, Grubhub, Caviar, Uber eats etc will survive the next economic downturn.

As a former restaurateur, I would like to tell you, contrary to popular opinion, during the last major economic downturn in 2008 (2009 for me since I was in a southern state, and the downturn hit us a bit later than most), spending money out to eat actually went up.

The theory goes a little something like this -- people actually spend more money on themselves to cheer themselves up when life gets shittier. So folks, too depressed to cook, would go out and at least try to eat, drink, and be merry.

Now how this correlates to these dining services has yet to be determined.

It's call the Lipstick Effect, aka Lipstick Recession Indicator.


And just as a somewhat tangential but related story to the phenomenon, British soldiers distributed lipstick tp the liberated but gravely ill women of the Bergen-Belsen concetration camp in WWII, it lifted their moral just enough in some cases to help save their lives.

I love this. Never knew it had a name. Thanks for showing me that. I also love all history related to WWII, so thanks for giving me Wikipedia food for 3 hours tonight.

I'd like to posit an alternative argument. That the increase in business was more due to demographic shifts than to the "lipstick effect". Around 2007 the entire generation of millennials was finally of age to go out and spend money eating. This is the largest demographic group of Americans. Even if people 16-30 were spending less money per person eating out, the volume of individuals spending money on eating out was sufficiently high to increase business.

Surprisingly, most poor people order takeaways the most around here, as well.

It's not surprising to me, it all ties back to the reality that it is more expensive to be poor than not. If you are poor, you most likely don't have the ability to keep a kitchen stocked with cooking essentials (spices are expensive), pots, pans, the increased water and heating cost to run a dishwasher and oven. Never mind the fact that most people living paycheck to paycheck are going from job to job and are physically exhausted at the end of the day. And that's for the people who were able to afford housing, then you have poor people stuck in shitty motels because they can't afford first month's rent and a security deposit. Those usually only have microwaves and a mini fridge.

Often times, going to McDonalds is your best option. The Government also subsidizes Big Food, so that factors. Getting 4 McDoubles for 4 dollars in 5 minutes driving through the drive thru next to your house so you can get back home to your kids and see them for the couple hours you have in between jobs versus spending 30 min to an hour buying a pound of ground beef, buns, cheese, lettuce, tomatos, the energy and utilities cost and the lost opportunity cost of the time spent cooking and cleaning when you could be working, it isn't hard to see why poor people choose the fast food.

The energy and other utilities for 1 meal will be like $0.30.

So that barely registers compared to time and ingredients.

Bad credit affects utility costs. Most impoverished people have bad credit. Again, being poor costs more in almost all areas of life in America. Contrary to popular belief, utilities are not a right. Utility companies have the right to refuse you if you have enough delinquent payments, can't front the deposit (if you have bad credit) or even outright refuse you (if you have terrible credit). Even on the FTC's website, their advice if you have trouble paying your utilities is basically to "budget harder"

Wow, I didn't know it was that bad. Being denied utilities based on credit score... damn. Do you have prepaid meters by any chance?

It's the standard option for those who fail to pay their bills on time here.

With a prepaid, you load up money and it turns off your gas/electrical once the prepaid amount is exhausted.

Water is exempt, no one can turn off the water at a residential address, no matter how long you haven't paid...

It’s because low paid work is the hardest, physically and mentally, so poor people don’t have the energy to cook, and with McDonalds available, they don’t really need to when you can get a dinner for $2.

UberEats will likely win in the long run... On-demand is just a long-term game of leading and losing money... Uber has the distribution and the money that will allow them to lead and lose for longer than anyone else.

How much money can all these companies lose before finding themselves in a dead-end? (no positive cash-flow, no more investors willing to invest, no more local market first mover advantage).

People who deliver for these companies will do it for the ones that can give them more business and larger commissions. People who order from these companies will do it from the ones with the largest selection and the lowest fees... Only Uber can pull-off the economies of scale to arbitrate those two sides without running out of money.

UberEats will struggle unless they didn’t service issues. They are slaves to the whims of drivers who can cancel orders at any time.

That may not matter, necessarily. If 3 of these fail but one becomes a £10bn company, that's ok. Some investors win, others lose, it averages out to normal returns.

VC is supposed to be risky.

Terrifying, considering this one will be one of the first companies to go the minute this roaring economy goes sour.

Instacart's biggest issue is not knowing real-time inventory. Amazon will never have this issue, because they just bought Whole Foods. Instacart, on the other hand, relies on crowdsourced shopper data to manage this.

The results is basically a hit and miss experience. My guess is they hope to get this inventory data direct from the stores one day, but who knows if they will.

So with that money, can they finally afford to pay living wages to the people who make their service possible?

As soon as Uber launches UberEverything , Instacart will be bleeding tons of money. I already left Postmates and Seamless for UberEats. Fast, predictable and more options.

If Uber could get more grocery delivery services and keep the onus of packing things on the stores vs delivery boys picking things, it will be more reliable.

I really hope this money goes towards their customer service infrastructure, and the quality of their workers. As an Instacart Express customer (their premium offer for free delivery) since 2013, I can say the customer service has gone downhill significantly. I can elaborate some here more...

- Their quality of workers have gone down. I don't know if they have just lowered the bar for who they hire, or if the workers are too focused on competing orders that they just don't care anymore. I'm not exactly sure.

For example, in the app there is a setting option you (as a user) can set to explicitly request a phone call me if there is any replacements to confirm them. In the past year, I don't think any workers have followed this setting. And I understand that is maybe because Instacart has added some of that functionality in app, but that doesn't really work all the time. I have also recently had more and more Instacart workers who will make the "replacement" requests in the last 2 seconds of shopping so you have no ability to actually "approve/deny" the things they pick. I believe they do this on purpose so they don't have to do as much work trying to communicate with their user they are shopping for. It probably shaves off time they have for completing other orders. So, by this "evil" tactic I've seen them start to use more and more, you can't actually control the replacements. You just get what they assumed you may want for the replacement. This is incredibly frustrating as a user to have happen to your order. Instacart has been good at refunding me for the bad replacements, but if they would have just called (like I marked in the app), we could have resolved the issue in store, and it would be all good. I don't understand why Instacart still has this setting if no workers are going to follow it anymore. They need to get this sorted out. Either informing their workers, or forcing app users to explicitly approve/deny in app before it closes that opportunity.

- Their up-sell fees have gotten outrageously greedy. It seems they are just rounding up to the highest potential possible and then charging that. They are transparent that some stores have higher prices, I understand that, but it's frustrating when certain items are way too up-priced. Meat being a perfect example. If you just want to get 1 ribeye steak, the app will say it will be $20, but then when you get the piece of meat it will still have the price label on it saying it was say $8. Instacart doesn't do any price adjustment to factor that and just charges $20, unless you contact their customer support and complain. On top of that, last time their customer support wouldn't even change it until I complained on Twitter. Then they finally took care of it.

- They used to give debit/credit card refunds for mistakes. Now they just give you a credit to your next order. I absolutely HATE this practice that companies sometimes do. It's so anti-consumer. You can't call it a refund if I'm forced to use your service again to actually be redeemed. That's a credit, not a refund. I don't get why they changed to this model, other than to speculate that their poor customer service has bit them in the butt so it's easier to give the user "monopoly" money to be forced to come back to use it, rather than just giving them a true refund. I'm not sure.

Those are just a few things that I've started to notice way more frequently. And I'll be 100% clear, this has all happened within the last year. I had 0 problems until the past year. I have no clue why it took such a dramatic fall. In the past year, there hasn't been a SINGLE order where I haven't had to contact customer support to fix something. And it's getting obvious that even their support is caring less and less about helping. Like making me have to go as far as get "social media justice" for them to fix their problems.

It's a bad trend I've seen. I'm optimistic that they can turn it around, and hopefully this money can help with that. I will not be renewing my Instacart Express this year, that's for sure. Will probably give them a few orders to redeem themselves after that and see. If it's still poor service, they will have lost a loyal customer all because of poor quality/scaling. But I'm also just 1 user. I get everyone may have different experiences.

I know these businesses are very regional. Where we are Instacart has some insane prices and Shipt is absolutely kicking their butts on service. I'm having trouble understanding the $4.2B valuation given their execution.


We ban accounts that won't post civilly and substantively, so please read and follow the site guidelines: https://news.ycombinator.com/newsguidelines.html.

Another valueless "disruption" being injected play money to destabilise the semblance of healthy capitalism we had on a macro level.

Venture capital enables subsidies to speculative companies in hope of a small probability of profit, which destroys perfectly good small companies [0] , and acts as a libertarian version of socialism [1]. This exposes the fabric of a normal economy to small stressors, a couple of which may hit it big and destroy entire industries. This has its brutal repercussions [2] which are not only economical, but also social, as the sum of jobs destroyed is bigger than the new ones created, at least in low innovation sectors, and which makes extremist movements grow out of the general frustration with the state of things (isn't Trump the result of "disruption" in politics too?).

However, in my opinion Universal Basic Income will fix all the major problems acting effectively as a universal VC - and paradoxically a healthy one as not guided by buzzwords or credentialism, which should be the only way any subsidy work, as it frees everyone from black swan risks which are fruit of unexpected outcomes of technological advances (and a good thing per se), and enables them to work on bettering the world in an amazing way (my speculation). Until the AI comes along... Well, that's for another story.

[0] https://m.signalvnoise.com/venture-capital-is-going-to-murde...

[1] https://medium.com/@willszal/venture-capital-as-socialism-47...

[2] https://www.technologyreview.com/s/515926/how-technology-is-...

Edit: build an argument

Even though I agree with you, it would make for a much better conversation if you provided some evidence yourself instead of insisting the onus is on others to prove you wrong.

You're right, I sound like a prick even though I hadn't meant it.

I'll grab some data later on to construct a more compelling case against this type of funding.

as an instacart engineer, i'd be super curious as well. i haven't seen many actual data-driven cases (noting this honestly and thank you for acknowledging the attitude in your initial comment :)

Prove it yourself or get downvoted to shit (not by me). This isn't a real discussion, it's HN.

Guidelines | FAQ | Support | API | Security | Lists | Bookmarklet | Legal | Apply to YC | Contact