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Instacart adds Trader Joe's (thenextweb.com)
146 points by apoorvamehta on Jan 10, 2013 | hide | past | web | favorite | 76 comments

I wonder what the ROI would be if they hired graphic designers to make some really snazzy thumbnails for each item? By extension, I'd be really interested in how effectively they could push extra items, similarly to how Amazon does it.

* "Adding avocados to your cart? Add [several guacamole ingredients] at a 10% discount, and we'll email you a free recipe."

* "Want to make your own guacamole? Add these [several items] and we'll email you a free recipe."

* "Browse these popular shopping lists"

* Possibly a "buy now" button on a recipe site that automatically added all of the required ingredients to your cart.

I could see a service like this sapping more of my money than Whole Food's prepared food section.

(I'm in Boston, so I haven't signed up for their site - do they do any of this already?)

10% is huge for a grocer. Grocery margins tend to be very thin.

Was a buyer at a large supermarket for a little over a year; we were normally pushing for 30-40% margins on most food items. On the hyper-perishable stuff, normally higher. It did really vary vendor to vendor though.

A large enough grocer would have the markup of both the distributor and the gracery store, which usually total 30%ish

Yeah but paying everyone and whatever else, very little remains as profit. 10% off just like that might wipe the profit.

That's a good point. Amazon's "Price for Both" is literally the price for both. Personally I always assume the "Price for Both" will be at a discount, even though it rarely is.

It's true that margins are generally thin... but 10% doesn't even compare to the average sale (deal).

I'm intrigued by Instacart. Part of me realizes that Webvan had it right all those years ago, and another part of me thinks this model can't scale.

The best ideas are the ones that teeter on the the edge of improbability. Watching the success (or failure) of this company is like watching NASCAR. Keep making those left turns until something blows up or you win the Cup.

Win or Lose, I'm glad someone is trying this idea. The Instacart folks just might have enough hustle to pull this off.

Wishing you folks lots of luck!

Grocery delivery makes a lot of sense in a lot of places (it's been going on in NYC forever).

What didn't make sense was massive capital investment to build their own distribution centers (billions) and expanding into markets where everyone who could afford non-food-stamp food had cars (Atlanta, Texas).

I loved WebVan in the bay area. In the Bay, the capital-intensive model was fine, although they could have bootstrapped by having kids run into Safeway stores as customers, which is what Instacart, Tesco, Safeway Delivery, etc. do now.

I've always wondered, what happened to that $1 BILLION of infrastructure that Webvan setup?

I've heard, anecdotally, that Safeway acquired the vans for their own delivery service.

It's right next to Cuil's infrastructure.

Cuil's infrastructure was across the aisle from my cage :)

Lol! That's awesome.

I always wonder about that company. I saw the ex-CEO speak at Failcon and I'm continually reminded of the idea that companies die not because of bad product or losing one particular deal, but, rather, because the owners decided to give up.

To my mind, Cuil could've stayed afloat, but no one wanted it to. It was easier to sweep that giant pile of FUBAR under the rug, but, in retrospect, they would've still likely been a large company, albeit not Google size, but large nonetheless.

Yeah, I think there's a conflict between opportunity costs and fighting to the absolute end.

There's plenty of value locked up in the company which could have done other things. If it were startup nuclear winter and they had no other options, they might have made something successful out of it. Staying may not have been the economically rational choice for them, but if there were different economics, or non-economic factors (pride, unwillingness to fail, etc.), they might have had a better outcome.

And there's always uncertainty in estimating -- usually in underestimating how big a success something could be if successful -- so "blindly" continuing could the EV maximizing choice, too.

"To my mind, Cuil could've stayed afloat, but no one wanted it to. It was easier to sweep that giant pile of FUBAR under the rug, but, in retrospect, they would've still likely been a large company, albeit not Google size, but large nonetheless."

Care to elaborate why (you believe they'd become a large company)?

Ask.com and the fact that their epic fail probably gave them great SEO :).

In all honesty, I think that a 100M investment would've been enough of a runway to right the ship IF anyone could've stomached it after the horrific launch. Cuil could've pivot'ed their algorithm or their model and been a relatively large search engine (1% of the market is ~$1.5B).

Success, in all things, is relative. Cuil could've been the fifth biggest search engine on Earth and STILL have made a ton of money.

another part of me thinks this model can't scale.

It scales just fine if you are in tightly laid out cities. Like in the UK or NY: http://www.peapod.com/

We have Peapod (affiliated with the local supermarket chain Stop & Shop) deliveries here in Connecticut out in the far suburbs and it works just fine. Place your order online with prices that match the store and have the same weekly deals.

Minimum order is $60 and the delivery fee is $10 although you get discounts for filling in empty timeline spots or booking in advance. It's not same day but you can get very early next day. It's a real lifesaver if you can't get out of the house for some reason, like kids or disability.

If they can add a TJ's near me (SFBay but not PA/MV), I'll use this weekly. With 3 kids and both employed, my wife and I have difficulty finding time to shop other than the weekends.

Features I'd really like:

1) Ability to create a persistent shopping list (see specialtys.com and their "fav" reorder).

2) Amazon-style "people who bought this bought/browsed XYZ also".

Great work, guys. Can't wait for you to expand to my neck of the woods.

Does Instacart really try to force you to sign in before you even get to their webpage? Am I doing something wrong?


I guess I'm supposed to click "learn more", but this isn't intuitively an alternative to signing in, nor is it satisfying.

Yes, we do. Our metrics show that this converts better.

Does the metric account for people like me who are so turned off by the requirement that I'll never return to sign up at a later date?


Why can't I sort by price? Does that test better too?

We will be adding that soon :)

Awesome, thanks! I think it will be a huge improvement for price sensitive folks (and people like me who are just cheap!)

Makes sense. I appreciate the feedback.

Price sorting will be most useful when it shows price / weight~

I love the idea but I'm skeptical about the ability to scale.

I do think grocery shopping is definitely in need of a large dose of increased efficiency. It dawned on me last time I went grocery shopping with my wife and son just how much time and effort can be wasted grocery shopping.

1. We drove to the store. 2. Walked around the store getting everything. 3. Checked out and put all our stuff in bags. 4. Put the bags in the car, drove home. 5. Took the bags from the car into the house. 6. Emptied the bags and put everything away where it belongs.

Steps 1-5 should be eliminated by some sort of automation. Services like Peapod are starting to do this, but they're quite a bit more expensive.

When you think about it, you have a large number of people within a certain radius of a local grocery store all buying items from that store on a regular basis, but usually driving there themselves over and over.

Seems like it would be more efficient (in an ideal world) to have the store make regular rounds (like the mailman does) to the houses with their orders.

Don't forget to use driverless vehicles to make deliveries (this is an ideal world, after all).

Hm, probably not. That might work in a suburban setting, but imagine someone in an apartment a couple floors up who orders a significant load of groceries.

It'd be much quicker for a person to cart the whole load to their door, rather than waiting for the customer to unload everything in a few trips. Driverless vehicles are feasible in the next decade or so, but delivery-robots not so much.

I'm not so sure. I could see delivery robots in a decade.

I see delivery robots being significantly easier to create than driverless cars. All you need is a shopping cart stuck on top of a set of stair-capable movement system, it's not like the thing needs to be dressed up as a butler.

Stairs are only a requirement for humans; drones can be far more flexible. Attach hoists to the side of the building, let them in through windows (or cut doors for them). Easier on both parties: no additional stairwell traffic, less chance of the drone tipping over and hitting someone.

Excellent point. Not necessarily practical everywhere, but a much better outside-the-box solution where it works.

in metropolitan areas, major markets such as whole foods already deliver for ~$5. If anything, this type of business streamlines the process making it cheaper. Lot's of things can be done to make this process more efficient (i.e. good algos for who should deliver what where when).. After these processes mature and delivery gets cheaper, this service can be extended to more retailers. There is your (simple example of) strategy to scale.

So hard to "order" fruit and veggies, though. You say you want flat leaf parsley, but you get delivered a sad bunch of limp & yellowing leaves. If I was in the store, I'd get curly parsley if it looked better.

Good point. You can leave notes for the shopper for each individual item on Instacart so the shopper knows what to buy.

"Note - can you only buy the flat, sad looking parsley"

I use instacart a few times a week and have found they're happy to resolve any issues with produce.

I switched from monthly Costco visits to soap.com and won't go back. Now Instacart looks like it will save me some of those Safeway and Trader Joe trips, too. More weekend free time!

Is soap better than Amazon in your experience? I'm a heavy user of amzn for a lot of this stuff, but hadn't heard of soap.com.

Actually Amazon owns soap.com. It's a more limited inventory but quick (1-2 days typically for most items) with free shipping over $49. I supplement soap.com with amazon.com as needed.

Soap.com is a Quidsi company which is a unit of amazon.

Meh, you can't cruise soap.com on a Saturday and fill-up on free samples ...

I really, really wish costco didn't give out samples of anything.

Each sample cart becomes the nexus of a swirling shitstorm of carts and kids, all oblivious to the people who are trying to get some shopping done.

Try finding a Costco Business Center near you. You don't need a business membership, and they don't have samples or the food court that creates all the commotion.

Please add whole foods or berkeley bowl or some other place with decent produce (nob hill in MV is ok) -- Safeway is great for national packaged food, Trader Joe's for private label frozen stuff, but both are weak for produce, meat, fish, deli, etc.

A drug store might also be good, although Safeway probably has enough of a selection for OTC medication, cleaning/etc. supplies, etc.

For produce, why not order it directly from farms?

We live in downtown San Francisco and get our organic produce delivered weekly from http://farmfreshtoyou.com

We've been using it for more than a year and have been happy with it, that said I'd be curious to hear other suggestions, specially services that deliver organic produce from a group of farms instead of only one.

Instacart is about "oh shit, I ran out of x and y for use in the next few hours, but if I go to the store I will miss my party or not get work done or not make e other items". If I had a week to plan, it would be different.

Yeah - CSAs have their place, but you are constrained to local vegetables in season, and often you don't know more than a day in advance what you are getting. They are great for supporting localvorism, but it doesn't cover the "hey come round to my place tomorrow, I'll cook a green curry - oh hell I need japanese eggplants".

Frankly vegetables and bread are the main thing I would want delivered quickly and often - pantry staples I can stock up in one big monthly trip, it's not really a big deal to fit that in.

Pantry staples are generally fine if you have decent inventory tracking. The problem is when you've started something and realize "oh, shit, we're out of salt...the big box we thought was full behind this one was empty/spoiled/etc."

Instacart also makes a lot of sense in groups, where no one individually wants to be responsible for going for stuff. Parties, roommates, or offices.

The problem with fish/produce/etc. is there's variation on offer. If I go to the store and want some tuna steaks, but see hamachi is on sale, I might get that instead. It would be hard to delegate that level of decision making to anyone who wasn't a routine agent, or having an exceptionally good CRM, or having a realtime inventory system at the store.

What I'd love if if someone could get Tokyo Fish Market in Berkeley, a few farmers markets, etc. to publish realtime inventory info, and do a buying trip once a day. Go in in the morning, see exactly what is there and at what price, let me know, and then I'll let you know in an hour or so what I'll buy. Specialized restaurants do this already (e.g. sushi chef goes to the fish market), but maybe smaller places would be more likely to do it for ancillary items if they could use tech to do it for them, or home cooks would do it. Most restaurants just use food service companies like SYSCO for most of their stuff now, though.

"Constrained to local vegetables in season" is a feature :)

What's your metric for "decent" produce ? I prefer to get produce from 99 Ranch because it's better and cheaper than what's available at Safeway.

99 Ranch is also great. It's not as high quality for fish as Tokyo Fish Market, but good, and definitely cheap. If I were in the South Bay I'd shop there a lot more.

Trader Joe's already delivers; so does Safeway. However, I'm surprised that the delivery fee is so cheap ($3.99 for sameday). Safeway currently charges $4.95 for delivery in a 4 hour window the next day.

Does Instacart use TJ's/Safeway's prices, or do they set their own prices for each item?

I use Instacart because the experience is better. Their prices are roughly a 5% markup over Safeway (and now, I assume, Trader Joe's), which amounts to a few dollars on my typical grocery order.

That's more than made up for in the convenience factor. There's a huge difference between being available to take a delivery during a 1-hour window today vs a 4-hour window tomorrow. For 1 hour, I can do highly interruptible activities (checking email, tidying the apartment, reading a book, etc.) without a significant negative impact on my overall productivity. It's a lot harder to find a 4 hour block of activities that offer the same kind of flexibility.

>Trader Joe's already delivers

I hadn't heard about that before, so I looked it up. I couldn't find any TJ delivery site, except an unofficial one from 2011, but it looks like they got sued by TJ.[1] The official TJ website says that they don't sell online.[2]

1: http://domainnamewire.com/2011/08/14/trader-joes-sues-grocer...

2: http://www.traderjoes.com/about/general-faq.asp#Online

It must be a NY only thing.

IIRC, Trader Joe's has delivery but not online orders. You go to the store to shop, and then they deliver to your apartment. That way you can walk or take the subway even if you buy a lot of groceries.

Instacart's per-item prices tend to be far higher. I might use them if they raised the delivery fee and removed the item price gouging.

How would consumer opinion be effected by the change?

I wonder if, as a consumer, I would resent seeing a "service fee" as opposed to seeing higher priced goods. Perhaps, subconsciously, people ignore the item price and are looking for the "fee". In this case, their pricing is their marketing.

I'd be quite interested in whether they A/B tested the two strategies.

I think the average InstaCart customer doesn't realize that per-item prices are higher. I didn't.

I've been passively aware of it, but don't really care - most items are not really egregious. Because Safeway's prices are so volatile with sales and Instacart doesn't seem to really reflect that, it ends up balancing out pretty well (plus, of course, the huge convenience factor)

EDIT: Eridius is correct below. Instacart is just mislabeling their product pricing. The 3 lbs. ribeye shows up as $30 per lb., but is actually $30. I'll bet they are doing the opposite as well (buying 0.5 lbs. of anything will look like an insane deal).


I'm looking at some $30/lb ribeye steak right now. The same "extra value" package at Safeway was $10/lb.

Price-tripling is unacceptable to me.

Are you sure you're looking at the same thing? I just compared some ribeye "extreme value" steak on Instacart vs Safeway's website. Instacart has the 1.50LB package at $15.74/lb. Safeway has it at $9.99/lb as the Safeway Club price (for some reason it won't show me the non-club price). That's a 50% increase, against Safeway's discounted price.

Except oops, no it's not. Instacart does say "per lb", but if I add it to my cart, the final price is actually $15.74, not the expected $23.61. Which compares to Safeway's club price of $14.99. That's a 5% increase, which seems quite reasonable.

As an instacart user, I can say this is a welcome addition to a much valued service.

As a frequent Trader Joe's customer, it seems like supporting them for something like this would be a bit of a nightmare because the items they carry are constantly changing based on regional supply and demand.

What's the current state of computerized inventory systems? Allowing for some error due to theft and accidents, I would think it'd be fairly straightforward to keep everything up to date.

I'm sure Trader Joes can (and maybe does) do this internally, but it's unlikely that they'll share that information with a third party delivery service.

I love Instacart and use the product with our startup probably 2-3times a week. Going to the grocery store takes at least an hour when you consider driving and standing in line. Instacart is like 7-11 - you never plan to a trip to 7-11 and always pay a premium, but it's everywhere and convenient. It's great that if I crave Ben&Jerry's ice cream, I can buy it and have it delivered in under 3 hours. With the added Trader Joe's delivery service, our Instacart usage will probably bump to 4 times a week.

"It's great that if I crave Ben&Jerry's ice cream, I can buy it and have it delivered in under 3 hours."

Every time I wanted ice cream, it was in my hands in a matter of minutes not hours :). Detergents, soaps, medicines etc can be bought via Amazon, Drugstore.com etc. Fruits and veggies...you actually want to see before buying them.

I don't think this will scale. Prices will have to be a lot more expensive than normal grocery shopping, so adoption will be limited. Even if it takes just one hour, the person doing the shopping has to be paid, instacart has to make a profit and that will jack up the price. I understand the convenience factor, but for the vast majority of people it's not a good tradeoff. That said, Instacart can become a niche player and still make money.

What's up with Instacart not letting you browse without logging in?

I was really interested in the service and wanted to check it out. It wont let me in without signing up. How do I know they are not a scam site or useless without providing my information. Bad UX. If you want to do business, keep your front door open.

Thank you so much, I needed this so badly. I've been at home with the flu all week and haven't been able to get out to buy groceries. I just placed my order. I can have food now!

Aw yiss.

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