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Instacart brings the convenience of shopping online for local groceries to the Central Coast

 

A company that is making a big push to corner California’s grocery shopping service market has set its sights on the Central Coast.

Instacart, a grocery delivery startup, was recently reported to be valued at $3.4 billion by the Wall Street Journal after Sequoia Capital invested more than $100 million in the company.  According to Instacart’s blog the company also garnered $400 million from investors that included Y Combinator Continuity, Andreessen Horowitz and FundersClub, which is no small feat considering the delivery service is only 5-years-old. Started with only a handful of employees, operational manager Justin Reeves, estimated that the administrative team alone is now made up of more than 300 people.

“I joined the company when there were 30 people there and that was about almost 4 years ago,” said Reeves, “and it’s kind of insane how we have grown exponentially.”

Consumers can order items and food products from chain stores, such as Whole Foods, Petco and Costco (without the need of a membership), and a real person goes and picks up the items. The ordering processes allow customers to substitute items and once the shopper is on the job Instacart gives live updates and GPS coordinates. Reevers said that the products are not limited to food, but the majority of the items the stores carry.

“The only thing you can’t get at Costco are the huge things like a refrigerator, but we do a lot of the refrigerator/frozen perishable household items,” said Reevers.

The cost structure is built on both the front and backend of the deal. The upfront costs are typically what a person would expect. Delivery charges are based upon speed. The faster a customer wants it, the more it’s going to cost; $5.99 for requesting items to be delivered within an hour and $3.99 for within two hours. Both options come with a minimum purchase requirement of $35. Of course, the first delivery is free. Reluctant grocery goers can subscribe to the Instacart Express membership club for $14.99 a month or $149 per year that offers free two-hour delivery but does not drop the minimum purchase requirement. Locals can get $20 off of a minimum $35 purchase and free delivery from an special introductory offer if they use the code “HELLOSLO.”

There are backend costs that come into play, but based on the company’s growth rate, it seems to have the pricing challenge worked out. Simply put, Instacart marks up some items and marks down other items compared to what the store’s selling price. The company also retains people and shopping information that it can “share” with third-party providers or advertising companies, according to its privacy policy.

Delivery is not restricted to a subscriber’s home address. Family members can send care packages from across the country and skip the rigmarole of packing, shipping costs and waiting line at the post office.

“It’s not just about using the service to get groceries for yourself,” said Reeves. “Let’s say someone is sick across the country and you can send them flowers and some chicken soup.”

It may be that the startup’s big push for California is to establish a foothold before Amazon can. The competitor recently acquired Whole Foods, a company that Instacart has a five-year contract with.

For more information; visit https://www.instacart.com/

By Mark A. Diaz

 

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