Instacart has enormous revenue growth potential, but I am not sure about profitability. It has only recently made very small operational profits for the first time. But that has been the story of some of these biggest of the unicorns.

When venture capitalist fund their growth, they will grow.

Instacart has only proven that they can move nimbly during a crisis, the real trick will be if they can become a profitable, sustainable business. Beating Walmart in the grocery business and achieving a stunning $13.7 billion+ valuation are vanity metrics. It took a pandemic to get consumer demand for e-commerce grocery shopping in the U.S. to where it should have been years ago. Instacart has multiple factors going for them that CAN position them as the “go to” for grocery delivery (for both consumers and retailers) but we all loved Webvan, too…

Sorry, I used Instcart once. I don’t trust the shoppers, the substitutions were odd, the pricing was odd and for me was more complicated than just going to the store. Sorry digital natives, as the country reopens, most people want to pick their own produce and do not want to add an extra, more complicated step to getting what they want. More companies will develop their own last-mile capabilities.

Instacart has always been a great model for retailers that want to offer online sales without investing too much in platforms and systems themselves. However, while elevated levels of online shopping have undoubtedly helped Instacart they may also be the catalyst grocery retailers need to invest in e-commerce themselves. If they do that, the reliance on Instacart fades – just as we saw when Amazon took over Whole Foods and put in place its own online proposition. I have no doubt that Instcart has a future role in grocery fulfillment, but I wonder whether that role will be reduced in countries like the U.S. in the years ahead. If so, that’s not great for already thin profitability.

I think that is an easy one: yes! If they cannot take advantage of the market penetration that they are experiencing, shame on them!

Mehta has been enormously successful with Instacart and without a doubt there is a need for the service. Even before the pandemic this service was valuable and attracted the busy, unavailable working professional. Now it attracts a far larger constituency. For groceries, the service was a lifeline to almost non-existent IT departments and opened up access to the digital space. On top of that, the rapid delivery service with personalization and back and forth engagement with Instacart workers buying products made it a perfect match for the typical regional grocer. Without a doubt the business model was proven long before. What we see with the pandemic is still an anomaly. Companies like Kroger and Albertsons have already invested in their digital experiences. The expansion of the grocery sector will still be relatively slow in digital, due to tight margins and talent shortages, and Instacart fills the gap perfectly as these grocers transform into digital/physical entities. The question is how Instacart will evolve the business model over time as groceries key in on building their own… Read more »

In a word, yes. Grocery delivery is addictive and as Instacart has improved its software and training of personnel, it has only gotten better.

As long as it can turn a profit, it’s the winner. Period. Let’s put it this way, Amazon Fresh can’t touch it

Long-term loyalty for Instacart users and grocers is a big question mark, especially as others like Walmart and Amazon/Whole Foods do it themselves. The issue is quality, trust and pricing and at least from our own experience, Instacart is terribly inconsistent, expensive and non-human in terms of its customer service and problem resolution.

Its valuation is typical for this market and time will tell regarding the level of exuberance for the company and how irrational or rational it is. I’m not a fan, at least not at this point.

I am speaking mostly from personal experience, so take my comments with a grain of salt, but the though of Instacart hiring an additional quarter of a million shoppers and throwing them into the fray makes me seriously doubt they can sustain their position for the long run. As they rushed to scale, it appears that they neglected to scale their training programs or their quality assurance programs. Yes, they have increased capacity, and wait times have diminished, but I have not received a “perfect order” from an Instacart shopper in weeks. Every order is either missing items or includes wrong items. Our most recent order, which included numerous frozen items, took over three hours from the time the shopper added the first item to their cart until it arrived at our door. All the frozen items had thawed, and many of the refrigerated items were warm. We waited three hours for the order to arrive, then had to wait an additional two hours for the re-shop of the spoiled items. Another order was shopped… Read more »

We need far more to “prove” a business model. After all, Instacart’s demand is driven by a once-in-100-years pandemic.

So what DO we know? Not much. And let’s remember how many premature declarations of “business model proof” we have had before:

• Dollar Shave Club proved you can pay people to take razors you deliver to their home.
• Amazon proved people love internet shopping as long as they don’t have to pay an economically viable price.
• Uber proved people want better taxis — then proved they didn’t know how to make a profit.
• Groupon proved there is a small portion of the population who loves coupon clipping. Then there’s the rest of us.

We will only know what Instacart proved AFTER the pandemic is over and “normal” has returned.

I’m glad Instacart has been here during the pandemic but the model is broken. Sending waves of people picking in a grocery store creates congestion and risk. The interaction required with out-of-stocks creates an extended shopping transaction that just adds to the problem. Retailers need to have real-time grocery inventory and be able to commit and reserve product. This can only be accomplished with technology and I believe micro-fulfillment is the answer either in a hub-and-spoke dark store scenario (where a dark store supplies a number of satellite stores) or a semi-dark environment in which auto-pick and traditional shopping co-exist.

As fast as Instacart has grown during the pandemic, other vendors that offer much better deals for retailers have strengthened their capabilities. These competitors are in the form of comprehensive e-commerce platforms and automated micro-fulfillment centers, and have long term advantages for the retailer that Instacart doesn’t offer.

I have used Instacart a number of times over the past few months. Once they scaled up and had availability, the service was OK. Using Instacart for Costco gives me heartburn as the markup they take (yes they warn about it) seems outrageous. Is it a sustainable model? Frankly I don’t see it when they can be replaced by a robot, or an in-sourced service from the retailer. Will retailers replace Instacart? I can’t see it being a priority at the moment, but over time …

I was not that bullish on Instacart pre-pandemic. The transition to digital grocery was inevitable, and Instacart was a great solution for helping retailers that didn’t want to make their own investment toe-tip in digital grocery. But as digital grocery grows in adoption, retailers simply can’t outsource something that important to a third party. Much less a third party that runs a marketplace that can complete with the retailer. For that reason, I’ve expected and observed most major retailers move away from Instacart to their own in-house solutions. Obviously Whole Foods/Amazon moved off. It can’t be part of Sam’s Club, Costco, or Aldi’s long term strategy to outsource the majority of their customer experience to Instacart. So Instacart needs to pivot to smaller grocers and particularly independents that will continue to want to outsource. Pre-COVID-19 Instacart was moving to smaller operators for that very reason. COVID-19 dramatically increased bigger retailers’ dependency on Instacart in the short term, but makes it even less likely that Instacart is the long term solution for those same clients. Unfortunately,… Read more »

In the world of COVID-19, this is how I’ve seen Instacart shoppers shop: no mask, constantly looking at the phone to rush ahead to the next item, meanwhile going the wrong way down aisles or squeezing in between socially distanced shoppers to grab an item. At times I have witnessed Instacart shoppers outnumbering regular shoppers in Kroger, Trader Joe’s and other stores. While my observations could be described as anecdotal evidence, most humans in day-to-day life operate on how something makes them “feel.” I do not blame the Instacart shoppers themselves — they are boxed into the act of shopping as fast as possible to earn a living. Instacart now has earned a $13.7 billion dollar valuation on the backs of their “team” of Instacart shoppers. It is so difficult to watch all human shoppers become the widgets of corporate billion-dollar valuations. Layer that on top of shopping becoming a competitive sport requiring pedestrian shoppers to wear PPE gear due to the influx of untrained Instacart shoppers. COVID-19 grocery shopping is stressful enough without the… Read more »

Instacart has made it this far because it can continue operating at a loss. Retailers didn’t want to get into the ecommerce game directly because they couldn’t figure out how to make a profit. Until that problem is solved, retailers will stay away. Once it is solved, retailers will all implement and Instacart will be pushed out.