Instacart just leaves deliveries at the door as customers hole up against the coronavirus

Discussion
Photo: Instacart
Mar 06, 2020
George Anderson

Instacart announced yesterday a new feature — Leave at My Door Delivery — after seeing increased demand from customers in recent days as a result of concerns over the spread of the coronavirus (COVID-19).

The delivery service has been testing the feature in recent months and decided to give customers the ability to opt-in. Instacart reports a significant jump in deliveries over the last week to customers in California, New York and Washington, the states where many of the virus cases have been reported to date.

Whether other services such as DoorDash, Grubhub and UberEats will follow Instacart in offering deliveries sans an exchange between driver and customer remains to be seen. A spokesperson for Grubhub told CNN Business, “This is obviously a complex and fast-moving situation. We are focused on prioritizing the health and safety of our drivers, diners, restaurant partners and employees during this challenging time. We will continue to monitor the situation closely, including assessing and analyzing the potential impact on our business.”

Demand for delivery is only expected to increase as many people look to reduce their contact with others. A survey of U.S. consumers conducted on Feb. 25 and 26 by Coresight Research found that 27.5 percent were already limiting their visits to public areas as a result of the outbreak.

Reports of delivery delays have surfaced in recent days as consumers do more of their shopping online. Same-day services, in particular, seem to have been somewhat overwhelmed by the increased demand, with Amazon Prime Now, Instacart and others limiting delivery windows or instead offering next-day service.

The New York Times reports that as of last night there were 215 reported cases of people infected with coronavirus across 20 states. There have been 14 fatalities in the U.S. to date.

DISCUSSION QUESTIONS: How will retailers deal with the increased demand for deliveries resulting from the coronavirus outbreak? Do expect many customers will stick to their shift to online shopping online once the current emergency has passed?

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"I think this outbreak will permanently accelerate both home delivery and telecommuting. "
"I have to say that Instacart is addictive. I started using it because I had knee problems and now — I just use it. It’s easier."
"The interesting item here is that Instacart is able to use the virus concern as a way to reduce engagement and avoid the time it takes for direct handoff of products..."

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21 Comments on "Instacart just leaves deliveries at the door as customers hole up against the coronavirus"


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Mark Ryski
BrainTrust

This is going to be difficult to manage for retailers. As demand for online buying increases, service levels and delivery times will ultimately be impacted and perhaps even significantly. While online purchasing will be helpful, home delivery does no good if supply shortages mean that there’s nothing to buy – or at least nothing that you need to buy, like hand sanitizer or face masks.

David Naumann
BrainTrust
David Naumann
Retail Industry Analyst
4 months 3 days ago

As more consumers opt for online orders and delivery from grocers, the biggest challenge will be to keep up with demand. If the coronavirus gets extremely bad, it will be difficult to get delivery drivers to continue and grocers will need to actually hire more drivers or expect third-party delivery services to increase their driver workforce.

Consumers are creatures of habit. When consumers get accustomed to ordering groceries online, this may be the catalyst that spurs online grocery shopping to take hold. Beyond grocery, the coronavirus will also increase online shopping in general, which will have an extremely damaging impact on malls. Malls are already in a very difficult situation and this makes it worse.

Art Suriano
BrainTrust

Instacart’s leave it at the door policy is excellent. Many people are concerned about the coronavirus, and taking all precautions possible is wise. Recently, many archdioceses have suspended priests offering Catholics the blessed cup and have banned shaking hands during the sign of peace. There is nothing wrong with precaution. This virus will end, and hopefully it will end soon. When that happens, the majority of people will resume the life they had prior, but a few will continue their new practices not so much because of fear of contracting an illness but most likely because they prefer it, as in the case of shopping more online for the convenience.

Richard J. George, Ph.D.
BrainTrust
Coronavirus needs to be taken seriously. According to the World Health Organization, the virus had sickened more than 90,000 people, has claimed over 3,000 lives worldwide including across 73 countries and 12 states in the U.S. “We are on the highest level of alert or highest level of risk assessment in terms of spread and in terms of impact …. Wake up. Get ready. This virus may be on its way and you need to be ready,” said a World Health Organization official. Retailers of all ilks need to develop coronavirus strategies. The first hit industries have been those related to travel. Now schools are beginning to close. The stock market continues to tumble despite a strong jobs report. All of these results will weigh heavier on the American psyche forcing more “flee” like responses. Online is an option that needs to be ramped up to counteract fewer store visits. Long term, as my mother always said to me, “there’s always good that comes from bad,” online will continue to grow aided by the trial… Read more »
Ralph Jacobson
BrainTrust

Of course this temporary outbreak will drive short-term behavior, however, I think consumers will appreciate home delivery for product categories that they may not have experienced in the past. Therefore, retailers will see a more sustained move toward increased home delivery over the long-term, and must adjust staff and logistics to support that.

Casey Golden
BrainTrust
4 months 2 days ago

I agree, late adopters will realize the value and fuel long-term last mile initiatives. However, I also see this increasing the risk for theft; especially in more urban and high concentration areas.

Bob Phibbs
BrainTrust

Quite simply this has the potential impact of 9/11 on our economy as multiple systems and businesses are presented with vague options to mitigate the consequences.

Cathy Hotka
BrainTrust

Oh, come on. People just seem to love hysteria. Four months after the World Trade Center attacks an Iowa newspaper ran a huge headline that said “9/11: The Day That Forever Changed Iowa.” We’ll probably see this kind of overreaction for months.

Neil Saunders
BrainTrust

Dealing with the upswing in demand will be difficult, especially if delivery workers get sick or feel they need to limit their own exposure. The likelihood is that demand will outstrip supply and retailers will need to limit delivery options. The other concern is that online delivery is way less profitable than consumers buying in stores, so there will be some erosion of the bottom line.

Paula Rosenblum
BrainTrust

I have to say that Instacart is addictive. I started using it because I had knee problems and now — I just use it. It’s easier.

And FYI, Amazon Fresh already just rings the bell and walks away. It’s one reason I don’t use them anymore. Whole Foods Market has lost all my business because it stopped using Instacart when the contract ran out.

Instacart or Shipt plus a local grocer is a real winner for the top line.

Brandon Rael
BrainTrust

No industry will be immune to the potential impacts of the coronavirus including e-commerce, food delivery, and other services that require face-to-face interactions. While every single business and service provider will be impacted by the potential chaos from the coronavirus, now is the time to be pragmatic and come up with solutions, such as what Instacart is offering, to protect both the workers and customers.

Customers will have to temper their expectations, and there is a likelihood that their delivery won’t be exactly when they want it, especially as companies are ramping up their fulfillment services teams to meet the expected increases in online shopping.

Michael Terpkosh
BrainTrust

This is an excellent idea and I expect other delivery services to follow. Retailers can always find a way to handle increased demand. However, if your employees don’t show up for work or the supply-chain slows, causing shortages, there is not much a retailer can do. There is another human dynamic going on here that can cause home deliveries to slow down — increased purchasing of shelf-stable groceries as people stock-up or hoard product. A family has to eat and use this stuff eventually. This could create retailer sales slumps as we move through 2020.

Jeff Weidauer
BrainTrust

This is a smart move by Instacart, and one that will have long-term ramifications for its business as well as for its partner retailers. As the urge to hibernate grows, online shopping will grow as well. For shoppers who have a positive experience, it’s likely that they will continue to shop online. That’s a major risk for retailers, as Instacart will get the credit for that experience, while supply problems will be blamed on the retailer.

Ken Morris
BrainTrust

I think this outbreak will permanently accelerate both home delivery and telecommuting. This is a real challenge for retailers but luckily this is happening in a non-peak season for most retailers. Changing your business model and your process is not an easy task and is exponentially more complex the larger the retail organization. Many home office personnel can work from home but the in-store challenge is daunting. How do you staff a store in an already tight labor market when a challenge like this happens? Will this increase BOPIS as well as home delivery? Never a dull moment in retail.

Herb Sorensen
BrainTrust
This well summarizes what could be a major trend for retail. It will force addressing the massive “parked capital” problem across the bricks retail world. Virtually billions of dollars of assets just sitting there resting quietly in bricks store’s aisles (the alt-warehouse of bricks retailers, “parked capital.”) Amazon has been working feverishly for decades to move all that “parked capital” offsite, and has quite possibly passed Walmart as the world’s premier logistics organization in the world (managing “the stuff.”) However, the super-successful “merchant warehousemen” of the past century need to create from scratch a focus on what the shoppers are focussed on, a small slice of what retailers are shoving into their faces — on behalf of themselves and their suppliers. The small slice is known as the big head! The 10+% of all merchandise that shoppers mostly buy! Costco is in the lead for bricks retailing, except that they hardly accommodate the convenience of the neighborhood supermarket. Creating “Costco-like” “neighborhood pantries” will be the winning model of the small supermarkets of the future. The… Read more »
Gene Detroyer
BrainTrust

Once someone gets accustomed to the convenience of online, it will be hard to go back.

I have told the story several times here on RetailWire about my wife’s first experience with Zappos. Her words were, “why would I never go to a store again?” Don’t worry, she still goes to a store occasionally. But I just asked her to estimate what percentage of her apparel purchases are online. Her answer, “90 percent or more.”

Kenneth Leung
BrainTrust

I think the issue is still a case of profitability. Will the increase in deliveries eat too much into the profits for the retailers who aren’t structured for it? I do wonder, once you are forced to stay in for that long, then when this is over, will people just get claustrophobia and release the pent-up demand for travel and leisure? Easy to say you don’t want to leave the house, but when you can’t leave the house, it has an opposite effect.

Peter Charness
BrainTrust

As others are noted, our current scenario will demonstrate to a lot of home delivery laggards just how easy it is, and many of them will become permanent online shoppers. I suspect that the next 3 months will accomplish a year of converting shoppers to online. Brick and mortar shopping will decline faster than it otherwise would have.

Sheri Blattel
Guest
For the short term, this will be the makings of a perfect storm. With each passing day more people are being asked to work from home and limit their outside interactions. Travel is down or cancelled.Conferences and meetings across the country are being cancelled or postponed. Visits to any places where there is concentration of people will be avoided. All these scenarios create the opportunity and demand for more delivery services in grocery, ready to eat food, goods, and potentially even services such as dry cleaning delivery as more people are opting to have items deep cleaned. There are multiple challenges: keeping up with demand along with having available workforce and the supply-chain challenges as the increased demand for items depletes resources and availability. There will also be an impact on brick and mortar in-store sales during this time. Retailers and providers are faced with difficult challenges until the COVID-19 novel outbreak is under control. The upside is that many who have not before utilized delivery services or who have been reluctant will experience the… Read more »
Craig Sundstrom
Guest

Maybe I’m missing something here — hey, would be the first time! — but isn’t there a fundamental disconnect between being concerned about a failure (to deal with increased demand) in the short-term and increased demand in the long term? What about the idea that negative experiences will actually make people less likely to use online delivery later?

Ananda Chakravarty
BrainTrust

The increased demand for online is just a bump and will subside after the crises either passes or doesn’t materialize. The interesting item here is that Instacart is able to use the virus concern as a way to reduce engagement and avoid the time it takes for direct handoff of products to customers. It lowers costs for Instacart, removes some accountability, and allows associates to service more customers. Communication doesn’t vanish — such as navigating substitutes.

As Instacart is primarily tied to grocery, it will also reduce frequency of foot traffic at certain grocers, however I believe this will be relatively small amounts. The main reason this is even being noticed is that online grocery is relatively small right now (< 5%) and even a tiny jump will drive large changes in online purchase results. Instacart is playing this well — but it remains unsustainable once the crisis is averted.

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Braintrust
"I think this outbreak will permanently accelerate both home delivery and telecommuting. "
"I have to say that Instacart is addictive. I started using it because I had knee problems and now — I just use it. It’s easier."
"The interesting item here is that Instacart is able to use the virus concern as a way to reduce engagement and avoid the time it takes for direct handoff of products..."

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