I hate to be overly negative against this startup, but I have a couple of issues with this service, that haven't been addressed since Webvan in 2000:
1) The target audience is definitely those people who are too busy to get their own groceries. If they are too busy to get their own groceries, aren't they too busy to cook a meal? I would think that take-out or going out to eat would be their #1 competitor in this area. When both my wife and I were working full-time, at the end of the day we were so exhausted that the last thing we wanted to think about was what we were going to eat, and then actually cooking it. We ate out probably 5 days out of the week. Ordering take-out will be quicker, and less of a hassle.
2) If the delivery person selects items such as meat, eggs, milk, etc that are expired or very close to expiry, it will likely cause a complete lack of confidence in the service. It will only take 1 bad experience buying meat, or a couple of busted eggs in a dozen, and they could potentially lose a customer forever. I'm not sure what their return policy is, but if they have one, it will likely be pretty costly for the company. There also could be incentive for people to return their close-to-expired food to Instacart, claiming that the delivery person selected it. It may seem petty, but for example very high chargebacks rates are one of the biggest challenges that Square faces right now.
3) Free delivery is interesting, but the 3hr delivery window I think will turn out to be pretty inconvenient for customers. It means that they need to deliver their goods at home, because who wants to be stuck at work waiting for their groceries to be delivered? I'm not sure what the delivery times were during their beta testing, that would be interesting to know, but my best un-educated, armchair-analyst guess is that the highest amount of deliveries will be from 7 to 10pm, and on weekends. If Instacart takes off, it means a disproportionate about of work required between 7pm and 10pm, and a lot less at other times. This sounds like a lot of people sitting around waiting for deliveries.
4) Safeway has their own delivery service as well, with a 1hr time window. What exactly does this service provide that Safeway can't? Is it cheaper? Or just faster?
This is already very common in England, and a number of the major supermarkets offer delivery service (Tesco and Ocado/Waitrose are I believe the largest).
1.) The reason I get them delivered isn't necessarily that I'm too busy, just that pushing my way around a busy supermarket on Saturday afternoon is boring! Honestly, when we haven't done an online shop and end up having to go to the store I find myself wishing I could just "search" for items, like with the web/iPhone app.
2.) Ocado (the service I'm familiar with here) never chooses items near the expiry date, it's as simple as that. They must recognise that if people were consistently getting nearly-spoiled goods, they'd just stop using it. Products nearing their expiry date usually have their price reduced in their store, so it's not a problem shifting that stock.
3.) Agreed, Ocado lets you choose 1-hour slots and that's about the longest I'd want. Unless nearer the time they can be more specific based on the van's progress, e.g. send a text saying "we should be with you between 8.00 - 8.30".
Honestly, if I was building this service I'd be looking at someone like Ocado. For me, they've nailed the whole product (including awesome iPhone/iPad apps). If the InstaCart folks would like more info about them (guessing you can't use it outside of the UK?), let me know and I'd be happy to help.
I absolutely loved Ocado when I was living in London. Tesco's was four blocks away, and Sainsbury's a kilometer. Getting groceries home on the bus is no fun.
Damaged goods were refunded no questions asked (the yogurt pots had a habit of bursting).
If I could get the same service in this area, I'd do it at the drop of a hat.
I second that. We have a standing weekly order with Ocado.
For those who've not experienced Ocado weekly deliveries:
It's fantastic - they automatically create an order for us every week for delivery on Friday between 6pm and 7pm. The order includes items we've said to always include, excludes items we've said to never include, but other than that they create a "recommended" order based on our past shopping patterns. Usually it's a very close match and we just tweak some quantities if we've used less or more of something or want to wary our menu.
We then have until about 1am on Friday to amend the order via the web interface or their mobile apps as our needs change through the week. It cuts down my total grocery shopping time to about 5 minutes a week.
Everything comes sorted into color coded bags for the freezer, fridge or cupboards, and the invoice (and web site) lists the minimum number of days until the use by date of each item.
I hardly shop offline any more - between Ocado and Amazon, 99% of my shopping needs are taken care of.
Our metrics to date seem to disagree with your speculation about people not having the time to cook. There are also a host of products that Instacart carries for occasions other than dinner, like sundries, snacks and beer. These are our most popular items. Also, I agree that it would be a terrible experience for the customer if items arrived expired or broken - which is why we take such great care to make sure that those things don't happen.
We've also found that a 3-hour delivery is very convenient for most customers, and it's by far the most preferred option. With regards to delivery from grocery stores themselves: please try ordering something from one in the next hour.
It's really for people without a car. I have plenty of time to cook, but shopping for groceries without a car is annoying. Taking more than two bags at a time on the bus really sucks.
I went to a talk with one of WebVan's early employees, who actually went on to found Kiva Systems, the robotic fulfillment system Amazon just purchased for something like $750 million.
He seemed to insist the reason WebVan couldn't be profitable was because fulfillment was too expensive, which served as inspiration for Kiva. Having people walk around was too slow and too big a cost center.
Obviously this is biased, but still an interesting point to throw in here, since it doesn't look like something they've addressed.
Point #2 Sounds like it could be alleviated via offering users the ability to set account preferences: "If an item is running low on stock, I'll take something that is close to the expiry date."
1) The target audience is definitely those people who are too busy to get their own groceries. If they are too busy to get their own groceries, aren't they too busy to cook a meal? I would think that take-out or going out to eat would be their #1 competitor in this area. When both my wife and I were working full-time, at the end of the day we were so exhausted that the last thing we wanted to think about was what we were going to eat, and then actually cooking it. We ate out probably 5 days out of the week. Ordering take-out will be quicker, and less of a hassle.
2) If the delivery person selects items such as meat, eggs, milk, etc that are expired or very close to expiry, it will likely cause a complete lack of confidence in the service. It will only take 1 bad experience buying meat, or a couple of busted eggs in a dozen, and they could potentially lose a customer forever. I'm not sure what their return policy is, but if they have one, it will likely be pretty costly for the company. There also could be incentive for people to return their close-to-expired food to Instacart, claiming that the delivery person selected it. It may seem petty, but for example very high chargebacks rates are one of the biggest challenges that Square faces right now.
3) Free delivery is interesting, but the 3hr delivery window I think will turn out to be pretty inconvenient for customers. It means that they need to deliver their goods at home, because who wants to be stuck at work waiting for their groceries to be delivered? I'm not sure what the delivery times were during their beta testing, that would be interesting to know, but my best un-educated, armchair-analyst guess is that the highest amount of deliveries will be from 7 to 10pm, and on weekends. If Instacart takes off, it means a disproportionate about of work required between 7pm and 10pm, and a lot less at other times. This sounds like a lot of people sitting around waiting for deliveries.
4) Safeway has their own delivery service as well, with a 1hr time window. What exactly does this service provide that Safeway can't? Is it cheaper? Or just faster?