Instacart Business Model

There are innumerable reasons which feed the satisfaction of living through the current times. The individuals with business instincts are the luckiest for having incredible opportunities at their disposal. Besides, the aspirants with little entrepreneurship knowledge are fortunate too. A significant number of cases can serve as the role models for fledgling businesspeople. One undeniable example is that of instacart business model.

The primary reason for the success of Instacart is the identification of state of engagement of average citizen’s life. The routines are becoming tougher as many people travel for hours to reach workplace and back. The week-long activities discourage the consumers to travel to grocery store. People looked for an alternative which could bring them groceries at their doorstep.

Some companies offered home delivery by phone call prior to instacart model. However, these companies charged additional money as delivery charges. Most of the consumers preferred money over time. Thus, the traditional delivery option could not make an impressive mark.

Instacart strategy thrived since it addressed the mass necessity.

At the beginning of this age where the on-demand industry is on the rise, Instacart founders relieved consumers by providing a solution to one of their primary problems. Instead of traveling to grocery stores, the delivery agent reaches up to the consumer. None of them need a phone call since the customer may order with few smartphone taps.

Although the business model of Instacart offers plenty of solutions to assist grocers, yet following are the most significant ones.

Eliminating Delivery Costs

Earlier, every grocery store in the US and around the world surcharged consumers if they asked for home delivery. The delivery charges presented a huge drawback since most of the consumers preferred money over time.

Instacart business model revamped the delivery process by making collaborations with local stores in various cities. The stores had to previously charge an extra amount of money to meet the delivery costs. These costs included maintaining the delivery fleet and paying the associated employees. However, after starting a partnership with Instacart, they delegated the task of delivery to Instacart agents.

The only times that Instacart charges customers more than usual are when the user seeks urgent deliveries. Nevertheless, the charges are still reasonable. It is noteworthy that the stores in collaboration pay Instacart for delivery. The amount is substantially lower than that if they do not delegate the task. Thus, the model serves stores as well as instacart.

Minimizing Delivery Time

Instacart allows the customers to get the intended items in remarkably lesser time than the traditional delivery. The primary reason for time reduction is the ability to find the nearest agent. Another factor is the capability to find out the store where the customer may find a product. Thus, instead of agent or staff member search around stores for the required product, the customers indicate the store ahead of placing the order.

The customers can further reduce the delivery time by placing an urgent order. The staff will put this order above others in the priority list. They will make an agent to cater the urgent order first.

Redefining the Employment Model with Gig Economy

Initially, Instacart followed the traditional model of employment. However, they introduced a pay system for shoppers. Any shopper who stops at one of the instacart stores can earn money by delivery grocery to another consumer who wants home delivery. This Boulder model of on-demand grocery business eliminates the need to keep a dedicated workforce.

However, the company executives plan to maintain a base amount of daily wagers to address the orders in unusual times. Moreover, the company also offers part-time employment. The requirement of these jobs arises during the peak days. Thus, company has a cost-effective system to increase the profit margin. This is one of the reasons that Instacart managed to double its funding to reach as high as $1.6 billion.

Distinctive App Modules

The customers, staff and delivery agents have three separate modules purpose-built to effectively serve them. This approach follows Instacart business plan which identified unique needs of these three stakeholders.

Customer module enables the users in selecting the grocery store of their choice as well as the intended items. The module informs about prices and the availability of the item. Most of the stores share and update a complete list of available items. Thus, the customers may know if a product is accessible or not.

Moreover, the app requires an address where the customers intend to get the grocery delivered. Thus, the customers can acquire the purchases at their doorstep. The app also enables users to make use of more than one store in the same order. Instacart app provides simple navigation so that the users can conveniently use it regardless of technical understanding of smartphones.

Staff Module is purpose-built to facilitate the staff which regulates the grocery orders. It is notable that delivery agents alone are insufficient because there must be a centralized mechanism which monitors the delivery status.

As soon as one of the staff members receives a request from a customer, the member redirects it to the appropriate agent. The order details include the grocery store of customer’s choice as well as the customer’s address. Therefore, the staff must redirect the order to the most suitable agent who is present in the vicinity of selected store. Customers may have queries and complaints regarding their booking. Staff is also responsible for addressing these concerns.

Delivery agent module enables the agent to find the appropriate route to the grocery store and customer’s location. The agent is able to view the list of ordered items to avoid the inconvenience of missing item during delivery.

Replication Does not Guarantee Success

Some Instacart competitors successfully replicated the model. However, many aspirants failed too. The primary cause of failure is the inefficiency in planning and implementation. Some of the successful ones failed in the long-term owing to the inability to sustain high demand. The demand is still peaking up as more consumers are shifting to on-demand grocery. However, the number of instacart-like businesses is very less to cope with the increasing demand.

There is a massive opportunity for startup enthusiasts to fill the gap between demand and services provision. Sign up right now to start your free trial on the way to owning an on-demand grocery app.