Unless they've got logistics so tight that their delivery cost is less than the grocers doing themselves, I don't see this working for Instacart.
The margins for groceries are already paper thin. Consumers have no appetite for delivery fees so vertical integration and proper logistics is key.
Only path I see for them is getting acquired by a major grocer purely for the platform. That grocer would become the first party integrator. I don't see that happening though as it'd be cheaper for them to do it from scratch in house.
> Consumers have no appetite for delivery fees so vertical integration and proper logistics is key.
At least in the UK, most of the major supermarkets offer delivery for fees of around £4, last I knew. And at the end of the day, much of the US lives in places that aren't that different in terms of population density to the UK.
I might be mistaken but I think that groceries are generally more expensive in the UK, so people there might be willing to pay more for delivery because it's a lower relative cost.
> I don't see that happening though as it'd be cheaper for them to do it from scratch in house.
Why? I don't think most grocery stores have a ton of IT resources or talent. I used Kroger's home delivery service off and on for years, and the UX was first horrible and then only slightly less horrible. And, in 2017, as far as I can tell, still has no mobile client.
An instacart acquisition, where you get the whole infrastructure, would seem pretty appealing.
They could move into the b2b space - be a delivery service provider for grocery stores. Contract with the grocery chains to provide delivery service, allowing the grocery store to hide the delivery fee.
The margins for groceries are already paper thin. Consumers have no appetite for delivery fees so vertical integration and proper logistics is key.
Only path I see for them is getting acquired by a major grocer purely for the platform. That grocer would become the first party integrator. I don't see that happening though as it'd be cheaper for them to do it from scratch in house.