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The point of VC-subsidization is only to last until the company can build up both a brand and a more efficient system. For example, shopping at Whole Foods is
by gkoberger 11y ago
The point of VC-subsidization is only to last until the company can build up both a brand and a more efficient system.
For example, shopping at Whole Foods is inefficient. However, once Instacart has their own (automated) warehouses and can cut out the middleman supermarket, as well as real estate/cashiers/etc, it can potentially shift to being profitable. Add in self-driving cars, and they're set.
(Also, don't forget that for many stores, Instacart marks things up 10-20%. So they're making +$20 on a $150 order.)
- Dwolb 11y agoInstacart are absolutely not subsidizing until creating their own automated warehouses. Pick and pack for groceries is really hard due to the high variety and expensive and the margins are really small. Instacart are trying to capture the top-of-the-funnel via marketing efforts and branding, which is capital intensive, but from a variable cost instead of fixed cost perspective.
- puranjay 11y agoSo basically a business that isn't going to be feasible for the next 5-10 years. That's not a business model then
- ghaff 11y ago> once Instacart has their own (automated) warehouses and can cut out the middleman supermarket So now they're running a delivery-only grocery chain that has to compete with the well-established brand and distribution network that is popular among their not very price-sensitive customer base. >Add in self-driving cars, and they're set Don't hold your breath for door to door that also somehow has to drop off bulky and potentially fragile packages.
- machinshin_ 11y agoUh no. At that point you're like a UPS delivery man, pack the truck vlby delivery order. Then the car drives to each location, you get the package inside and the car moves on