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If there is as much money to be made as Instacart's valuation implies, then it's just a matter of time until the big chains, at least, start offering their own

If there is as much money to be made as Instacart's valuation implies, then it's just a matter of time until the big chains, at least, start offering their own online shopping. This strikes me as another version of AutoByTel.com Remember them? They worked between you and the dealership, and generally got you a much better price on a car, usually the fleet rate. They did well until dealerships figured out how to use the web, and then the company hasn't been anywhere near as relevant for a long time. It tough existing between web-based customers and physical dealers. There isn't a lot of loyalty, so as soon as tgere is a better price customers will change sites. Also, Autobytel's business is really offering highly qualified sales leads to dealerships. The basics are nothing fancier than that. I see the same thing for Instacart. Grocery stores tend to be effective at shipping stuff around, but tge same "shoping" experience has worked for many, many years. It seems like the grocery stores have a lot more power than Instacart, and Instacart is going to have a very hard time getting between customers and stores. It's going to be hard to make a profit when stores offer free/cheap delivery and develop their own shopping apps.

up_and_up 10y ago
> If there is as much money to be made as Instacart's valuation implies, then it's just a matter of time until the big chains, at least, start offering their own online shopping. They already do. We sometimes use personal shopping at Whole foods, it costs like $15. You drive up and pick up the groceries. Super easy. Another smaller chain store, for $20, they will shop and deliver to your door. While great in terms of saving time, the problem is that you sometimes dont get exactly the item you would have picked nor get the option to pick up extra items or things on sale.
- wincy 10y ago
  Where I live in the midwest, one of the chains has started doing delivery or curb side pickup for free if you spend at least $100. We started shopping there exclusively for awhile because of it, super convenient.
- kornish 10y ago
  > While great in terms of saving time, the problem is that you sometimes dont get exactly the item you would have picked nor get the option to pick up extra items or things on sale. Seems to me that the grocery stores have an advantage of Instacart in this, actually, because they have access to their own inventory systems while Instacart doesn't. To vertically integrate delivery would make a lot of sense.
simplehuman 10y ago
What you are saying is correct. But this comment is true for every startup out there.
- koolba 10y ago
  In this case though I don't see a secret sauce that keeps the customer with Instacart rather than going direct to the retailer. With something like Uber or Lyft, you're accessing a pool of drivers that can't immediately be created by a small competitor. Even in a local environment. With a grocery store I'm generally ordering from the same place repeatedly. If they offer the same service directly, I see no advantage to dealing with Instacart. Maybe if they integrate vertically but at that point they become a modern grocery store without a store front (I bet they're considering this already). But otherwise they're just tacking a markup on something the stores can do directly. Another example would be a maid service like Homejoy. It's great if you don't have a contact to begin with but once I've had a maid come to my house, I want the same person to come back again. It's in my interests (cheaper, same person) and the maid's interest (no commission to service) for it.
  - kingbirdy 10y ago
    As far as Instacart vertically integrating, at that point they'd be competing with Amazon Fresh, and Amazon could likely muscle them out of the market
  - err4nt 10y ago
    You did a really good job illustrating the idea we're all talking about this with the Uber/Lyft metaphor. It's hard being a 'value add'-only business, ultimately when things get competitive those people are going to go bankrupt first before the people actually holding the supply, even if they're suffering or hurting. It sounds like this sort of business can only exist in non-competitive spaces.
- deleted 10y ago
  [deleted]
- jdoliner 10y ago
themagician 10y ago
Unless Instacart deeply integrates with each stores inventory, they will ultimately lose. The biggest problem with Instacart vs Amazon Fresh is that with Instacart you never really know what you are going to get. You never know what your end bill is going to be, and you never know what the real markup is. I don't think I've ever place an order on Instacart and had it filled 100% with everything I wanted. Place a large enough order and 10+ items might be missing. Miss the call to try and find a subsititue? Too bad. The end user experience for Instacart is actually pretty damn bad. It's often just "better than nothing", but I don't see how that's sustainable.
- grandalf 10y ago
  Instacart would benefit from keeping inventory data synced more accurately, but ultimately Instacart offers a solution in the form of the shopper making a reasonable decision. Instacart used to prompt the buyer to approve all substitutions, but it got tiresome pretty quickly. Now you can still do that, but the default experience lets the shopper make the (usually obvious) choice. Grocers do not always have everything in stock, and so I think Instacart's solution is the best I've seen so far. If you are someone who wants to know the exact total in advance, then request no substitutions, it's very simple.
  - themagician 10y ago
    It's not simple, nor does "no substitutions" solve the problem. The Amazon Fresh model is far superior. If the item is out of stock, it shows out of stock. People will put up with Instacart until there is better solution—any really—because Instacart's solution is terrible.
    - grandalf 10y ago
      > The Amazon Fresh model is far superior. If the item is out of stock, it shows out of stock. How is this better? Most supermarket items are sold alongside many competing items that are nearly identical. As a customer, I may or may not have a strong brand preference. In my case I have a brand preference for only about 10% of the items I buy. For the rest I'm largely indifferent. Also, in the vast majority of cases, the store brand is an adequate substitute. So I would argue that by actually applying intelligence to the problem, Instacart's approach is better. Showing out of stock puts the burden on the user to solve the problem of which alternative to choose.
clairity 10y ago
as i mention elsewhere on this thread, the delivery business is not the bet that VCs are making. they're making a bet that instacart will become critical marketing infrastructure for the grocery industry. the disintermediation that you talk isn't applicable here. instacart is creating and sharing value in the value chain rather than trying to take a cut from the downstream customer (i.e. dealerships, in your example).
peterjlee 10y ago
How is AutoByTel.com different from TrueCar? TrueCar doesn't seem like it's doing too badly
grandalf 10y ago
> If there is as much money to be made as Instacart's valuation implies, then it's just a matter of time until the big chains, at least, start offering their own online shopping. That depends on what grocery stores are good at. It seems to me that grocery stores are the ones with the outdated model. Why would we expect people who make many multiples of the wage paid to a shopper to enjoy wandering through a warehouse putting goods into a cart? High end chains offer samples of gourmet food, pleasant music, oyster bars, etc., but ultimately when I'm there I'm sacrificing a LOT of time simply for the pleasure of shopping manually. Instacart has created an extremely polished, highly usable shopping experience. When I order I don't really care where the items come from (I have no loyalty to the local grocer). I typically shop at Whole Foods because it carries many high-end items, but why should my grocer have to buy prime retail space just to put a bunch of short-shelf-life items on display in a beautiful shopping environment hoping that I'm happy to pay a 20% markup over a Safeway or other competitor? Instacart is the best solution to the problem of "how do I keep my fridge and pantry stocked with the items I want with minimal cost and effort" problem. Think about if we had to browse through cartons of mail in a local postal service warehouse just to collect our mail. Delivery makes perfect sense for things that we need on a routine basis. > but tge same "shoping" experience has worked for many, many years. This is almost an absurd luddite-ism and I won't even respond :)

up_and_up 10y ago

> If there is as much money to be made as Instacart's valuation implies, then it's just a matter of time until the big chains, at least, start offering their own online shopping. They already do. We sometimes use personal shopping at Whole foods, it costs like $15. You drive up and pick up the groceries. Super easy. Another smaller chain store, for $20, they will shop and deliver to your door. While great in terms of saving time, the problem is that you sometimes dont get exactly the item you would have picked nor get the option to pick up extra items or things on sale.

wincy 10y ago
Where I live in the midwest, one of the chains has started doing delivery or curb side pickup for free if you spend at least $100. We started shopping there exclusively for awhile because of it, super convenient.
kornish 10y ago
> While great in terms of saving time, the problem is that you sometimes dont get exactly the item you would have picked nor get the option to pick up extra items or things on sale. Seems to me that the grocery stores have an advantage of Instacart in this, actually, because they have access to their own inventory systems while Instacart doesn't. To vertically integrate delivery would make a lot of sense.

simplehuman 10y ago

What you are saying is correct. But this comment is true for every startup out there.

koolba 10y ago
In this case though I don't see a secret sauce that keeps the customer with Instacart rather than going direct to the retailer. With something like Uber or Lyft, you're accessing a pool of drivers that can't immediately be created by a small competitor. Even in a local environment. With a grocery store I'm generally ordering from the same place repeatedly. If they offer the same service directly, I see no advantage to dealing with Instacart. Maybe if they integrate vertically but at that point they become a modern grocery store without a store front (I bet they're considering this already). But otherwise they're just tacking a markup on something the stores can do directly. Another example would be a maid service like Homejoy. It's great if you don't have a contact to begin with but once I've had a maid come to my house, I want the same person to come back again. It's in my interests (cheaper, same person) and the maid's interest (no commission to service) for it.
- kingbirdy 10y ago
  As far as Instacart vertically integrating, at that point they'd be competing with Amazon Fresh, and Amazon could likely muscle them out of the market
- err4nt 10y ago
  You did a really good job illustrating the idea we're all talking about this with the Uber/Lyft metaphor. It's hard being a 'value add'-only business, ultimately when things get competitive those people are going to go bankrupt first before the people actually holding the supply, even if they're suffering or hurting. It sounds like this sort of business can only exist in non-competitive spaces.
deleted 10y ago
[deleted]
jdoliner 10y ago

themagician 10y ago

Unless Instacart deeply integrates with each stores inventory, they will ultimately lose. The biggest problem with Instacart vs Amazon Fresh is that with Instacart you never really know what you are going to get. You never know what your end bill is going to be, and you never know what the real markup is. I don't think I've ever place an order on Instacart and had it filled 100% with everything I wanted. Place a large enough order and 10+ items might be missing. Miss the call to try and find a subsititue? Too bad. The end user experience for Instacart is actually pretty damn bad. It's often just "better than nothing", but I don't see how that's sustainable.

grandalf 10y ago
Instacart would benefit from keeping inventory data synced more accurately, but ultimately Instacart offers a solution in the form of the shopper making a reasonable decision. Instacart used to prompt the buyer to approve all substitutions, but it got tiresome pretty quickly. Now you can still do that, but the default experience lets the shopper make the (usually obvious) choice. Grocers do not always have everything in stock, and so I think Instacart's solution is the best I've seen so far. If you are someone who wants to know the exact total in advance, then request no substitutions, it's very simple.
- themagician 10y ago
  It's not simple, nor does "no substitutions" solve the problem. The Amazon Fresh model is far superior. If the item is out of stock, it shows out of stock. People will put up with Instacart until there is better solution—any really—because Instacart's solution is terrible.
  - grandalf 10y ago
    > The Amazon Fresh model is far superior. If the item is out of stock, it shows out of stock. How is this better? Most supermarket items are sold alongside many competing items that are nearly identical. As a customer, I may or may not have a strong brand preference. In my case I have a brand preference for only about 10% of the items I buy. For the rest I'm largely indifferent. Also, in the vast majority of cases, the store brand is an adequate substitute. So I would argue that by actually applying intelligence to the problem, Instacart's approach is better. Showing out of stock puts the burden on the user to solve the problem of which alternative to choose.

clairity 10y ago

as i mention elsewhere on this thread, the delivery business is not the bet that VCs are making. they're making a bet that instacart will become critical marketing infrastructure for the grocery industry. the disintermediation that you talk isn't applicable here. instacart is creating and sharing value in the value chain rather than trying to take a cut from the downstream customer (i.e. dealerships, in your example).

peterjlee 10y ago

How is AutoByTel.com different from TrueCar? TrueCar doesn't seem like it's doing too badly

grandalf 10y ago

> If there is as much money to be made as Instacart's valuation implies, then it's just a matter of time until the big chains, at least, start offering their own online shopping. That depends on what grocery stores are good at. It seems to me that grocery stores are the ones with the outdated model. Why would we expect people who make many multiples of the wage paid to a shopper to enjoy wandering through a warehouse putting goods into a cart? High end chains offer samples of gourmet food, pleasant music, oyster bars, etc., but ultimately when I'm there I'm sacrificing a LOT of time simply for the pleasure of shopping manually. Instacart has created an extremely polished, highly usable shopping experience. When I order I don't really care where the items come from (I have no loyalty to the local grocer). I typically shop at Whole Foods because it carries many high-end items, but why should my grocer have to buy prime retail space just to put a bunch of short-shelf-life items on display in a beautiful shopping environment hoping that I'm happy to pay a 20% markup over a Safeway or other competitor? Instacart is the best solution to the problem of "how do I keep my fridge and pantry stocked with the items I want with minimal cost and effort" problem. Think about if we had to browse through cartons of mail in a local postal service warehouse just to collect our mail. Delivery makes perfect sense for things that we need on a routine basis. > but tge same "shoping" experience has worked for many, many years. This is almost an absurd luddite-ism and I won't even respond :)