9 ms·

Instacart Tries to Hang on to Whole Foods as Amazon Swoops In

111 points by ErikVandeWater 9y ago

jhowell 9y ago
I don't see Amazon buying Instacart. I also didn't see Amazon buying Whole Foods. Maybe Walmart saves this sinking ship.
- dawnerd 9y ago
  Amazon does have Prime Now which does close to the same thing instacart does. I could see it making a lot of sense to buying them out to get all those extra markets.
  - djsumdog 9y ago
    Prime is not the same as Instacart. You can't get ice cream or tine sensitiveness orders with Prime. You're thinking of Amazon Fresh, their grocery delivery service, which is in fewer markets than Instacart (as started in the article, 20 vs 69 cities).
    - jdauriemma 9y ago
      IIRC, Prime Now sells some groceries and essentials with two-hour delivery. It's a last-mile service not unlike Instacart.
      - jen20 9y ago
        It does it with an inside-one-hour window in some places, including groceries. I use it frequently.
      - dawnerd 9y ago
        And it's included with a prime subscription. No percent or delivery fee markups. There's also restaurants in some areas.
    - twblalock 9y ago
      I can get ice cream delivered within an hour on Prime where I live. I can also get groceries, booze, restaurant food, shoes and clothing, etc. Amazon sends people to buy the products from local businesses and deliver them.
      - baddox 9y ago
        I find it odd that Prime Now has alcohol, but Fresh does not. There are several other differences in what is offered. It's confusing why there's a separation, and why I should pay $15 a month for Fresh while Prime Now charges a smaller fee per delivery. Heck, it's even confusing why they separate normal Amazon shopping. If I add an item to my normal cart that is also available on Prime Now (or Fresh), why wouldn't they tell me?
        dawnerd 9y ago
        There's no fee for prime now, just an optional tip which is probably why amazon doesn't use prime now on their normal site.
        jlarocco 9y ago
        > I find it odd that Prime Now has alcohol, but Fresh does not. Maybe not so odd. Some states (Colorado, at least) have laws preventing grocery stores from selling alcohol, or severely limiting what they can sell. I could see offering it through Fresh complicating things.
        baddox 9y ago
        Would the legal difference only be that Fresh is marketed as grocery delivery? As far as I know, Fresh and Prime Now are both delivered from local warehouses by Amazon's own couriers.
        twblalock 9y ago
        I'd bet there are at least 50 legal differences in the 50 US states. For example, grocery stores in California can sell alcohol, but Amazon Fresh does not -- only Prime Now does, probably because Amazon is just a middleman -- they send a driver to a licensed liquor store to buy the product and deliver it to the customer's home. I sympathize with anyone trying to sell alcohol in the United States. They have to deal with 50 different liquor law regimes in order to sell nationwide, and probably federal laws as well if the alcohol is imported.
    - dawnerd 9y ago
      "Prime Now" is what I said. https://primenow.amazon.com https://primenow.amazon.com
- petra 9y ago
  Walmart is working hard to winning pickup retail and already offering it in 900 stores. All they are missing is the delivery guy, and since instacart delivers using the UBER model, that isn't terribly hard, and even today they offer that via UBER. Instacrt can't offer them much.
- cududa 9y ago
  Back in 2015 when they were sniffing around Postmates I was extremely hopeful they'd acquire them and make "delivery" an AWS product
IBM 9y ago
Even assuming that Amazon breaks the Instacart contract I'm not seeing the downside for them. Every single grocer should be more eager than ever to partner now that Amazon has shaken them to their core. It makes more sense for everyone to outsource delivery to Instacart than to have every grocery chain or retailer try to recreate it on their own. The scale of all the non-Amazon grocers should keep costs down.
- lefstathiou 9y ago
  I read the headline and immediately thought "Instacart is f*" then I read your response and thought "hmm that's a good point actually". HN community for the win. Thank you.
- crabasa 9y ago
  Every other retailer handing their destiny to Instacart and becoming undifferentiated warehouses of goods makes tons of sense for Instacart, but little sense for the retailers. Sure, a bunch of small/desperate retailers will do this in the short term, but the small handful that will still be around in 5-10 years know that owning the direct relationship with the customer is non-negotiable.
  - ativzzz 9y ago
    What direct relationship do groceries have with customers? Only those small local ones do. There is no relationship. I buy the best food at the cheapest cost. That's it.
    - jklein11 9y ago
      How do you determine what the best food is or the cheapest cost for that matter? Do you comparison shop at different supermarkets to figure out what the highest quality food is for the lowest price? If you are like me you did that one or two times when you moved to a new area, but then stick to buying everything from the same store which I thought had the best quality food for the best price in general. The relationship that I have with that grocery store keeps me from shopping around prices at other locations.
krat0sprakhar 9y ago
> “Instacart’s core value proposition is last-mile delivery at scale, something Amazon has always struggled with,” Is this really the case? I was under the impression that the e-commerce giant is great at last mile delivery.
- twblalock 9y ago
  My experience with Amazon delivery people has left a lot to be desired. They get lost, they are late, they are rude, etc.
  - blazespin 9y ago
    Botlr is the future. These things work and they are amazing. https://www.nytimes.com/video/technology/100000003050865/alofts-demo-of-the-botlr-bellhop-robot.html https://www.nytimes.com/video/technology/100000003050865/alo... http://www.cnbc.com/2017/04/21/robots-are-now-deliving-food-in-san-francisco.html http://www.cnbc.com/2017/04/21/robots-are-now-deliving-food-...
- azakai 9y ago
  I was surprised by that too. Isn't it literally what Amazon excels at? Just a few days ago there was a story here saying how Amazon's lead in 2 day/1 day/same-day delivery was "unstoppable."
  - jy1 9y ago
    Yep, but they couldn't do fresh produce that well.
- saosebastiao 9y ago
  Nope. Amazon absolutely struggles with it. They can hide how bad they are with it because they have a lot of cash and don't need to appeal to VCs every couple of months. That isn't to say that Instacart is better. They're nowhere near a sustainable business under their current business model. Since >75% of the costs of parcel delivery are due to the last mile, and because parcel delivery margins are so low, we can use parcel delivery prices as a rough proxy for last mile delivery costs. Last mile delivery is only viable at scale due to delivery density. USPS has extremely cheap parcel delivery because they have a government enforced monopoly on letter delivery, ensuring they basically visit every house every day no matter what. The UPS/DHL/FedEX crowd can do 1 day delivery at reasonable-ish prices due to their scale for all parcels. But Amazon and Instacart are cutting delivery windows down to 1 hr, and that absolutely destroys your delivery density...on the order of 10-15x. For the PrimeNow/Instacart business model to make sense, they need costs that are comparable to the current large parcel carriers...meaning they would need to scale their businesses to 10-15x the size of the large parcel carriers to get their prices in the range where their businesses are viable. Amazon is closer than instacart, but that is like saying a car is more likely to get you to the moon than a bicycle.
idibidiartists 9y ago
I can't go inside Whole foods after this. Same reason I won't answer an Amazon recruiter's email. It's disturbing to think of the race to the bottom (in terms of worker compensation and benefits) that Amazon brings to industries it's taken over.
- justicezyx 9y ago
  Since when competition is not a race to bottom game? Name one example?
  - batbomb 9y ago
    Costco
    - sib 9y ago
      Poor item selection; very limited options for different quantities; inconvenient location; must pay for membership; crowded stores; long lines. From the customer point of view, Costco is pretty much the definition of competing on nothing but price: a race to the bottom. (I know, yes, they pay employees [relatively] well.)
      - jedberg 9y ago
        That's not true. I'll buy things at Costco knowing full well that the item is cheaper elsewhere. Why? Because of their excellent customer service and return policy. I know that if that item breaks or has any sort of problem, I can return it no questions asked. Also, their model is pretty good as far as membership goes -- if you spend enough at Costco, your membership is free, because you get cash back. And a little known fact, even if you don't spend enough to pay for your membership, if you ask them, they will increase your cash back reward to make up for it anyway.
      - astrange 9y ago
        Nobody goes there because it's too popular?
justicezyx 9y ago
Even today you still think a non vertical fully integrated approach against Amazon is gonna work... I tried to not be sarcastic, because hn is a place support constructive commenting. But I think if today anyone who think they can survive amazon by doing a sub step of the retail chain, they are simply refuse to refresh their understanding or being too naive or plain stupid.
- theGimp 9y ago
  That last bit of your comment was completely unnecessary.
  - justicezyx 9y ago
    Yep, I was losing my self control... But people just do not get the difficulty of running a retail business... Look at google, how miserable are their retail operation...
    - deleted 9y ago
      [deleted]
- toomuchtodo 9y ago
  With funding and proper execution, you can meet Amazon at parity. FFS, their online consumer offerings are trash (Amazon Music and Video) and Prime is now "maybe two days if the planets are aligned".
  - FussyZeus 9y ago
    I think over this past year I've had one of probably over 50 orders take longer than two days, and that was three days. I'm still a Prime member and the value it delivers, not even counting the Music and Video which I agree are meh, is what keeps me coming back. Maybe this is one instance where living away from the big cities is an advantage.
  - ageitgey 9y ago
    Your experience will depend a lot on where you live. I live downtown in a large-ish city and many of my Prime orders give me free same-day delivery. There is no other service that comes close.
deleted 9y ago
[deleted]
idibidiartists 9y ago
The down votes prove the point you're making about that conscious humans being vastly outnumbered by idiots.
- idibidiartists 9y ago
  this got down voted... further proof in case the previous wasn't sufficient.
  - grzm 9y ago
    Please stop commenting on downvotes. It's explicitly against the guidelines and will likely result in you receiving even more downvotes because you're violating the guidelines. > Please resist commenting about being downvoted. It never does any good, and it makes boring reading. > Please don't bait other users by inviting them to downvote you or proclaim that you expect to get downvoted. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
- sctb 9y ago
  We detached this subthread from https://news.ycombinator.com/item?id=14576935 https://news.ycombinator.com/item?id=14576935 and marked it off-topic.
yueq 9y ago
WFM invested in InstaCart so AMZN is going to be InstaCart's investor's parent company.
bluebluetimes 9y ago
Instacart is a good company I hope they win in the long run and help the grocery companies
deleted 9y ago
[deleted]
deleted 9y ago
[deleted]
noloblo 9y ago
Are there any non- obvious reasons why Amazon acquired whole foods other than declaring war on the grocery industry or the Pe being at a low
jroseattle 9y ago
Looking at this move in terms of Instacart-vs-Amazon is most likely short-sighted. Amazon plays the long game just about better than anyone else around. I'm sure they care about it, but I wouldn't be surprised if they view the Instacart business as tangential. No offense to the fine people at Instacart! I love the service, am a big fan and customer, but objectively I think the business is going to change. Self-driving cars, drones, etc. -- last-mile delivery is going to change in the next 5-10 years. What I find more interesting about this acquisition: real estate. Amazon just acquired 450 or so locations in high-density areas that are likely in the sweet spot of their target customers. They are trying out some revolutionary concepts at Amazon Go. I'd say Amazon feels ready to move on changing the user experience in-store, as opposed to "old-school" delivery.
zghst 9y ago
I’m afraid that most of this audience has an affinity for the noble business model Instacart has, but our morality does not guide markets. I’m extremely concerned for what this means for Instacart. They are now in a cloud for four years. Does anyone really think that within the next four years, Amazon, Uber, etc will be stagnant? They already have existing delivery infra in place, is the price of an Instacart acquisition worth four years of opportunity and innovation in this space?

I don't see Amazon buying Instacart. I also didn't see Amazon buying Whole Foods. Maybe Walmart saves this sinking ship.

dawnerd 9y ago
Amazon does have Prime Now which does close to the same thing instacart does. I could see it making a lot of sense to buying them out to get all those extra markets.
- djsumdog 9y ago
  Prime is not the same as Instacart. You can't get ice cream or tine sensitiveness orders with Prime. You're thinking of Amazon Fresh, their grocery delivery service, which is in fewer markets than Instacart (as started in the article, 20 vs 69 cities).
  - jdauriemma 9y ago
    IIRC, Prime Now sells some groceries and essentials with two-hour delivery. It's a last-mile service not unlike Instacart.
    - jen20 9y ago
      It does it with an inside-one-hour window in some places, including groceries. I use it frequently.
    - dawnerd 9y ago
      And it's included with a prime subscription. No percent or delivery fee markups. There's also restaurants in some areas.
  - twblalock 9y ago
    I can get ice cream delivered within an hour on Prime where I live. I can also get groceries, booze, restaurant food, shoes and clothing, etc. Amazon sends people to buy the products from local businesses and deliver them.
    - baddox 9y ago
      I find it odd that Prime Now has alcohol, but Fresh does not. There are several other differences in what is offered. It's confusing why there's a separation, and why I should pay $15 a month for Fresh while Prime Now charges a smaller fee per delivery. Heck, it's even confusing why they separate normal Amazon shopping. If I add an item to my normal cart that is also available on Prime Now (or Fresh), why wouldn't they tell me?
      - dawnerd 9y ago
        There's no fee for prime now, just an optional tip which is probably why amazon doesn't use prime now on their normal site.
      - jlarocco 9y ago
        > I find it odd that Prime Now has alcohol, but Fresh does not. Maybe not so odd. Some states (Colorado, at least) have laws preventing grocery stores from selling alcohol, or severely limiting what they can sell. I could see offering it through Fresh complicating things.
        baddox 9y ago
        Would the legal difference only be that Fresh is marketed as grocery delivery? As far as I know, Fresh and Prime Now are both delivered from local warehouses by Amazon's own couriers.
        twblalock 9y ago
        I'd bet there are at least 50 legal differences in the 50 US states. For example, grocery stores in California can sell alcohol, but Amazon Fresh does not -- only Prime Now does, probably because Amazon is just a middleman -- they send a driver to a licensed liquor store to buy the product and deliver it to the customer's home. I sympathize with anyone trying to sell alcohol in the United States. They have to deal with 50 different liquor law regimes in order to sell nationwide, and probably federal laws as well if the alcohol is imported.
  - dawnerd 9y ago
    "Prime Now" is what I said. https://primenow.amazon.com https://primenow.amazon.com
petra 9y ago
Walmart is working hard to winning pickup retail and already offering it in 900 stores. All they are missing is the delivery guy, and since instacart delivers using the UBER model, that isn't terribly hard, and even today they offer that via UBER. Instacrt can't offer them much.
cududa 9y ago
Back in 2015 when they were sniffing around Postmates I was extremely hopeful they'd acquire them and make "delivery" an AWS product

IBM 9y ago

Even assuming that Amazon breaks the Instacart contract I'm not seeing the downside for them. Every single grocer should be more eager than ever to partner now that Amazon has shaken them to their core. It makes more sense for everyone to outsource delivery to Instacart than to have every grocery chain or retailer try to recreate it on their own. The scale of all the non-Amazon grocers should keep costs down.

lefstathiou 9y ago
I read the headline and immediately thought "Instacart is f*" then I read your response and thought "hmm that's a good point actually". HN community for the win. Thank you.
crabasa 9y ago
Every other retailer handing their destiny to Instacart and becoming undifferentiated warehouses of goods makes tons of sense for Instacart, but little sense for the retailers. Sure, a bunch of small/desperate retailers will do this in the short term, but the small handful that will still be around in 5-10 years know that owning the direct relationship with the customer is non-negotiable.
- ativzzz 9y ago
  What direct relationship do groceries have with customers? Only those small local ones do. There is no relationship. I buy the best food at the cheapest cost. That's it.
  - jklein11 9y ago
    How do you determine what the best food is or the cheapest cost for that matter? Do you comparison shop at different supermarkets to figure out what the highest quality food is for the lowest price? If you are like me you did that one or two times when you moved to a new area, but then stick to buying everything from the same store which I thought had the best quality food for the best price in general. The relationship that I have with that grocery store keeps me from shopping around prices at other locations.

krat0sprakhar 9y ago

> “Instacart’s core value proposition is last-mile delivery at scale, something Amazon has always struggled with,” Is this really the case? I was under the impression that the e-commerce giant is great at last mile delivery.

twblalock 9y ago
My experience with Amazon delivery people has left a lot to be desired. They get lost, they are late, they are rude, etc.
- blazespin 9y ago
  Botlr is the future. These things work and they are amazing. https://www.nytimes.com/video/technology/100000003050865/alofts-demo-of-the-botlr-bellhop-robot.html https://www.nytimes.com/video/technology/100000003050865/alo... http://www.cnbc.com/2017/04/21/robots-are-now-deliving-food-in-san-francisco.html http://www.cnbc.com/2017/04/21/robots-are-now-deliving-food-...
azakai 9y ago
I was surprised by that too. Isn't it literally what Amazon excels at? Just a few days ago there was a story here saying how Amazon's lead in 2 day/1 day/same-day delivery was "unstoppable."
- jy1 9y ago
  Yep, but they couldn't do fresh produce that well.
saosebastiao 9y ago
Nope. Amazon absolutely struggles with it. They can hide how bad they are with it because they have a lot of cash and don't need to appeal to VCs every couple of months. That isn't to say that Instacart is better. They're nowhere near a sustainable business under their current business model. Since >75% of the costs of parcel delivery are due to the last mile, and because parcel delivery margins are so low, we can use parcel delivery prices as a rough proxy for last mile delivery costs. Last mile delivery is only viable at scale due to delivery density. USPS has extremely cheap parcel delivery because they have a government enforced monopoly on letter delivery, ensuring they basically visit every house every day no matter what. The UPS/DHL/FedEX crowd can do 1 day delivery at reasonable-ish prices due to their scale for all parcels. But Amazon and Instacart are cutting delivery windows down to 1 hr, and that absolutely destroys your delivery density...on the order of 10-15x. For the PrimeNow/Instacart business model to make sense, they need costs that are comparable to the current large parcel carriers...meaning they would need to scale their businesses to 10-15x the size of the large parcel carriers to get their prices in the range where their businesses are viable. Amazon is closer than instacart, but that is like saying a car is more likely to get you to the moon than a bicycle.

idibidiartists 9y ago

I can't go inside Whole foods after this. Same reason I won't answer an Amazon recruiter's email. It's disturbing to think of the race to the bottom (in terms of worker compensation and benefits) that Amazon brings to industries it's taken over.

justicezyx 9y ago
Since when competition is not a race to bottom game? Name one example?
- batbomb 9y ago
  Costco
  - sib 9y ago
    Poor item selection; very limited options for different quantities; inconvenient location; must pay for membership; crowded stores; long lines. From the customer point of view, Costco is pretty much the definition of competing on nothing but price: a race to the bottom. (I know, yes, they pay employees [relatively] well.)
    - jedberg 9y ago
      That's not true. I'll buy things at Costco knowing full well that the item is cheaper elsewhere. Why? Because of their excellent customer service and return policy. I know that if that item breaks or has any sort of problem, I can return it no questions asked. Also, their model is pretty good as far as membership goes -- if you spend enough at Costco, your membership is free, because you get cash back. And a little known fact, even if you don't spend enough to pay for your membership, if you ask them, they will increase your cash back reward to make up for it anyway.
    - astrange 9y ago
      Nobody goes there because it's too popular?

justicezyx 9y ago

Even today you still think a non vertical fully integrated approach against Amazon is gonna work... I tried to not be sarcastic, because hn is a place support constructive commenting. But I think if today anyone who think they can survive amazon by doing a sub step of the retail chain, they are simply refuse to refresh their understanding or being too naive or plain stupid.

theGimp 9y ago
That last bit of your comment was completely unnecessary.
- justicezyx 9y ago
  Yep, I was losing my self control... But people just do not get the difficulty of running a retail business... Look at google, how miserable are their retail operation...
  - deleted 9y ago
    [deleted]
toomuchtodo 9y ago
With funding and proper execution, you can meet Amazon at parity. FFS, their online consumer offerings are trash (Amazon Music and Video) and Prime is now "maybe two days if the planets are aligned".
- FussyZeus 9y ago
  I think over this past year I've had one of probably over 50 orders take longer than two days, and that was three days. I'm still a Prime member and the value it delivers, not even counting the Music and Video which I agree are meh, is what keeps me coming back. Maybe this is one instance where living away from the big cities is an advantage.
- ageitgey 9y ago
  Your experience will depend a lot on where you live. I live downtown in a large-ish city and many of my Prime orders give me free same-day delivery. There is no other service that comes close.

deleted 9y ago

[deleted]

idibidiartists 9y ago

The down votes prove the point you're making about that conscious humans being vastly outnumbered by idiots.

idibidiartists 9y ago
this got down voted... further proof in case the previous wasn't sufficient.
- grzm 9y ago
  Please stop commenting on downvotes. It's explicitly against the guidelines and will likely result in you receiving even more downvotes because you're violating the guidelines. > Please resist commenting about being downvoted. It never does any good, and it makes boring reading. > Please don't bait other users by inviting them to downvote you or proclaim that you expect to get downvoted. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
sctb 9y ago
We detached this subthread from https://news.ycombinator.com/item?id=14576935 https://news.ycombinator.com/item?id=14576935 and marked it off-topic.

yueq 9y ago

WFM invested in InstaCart so AMZN is going to be InstaCart's investor's parent company.

bluebluetimes 9y ago

Instacart is a good company I hope they win in the long run and help the grocery companies

deleted 9y ago

[deleted]

deleted 9y ago

[deleted]

noloblo 9y ago

Are there any non- obvious reasons why Amazon acquired whole foods other than declaring war on the grocery industry or the Pe being at a low

jroseattle 9y ago

Looking at this move in terms of Instacart-vs-Amazon is most likely short-sighted. Amazon plays the long game just about better than anyone else around. I'm sure they care about it, but I wouldn't be surprised if they view the Instacart business as tangential. No offense to the fine people at Instacart! I love the service, am a big fan and customer, but objectively I think the business is going to change. Self-driving cars, drones, etc. -- last-mile delivery is going to change in the next 5-10 years. What I find more interesting about this acquisition: real estate. Amazon just acquired 450 or so locations in high-density areas that are likely in the sweet spot of their target customers. They are trying out some revolutionary concepts at Amazon Go. I'd say Amazon feels ready to move on changing the user experience in-store, as opposed to "old-school" delivery.

zghst 9y ago

I’m afraid that most of this audience has an affinity for the noble business model Instacart has, but our morality does not guide markets. I’m extremely concerned for what this means for Instacart. They are now in a cloud for four years. Does anyone really think that within the next four years, Amazon, Uber, etc will be stagnant? They already have existing delivery infra in place, is the price of an Instacart acquisition worth four years of opportunity and innovation in this space?