8 ms·

Impact of the Amazon-Whole Foods Deal on Instacart

101 points by whocansay 9y ago

hitekker 9y ago
>Mehta launched the service in 2012 and applied to Y Combinator, the prestigious Silicon Valley accelerator that hatched giants like Airbnb and Dropbox. He was rejected because the application deadline had passed. Undeterred, Mehta used Instacart to deliver a six-pack of IPAs to a Y Combinator partner. Within 30 minutes, he was asked to come in for an interview and the next day was accepted into the program. Shortly after, he closed a seed investment round. A classic example of having faith in yourself and your product.
- craftyguy 9y ago
  Wait, do people start companies from the ground up without faith in themselves and/or their products?
  - CamelCaseName 9y ago
    In most cases yes, people just starting do not have faith in themselves and their product. They have faith in their future selves and their future product. If instacart had not even had an MVP ready, the more likely response would have been to wait for next year.
    - hitekker 9y ago
      > If instacart had not even had an MVP ready, the more likely response would have been to wait for next year. Correct.
- garry 9y ago
  I was that YC partner. The beer was very good. 21st Amendment Stout.
abalone 9y ago
tl;dr They are "stronger than ever" because all the other grocery chains are shitting their pants at the Amazon - Whole Foods deal and calling Instacart to shore up their ecommerce operations. This does not in any way, shape or form suggest that Instacart actually has a strong long term position or that their solution will help these grocers prevail against a direct assault from Amazon. Their largely manual, layered-over-retail fulfillment model has inefficiencies that cause higher costs and stocking issues vs. the high-efficiency warehouse approach that Amazon has perfected.
- octernion 9y ago
  Their largely manual, layered-over-retail fulfillment model has inefficiencies that cause higher costs and stocking issues vs. the high-efficiency warehouse approach that Amazon has perfected. [citation needed] you mean the "perfected" approach they are shutting down in 9 states? (https://www.recode.net/2017/11/3/16601488/amazon-fresh-cancellation-shut-down-grocery-delivery-whole-foods https://www.recode.net/2017/11/3/16601488/amazon-fresh-cance...) noting this as an engineer on the team that does order fulfillment @ instacart and who actually knows our model...
  - abalone 9y ago
    Citation? Ok, you asked for it... "Instacart is infuriatingly bad. Replacing your main entree meat item with nothing, no call/notification, negates all convenience it offers" "My 1st @Instacart experience will be my last. 26 of my 49 items have been replaced but mostly refunded so I still have to go to the store." "i once had them tell a store had no cheese. completely out of cheese. no cheese was available to replace. i was naturally pretty cheesed off" "@instacart Why should I continue to use you all if every time I order, a huge % of items are out of stock and replaced? Update your database" "Same happened to me! 14 items, and 8 ended up being replaced. I'm going to give them another chance, hopefully it was just a bad shopper." ...and more.[1] Clearly the lack of integration with realtime inventory systems is a weak point. But perhaps you could clarify how the model is supposed to work. [1] https://techcrunch.com/2017/10/01/instacart-needs-to-deeply-invest-in-grocers-and-user-personalization-to-survive/ https://techcrunch.com/2017/10/01/instacart-needs-to-deeply-...
atonse 9y ago
We've had mixed experiences with Instacart. At first we loved it. They literally have ONE job to do: make me not have to go to the grocery store. But then we've had a couple of instances where they didn't pick the right food, or I rejected their replacement and they still sent it anyway, and I've had to go to the grocery store to fix the error, which defeats the entire purpose of Instacart. At the same time, you feel like such an entitled ahole for complaining (even if you're not mad) that you asked for strawberry preserves and got raspberry preserves instead (or you ask for boneless chicken since it's easier to cut, but you get chicken with bones). I mean even typing it, I can't believe what a spoiled brat I sound like. But at the same time, this is the entire purpose of their service. If they can't get grocery shopping right, I just won't use them. The other thing is, Instacart is aggressive about advertising its Express product but it's nearly impossible in all their copy writing to see what the actual price is. I had signed up for the trial but never actually found out what the price was (and it was "annual" which was even more scary), so I just never went ahead with it.
- wmccullough 9y ago
  I actually have a crazy conspiracy theory that the reason they swap certain items is because there is a secondary means of profit where Instacart makes money through companies paying them to “suggest” certain products. I’ve had multiple occasions now where they’ve said they couldn’t find an item that I knew was in stock, and in mass quantities. I’ve had common brands of milk swapped out for expensive shit like Atlanta Cream Top (which ended up being tasty). I have no hard proof, but I suspect.
  - mrlase 9y ago
    I've had the same experience. I'd select the cheapest possible chicken breast from Whole Foods and they replace it with air chilled, free range chicken breast. The difference in cost was quite significant per pound.
    - moonman272 9y ago
      I don’t think so because every time they do this, (often), I let them know and they refund that more expensive price, so I’m not sure it would be economical
robohamburger 9y ago
I like instacart but its frontend needs a lot of work. Until amazon fresh exists where I live it is nice to have around.
- octernion 9y ago
  We actually take a lot of pride in our front end (most recently, to make as accessible as possible). Can you be more specific? (Engineer @ Instacart)
  - firefixfox 9y ago
    please?
  - hitekker 9y ago
    There's some scrollbar jank on the homepage; the rendering of the page drops to just above 50fps rather than the buttery smooth 60 scrolling all the way down. It's not going to lose you customers but it's the first thing I tested for.
  - robohamburger 9y ago
    The add to cart button seems to work inconsistently. The images and the page loads also pretty inconsistently (I am in Tucson if that helps).
msoad 9y ago
This is a press release by InstaCart assuring their investors and employees everything is fine. We know it's not fine when PR like this comes out
- octernion 9y ago
  it’s “Instacart,” not “InstaCart” and [citation needed] (disclaimer: engineer @ Instacart)
thisisit 9y ago
> Instacart has more than 500,000 customers and approximately $2 billion in revenue, according to Forbes estimates. (The company, which counts the full price of customer orders as revenue, declined to comment.) What significance does the caveat of counting (recognizing) full price of customer orders as revenue have? Is it different from traditional retail business?
- lenley 9y ago
  It's GMV (Gross merchandise volume or GMV is a term used in online retailing to indicate a total sales dollar value for merchandise sold through a particular marketplace over a certain time frame. - wikipedia) not revenue (fulfilling the order through their service). Companies use it to inflate the topline (revenue) figures.
  - thisisit 9y ago
    > Companies use it to inflate the topline (revenue) figures. So, correct me if I am wrong, this implies Instacart is inflating the topline figures?
    - batiudrami 9y ago
      It is typical to include cost of goods a company onsells at a markup in their revenue figures. It's just worth noting in this case as they are effectively just a delivery service so it might be unclear.
      - thisisit 9y ago
        I re-read the article. It says - > Adopting an asset-light model, Mehta first built an app that let customers shop from established retailers--charging a delivery fee and, at least initially, a slight markup. Instacart kept a cut for itself and paid the shopper. So the implication is that they are not selling stuff at markups now. > It's just worth noting in this case as they are effectively just a delivery service so it might be unclear. In that case, wouldn't revenue be the "delivery service fee" instead and not the value of what was delivered? Looking at the article their revenue streams seem to be: delivery fees, Instacart Express Membership fees, partnerships with stores and advertisement fees. In which case using GMV seems odd. So, the original question stands.
Androider 9y ago
My experience with Instacart for Whole Foods delivery has been pretty bad overall. Too many items were consistently being marked as not available / not found by the shopper. Once, up to a third of my cart or almost 10 items. When you assembly your list and click "buy", you expect to get what you ordered, not for a third of your order to be missing come dinner time. I'm afraid Instacart won't ever be able to deliver a great experience as long as they have shoppers walking the aisles instead of direct back-of-store integrations and real time inventory. The substitutions offered are also frequently terrible, and always without fail for more expensive items. Sometimes ridiculously so. And I'm pretty sure the shopper sometimes just doesn't want to buy some of the stuff I've ordered, like watermelons or water, that I know is available in the store. Overall, I've found FreshDirect to offer a much more reliable service with good pricing and selection as well. They seem more professional in all regards. I also look forward to seeing what Amazon / Whole Foods come up with together, but I don't think the Instacart shopper model is something I'm interested in using again, it just seems like a fundamentally inefficient model.
- martinald 9y ago
  Yes in the UK Tesco suffers from this (not as badly as a 3rd of items), because they pick out of their local supermarkets for the most part. Ocado on the other hand uses huge centralised warehouses which have much more stock. They can also estimate substitutions ahead of time (much better stock management) based on delivery time and inform you to pick something else rather than some random choice when it's too late. The difference in substitution levels is night and day. I feel instacarts model is really wrong on the logistics side.
mmgutz 9y ago
I've gotten pretty good delivery service from Safeway in Seattle. What does Instacart provide over them?
beautifulfreak 9y ago
Instacart began delivering in my area recently, and my first order was yesterday. All went well and I'm pleased. It took me back to a time when I ruminated start-up ideas. Standing in line at a deli, feeling guilty for making the deli person have to saw through a very tough salami, I imagined it was a perfect opportunity for robotics. Now I see it was simpler than that, just give customers a different way not to wait in line, and remove guilt by creating an opportunity to give the delivery person a tip. Why don't we tip deli people anyway? It's awfully physical labor they do, when the slicers are manually powered, and we as customers have to stand there and watch them. Sometimes it seems humiliating. I rarely feel as thankful as when I thank the deli person who hands me my order of cold cuts. But I still think the job should be roboticized.
booblik 9y ago
Costco claim “free drlivery” online, but the prices are 20% higher than in my local Costco store.

101 points by whocansay 9y ago

>Mehta launched the service in 2012 and applied to Y Combinator, the prestigious Silicon Valley accelerator that hatched giants like Airbnb and Dropbox. He was rejected because the application deadline had passed. Undeterred, Mehta used Instacart to deliver a six-pack of IPAs to a Y Combinator partner. Within 30 minutes, he was asked to come in for an interview and the next day was accepted into the program. Shortly after, he closed a seed investment round. A classic example of having faith in yourself and your product.

craftyguy 9y ago
Wait, do people start companies from the ground up without faith in themselves and/or their products?
- CamelCaseName 9y ago
  In most cases yes, people just starting do not have faith in themselves and their product. They have faith in their future selves and their future product. If instacart had not even had an MVP ready, the more likely response would have been to wait for next year.
  - hitekker 9y ago
    > If instacart had not even had an MVP ready, the more likely response would have been to wait for next year. Correct.
garry 9y ago
I was that YC partner. The beer was very good. 21st Amendment Stout.

abalone 9y ago

tl;dr They are "stronger than ever" because all the other grocery chains are shitting their pants at the Amazon - Whole Foods deal and calling Instacart to shore up their ecommerce operations. This does not in any way, shape or form suggest that Instacart actually has a strong long term position or that their solution will help these grocers prevail against a direct assault from Amazon. Their largely manual, layered-over-retail fulfillment model has inefficiencies that cause higher costs and stocking issues vs. the high-efficiency warehouse approach that Amazon has perfected.

octernion 9y ago
Their largely manual, layered-over-retail fulfillment model has inefficiencies that cause higher costs and stocking issues vs. the high-efficiency warehouse approach that Amazon has perfected. [citation needed] you mean the "perfected" approach they are shutting down in 9 states? (https://www.recode.net/2017/11/3/16601488/amazon-fresh-cancellation-shut-down-grocery-delivery-whole-foods https://www.recode.net/2017/11/3/16601488/amazon-fresh-cance...) noting this as an engineer on the team that does order fulfillment @ instacart and who actually knows our model...
- abalone 9y ago
  Citation? Ok, you asked for it... "Instacart is infuriatingly bad. Replacing your main entree meat item with nothing, no call/notification, negates all convenience it offers" "My 1st @Instacart experience will be my last. 26 of my 49 items have been replaced but mostly refunded so I still have to go to the store." "i once had them tell a store had no cheese. completely out of cheese. no cheese was available to replace. i was naturally pretty cheesed off" "@instacart Why should I continue to use you all if every time I order, a huge % of items are out of stock and replaced? Update your database" "Same happened to me! 14 items, and 8 ended up being replaced. I'm going to give them another chance, hopefully it was just a bad shopper." ...and more.[1] Clearly the lack of integration with realtime inventory systems is a weak point. But perhaps you could clarify how the model is supposed to work. [1] https://techcrunch.com/2017/10/01/instacart-needs-to-deeply-invest-in-grocers-and-user-personalization-to-survive/ https://techcrunch.com/2017/10/01/instacart-needs-to-deeply-...

atonse 9y ago

We've had mixed experiences with Instacart. At first we loved it. They literally have ONE job to do: make me not have to go to the grocery store. But then we've had a couple of instances where they didn't pick the right food, or I rejected their replacement and they still sent it anyway, and I've had to go to the grocery store to fix the error, which defeats the entire purpose of Instacart. At the same time, you feel like such an entitled ahole for complaining (even if you're not mad) that you asked for strawberry preserves and got raspberry preserves instead (or you ask for boneless chicken since it's easier to cut, but you get chicken with bones). I mean even typing it, I can't believe what a spoiled brat I sound like. But at the same time, this is the entire purpose of their service. If they can't get grocery shopping right, I just won't use them. The other thing is, Instacart is aggressive about advertising its Express product but it's nearly impossible in all their copy writing to see what the actual price is. I had signed up for the trial but never actually found out what the price was (and it was "annual" which was even more scary), so I just never went ahead with it.

wmccullough 9y ago
I actually have a crazy conspiracy theory that the reason they swap certain items is because there is a secondary means of profit where Instacart makes money through companies paying them to “suggest” certain products. I’ve had multiple occasions now where they’ve said they couldn’t find an item that I knew was in stock, and in mass quantities. I’ve had common brands of milk swapped out for expensive shit like Atlanta Cream Top (which ended up being tasty). I have no hard proof, but I suspect.
- mrlase 9y ago
  I've had the same experience. I'd select the cheapest possible chicken breast from Whole Foods and they replace it with air chilled, free range chicken breast. The difference in cost was quite significant per pound.
  - moonman272 9y ago
    I don’t think so because every time they do this, (often), I let them know and they refund that more expensive price, so I’m not sure it would be economical

robohamburger 9y ago

I like instacart but its frontend needs a lot of work. Until amazon fresh exists where I live it is nice to have around.

octernion 9y ago
We actually take a lot of pride in our front end (most recently, to make as accessible as possible). Can you be more specific? (Engineer @ Instacart)
- firefixfox 9y ago
  please?
- hitekker 9y ago
  There's some scrollbar jank on the homepage; the rendering of the page drops to just above 50fps rather than the buttery smooth 60 scrolling all the way down. It's not going to lose you customers but it's the first thing I tested for.
- robohamburger 9y ago
  The add to cart button seems to work inconsistently. The images and the page loads also pretty inconsistently (I am in Tucson if that helps).

msoad 9y ago

This is a press release by InstaCart assuring their investors and employees everything is fine. We know it's not fine when PR like this comes out

octernion 9y ago
it’s “Instacart,” not “InstaCart” and [citation needed] (disclaimer: engineer @ Instacart)

thisisit 9y ago

> Instacart has more than 500,000 customers and approximately $2 billion in revenue, according to Forbes estimates. (The company, which counts the full price of customer orders as revenue, declined to comment.) What significance does the caveat of counting (recognizing) full price of customer orders as revenue have? Is it different from traditional retail business?

lenley 9y ago
It's GMV (Gross merchandise volume or GMV is a term used in online retailing to indicate a total sales dollar value for merchandise sold through a particular marketplace over a certain time frame. - wikipedia) not revenue (fulfilling the order through their service). Companies use it to inflate the topline (revenue) figures.
- thisisit 9y ago
  > Companies use it to inflate the topline (revenue) figures. So, correct me if I am wrong, this implies Instacart is inflating the topline figures?
  - batiudrami 9y ago
    It is typical to include cost of goods a company onsells at a markup in their revenue figures. It's just worth noting in this case as they are effectively just a delivery service so it might be unclear.
    - thisisit 9y ago
      I re-read the article. It says - > Adopting an asset-light model, Mehta first built an app that let customers shop from established retailers--charging a delivery fee and, at least initially, a slight markup. Instacart kept a cut for itself and paid the shopper. So the implication is that they are not selling stuff at markups now. > It's just worth noting in this case as they are effectively just a delivery service so it might be unclear. In that case, wouldn't revenue be the "delivery service fee" instead and not the value of what was delivered? Looking at the article their revenue streams seem to be: delivery fees, Instacart Express Membership fees, partnerships with stores and advertisement fees. In which case using GMV seems odd. So, the original question stands.

Androider 9y ago

My experience with Instacart for Whole Foods delivery has been pretty bad overall. Too many items were consistently being marked as not available / not found by the shopper. Once, up to a third of my cart or almost 10 items. When you assembly your list and click "buy", you expect to get what you ordered, not for a third of your order to be missing come dinner time. I'm afraid Instacart won't ever be able to deliver a great experience as long as they have shoppers walking the aisles instead of direct back-of-store integrations and real time inventory. The substitutions offered are also frequently terrible, and always without fail for more expensive items. Sometimes ridiculously so. And I'm pretty sure the shopper sometimes just doesn't want to buy some of the stuff I've ordered, like watermelons or water, that I know is available in the store. Overall, I've found FreshDirect to offer a much more reliable service with good pricing and selection as well. They seem more professional in all regards. I also look forward to seeing what Amazon / Whole Foods come up with together, but I don't think the Instacart shopper model is something I'm interested in using again, it just seems like a fundamentally inefficient model.

martinald 9y ago
Yes in the UK Tesco suffers from this (not as badly as a 3rd of items), because they pick out of their local supermarkets for the most part. Ocado on the other hand uses huge centralised warehouses which have much more stock. They can also estimate substitutions ahead of time (much better stock management) based on delivery time and inform you to pick something else rather than some random choice when it's too late. The difference in substitution levels is night and day. I feel instacarts model is really wrong on the logistics side.

mmgutz 9y ago

I've gotten pretty good delivery service from Safeway in Seattle. What does Instacart provide over them?

beautifulfreak 9y ago

Instacart began delivering in my area recently, and my first order was yesterday. All went well and I'm pleased. It took me back to a time when I ruminated start-up ideas. Standing in line at a deli, feeling guilty for making the deli person have to saw through a very tough salami, I imagined it was a perfect opportunity for robotics. Now I see it was simpler than that, just give customers a different way not to wait in line, and remove guilt by creating an opportunity to give the delivery person a tip. Why don't we tip deli people anyway? It's awfully physical labor they do, when the slicers are manually powered, and we as customers have to stand there and watch them. Sometimes it seems humiliating. I rarely feel as thankful as when I thank the deli person who hands me my order of cold cuts. But I still think the job should be roboticized.

booblik 9y ago

Costco claim “free drlivery” online, but the prices are 20% higher than in my local Costco store.