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Instacart is slashing prices as the war against Amazon heats up

62 points by prostoalex 8y ago

kirubakaran 8y ago
Everyone knows you should never get involved in a land war in Asia, never go in against a Sicilian when death is on the line, and most importantly, never get involved in a price war with Amazon.
- baybal2 8y ago
  Alibaba, somehow does it still. It seems to me it is more like Amazon is adapting to Alibaba's moves than the other way around. For example, their move towards opening up to Chinese dropshippers is totally is a preemptive castling maneuver against Alibaba getting more foothold, and them lobbying for America to quit UPU is that too.
  - TeMPOraL 8y ago
    > their move towards opening up to Chinese dropshippers This is something I don't understand in general. How is dropshipping products from China anything more than scamming the few people who either didn't realize they're dealing with a dropshipper, or aren't aware Aliexpress exists? What actual value those dropshippers provide?
    - baybal2 8y ago
      > How is dropshipping products from China anything more than scamming the few people who either didn't realize they're dealing with a dropshipper Given how well they are doing, that is not so few people. > What actual value those dropshippers provide? Turn that around. What value their collaborators on American side of the border provide them with? The answer is their English and marketing skills.
      - TeMPOraL 8y ago
        > Turn that around. What value their collaborators on American side of the border provide them with? The answer is their English and marketing skills. That makes sense. Thanks.
- joefourier 8y ago
  Is that really the case? Most of Amazon's offerings from what I can see are priced at a premium. AWS is much pricier than competitors, and the physical goods they sell (at least here in Europe) are either on par or more expensive than dedicated European online stores, let alone Aliexpress/Banggood/Gearbest/etc. In the UK/Ireland at least, the main attraction from Amazon is convenience - for those items that are available with Amazon Prime, the shipping is much faster than competitors. Beyond those however, I've honestly had better deals and faster shipping with eBay.
  - smacktoward 8y ago
    The thing is that Amazon is so big and has so many other profitable lines of business that, if they want to, they can swallow losses on the one that happens to compete with you for as long as it takes to choke you out. You can try to keep up with that, but since you’re not as big and diversified as they are, you will inevitably fail. What to them is just a paper cut will be more than deep enough to bleed you white. (They’ll raise the prices once they’ve driven out enough competition to assume a dominant position in the sector, of course, but that will come too late to do you any good.)
baybal2 8y ago
It is my first time hearing of Instacart. Are they that popular to the extend that they deserve comparison to Amazon?
- the_clarence 8y ago
  You’re probably not living in the US
  - jccalhoun 8y ago
    I live in the USA and while I had heard the name "instacart" I didn't remember what it was and had to look it up. I don't live near a major city though.
- minimaxir 8y ago
  Instacart has popped up quite a few times on HN: https://hn.algolia.com/?query=Instacart&sort=byPopularity&prefix&page=0&dateRange=all&type=story https://hn.algolia.com/?query=Instacart&sort=byPopularity&pr...
- askafriend 8y ago
  It's a nearly $10B company now.
  - whitepoplar 8y ago
    In funny money.
imranq 8y ago
What advantage would instacart have over amazon? Outside of being the first mover.
mcbits 8y ago
Hmm, uBlock failed to catch this ad. Maybe a "sponsored news" filter list is in order.
sjg007 8y ago
I guess the get a lot of customers through the whole foods channel. I would think that diversifying to Trader Joes, Costco, Walmart, Target etc... would help them.
- woolvalley 8y ago
  Target has target restock and such? I found the proposition fairly attractive, I just wish they added fresh grocery for target.
  - sjg007 8y ago
    Some targets sell grocery.
    - woolvalley 8y ago
      They do, but target restock doesn't seem to deliver fresh grocery, just the dry stuff.
dleslie 8y ago
It's funny, as a Canadian, Amazon is its own worst enemy. Hitherto there weren't many competitors that could match, or even compete with, Amazon's stock and delivery speed. Walmart is close, as is Costco, but Amazon is where it's at. For quite some time Prime was... Not a good value for us. Then we got Video and Music, to a certain extent, and it's a fair value if the content you want is there. But the problem, and why myself and many peers have cancelled prime and started shopping elsewhere, is that the basis of trust in the quality of their stock has fallen away completely. The amount of garbage with four stars or more is scandalous, and the likelihood of receiving a knock off product is too high. Opening a box to find a product similar to but different from what you intended to buy is all too common. Amazon, get your shit together before you irreparably harm your brand.
- rolleiflex 8y ago
  Your experience with review gaming is fairly universal, it's not specific to Canada. Amazon reviews are fundamentally untrustable at this point, to the point there are multiple startups providing 'fake or not' services for them. I've stopped buying anything from Amazon about two years ago. When you start to price compare, you realise how bad of a deal Amazon has become real quick. For the majority of the stuff I was buying, Amazon prime was marginally more expensive. For a minority of them, it was substantially (30%+) more expensive, and I had no idea.
  - dleslie 8y ago
    Oh, in case it wasn't clear: as a Canadian, Prime has been of dubious value. We don't have catalog parity either, but that has been less of an issue for a few years now.
    - Marsymars 8y ago
      Depends on the Amazon services you use. Amazon Music Unlimited is cheaper than other music streaming services in Canada if you have Prime, so taking that price difference into account, I'm basically paying $40 just for the unlimited photo storage. (I don't use Amazon Video, and always select the slowest shipping option for the environmental efficiency.)
matthewmacleod 8y ago
In the UK, all of the traditional supermarket chains moved pretty early to build their own online grocery platforms. The services are all generally pretty good. They seem to have successfully made that transition and kept most of the grocery market for themselves (with the exception of Ocado, the online-only service, which I guess is a slightly weirder example due to their supply arrangements with one of the existing chains). As such, I can’t really imagine anyone else entering the market, or Amazon being an effective competitor. I don’t think I’ve ever encountered anyone using the Amazon service here. Is there some obvious reason the same kind of market change didn’t happen in the US?
- rolleiflex 8y ago
  Same in Turkey as well, Migros and Carrefour kept the market to themselves by offering delivery fast, early. Migros had an online grocery store in 2000, even! That's early. I think US is uniquely suited to such a thing because of its sheer size. A supermarket company that has not built effectively a parallel supply chain cannot accommodate allowing a guy from New York and a guy from San Francisco to shop using the same stock, especially if perishable, because there is no profitable way to ship something from CA to NY in a few days. That effectively means CA and NY are, so far as groceries go, completely independent markets, and that creates challenges that being a supermarket does not inherently give an advantage in handling. In contrast, UK or Turkey are countries that are sized small enough that a lorry can cross in a day, given the need. That allows you to act like you have a 'supermarket' in the middle of the country, and you're taking orders by the phone, and sending them to their way. That mental model is much easier to handle for a supermarket chain than doing continental-scale logistics that Amazon is adept at.
  - matthewowen 8y ago
    I'm not convinced thats the reason, because that isn't how the online grocery stores in the UK work: from my recollection, you're effectively shopping from your local store and the options reflect that.
    - 8y ago
randallsquared 8y ago
Haha. I moved to NYC this year. I used Instacart for months, because I'd have to sign up for another service to use something else, and they mostly seemed equivalent, and I may even have had some YC-brand-loyalty, even though I was quite unhappy at times with Instacart. Instacart will often allow me to order more of something than is in stock, because they have no real concept of "in stock". For any order of more than 5-6 types of items, chances a very good that something will be missing, so you can't rely on them for tonight's dinner -- instead, you have to order the night before so that you have time to stop by the store yourself on the way home from work the night you want to make the meal requiring all of those ingredients, to get the thing(s) they allowed you to select but "couldn't find". I have placed orders through Instacart which didn't happen at all because they "couldn't find" anything in the order and it was all do-not-replace. I have placed an order through Instacart mid-day which was shopped, and then delayed until my SO finally called them, whereupon she was told it would be the next morning, but not to worry, everything had already been shopped, and had been put in temperature controlled holding! But then the next day most of the order was refunded before a few things were delivered, because the shopper "couldn't find them". Instacart will commonly put frozen food, bags of chips, dish soap, and 2L sodas in the same bag together, and then roll the dice on whether things are crushed, too warm, or otherwise came to ruin. I may have a lot of anger built up at Instacart. Although I've also become increasingly disgruntled with Amazon, at least I was already signed up with Prime, so I decided a couple weeks ago to try PrimeNow. I don't think I've used Instacart since. I cannot stress how different the experience was: When ordering from Amazon (not the individual grocers), PrimeNow wouldn't let me order more 2L sodas of my usual brand/flavor than were in stock. When I ordered something crushable, it was in a separate bag, and uncrushed. When I ordered something frozen, they put an icepack in with it. Instacart slashing prices is laughable. Price is not their main problem. I would gladly pay twice as much, if only I could count on them, but as it is, it's possible now that I'll never again use Instacart.
- chevman 8y ago
  My wife and I live in Minneapolis and our experience over the past 2 years has been basically the same as yours, expect with the companies reversed. Instacart has been generally top notch in their logistics and customer service. Small issues now and then, but rectified quickly and pro-actively. Amazon PrimeNow and their Amazon restaurant delivery has been a total mess. Cancelled orders hours after placing them, unexplained delivery glitches where a courier attempts a delivery and leaves with all the merchandise if we don't answer the door knock immediately, etc. I'm not shy in letting customer service know when there are problems and even the refund process is a mess - we've had charges refunded 3, 4, 5 times (like I spend $100 and they end up refunding me $300 dollars!). Tried to explain to Amazon and get in to crazy unintelligible email threads with offshore service centers. Finally just gave up on the whole thing with them. Will try again in a couple years and see if things have improved.
ronyeh 8y ago
The article didn't lay out exactly how instacart is now cheaper. Does it factor in the 5% whole foods discount you get from being a prime member?
resters 8y ago
Is this true? Instacart actually just raised prices a week or two ago.
apapli 8y ago
Prediction, instacart go bust in the next 36 months. What I have learned after nearly 2 decades in sales is that if an organisation needs to drop their prices to compete with a larger, more cashed up competitor, then their value proposition is comparably weak and certainly not sufficient to carry them in its current form over the long term.
- pj_mukh 8y ago
  "It has also removed the 5% service fee for its Express members, a charge that caused much controversy among customers in the past." This was pretty much my only qualm. I'm heading back to Instacart. Pound-for-pound, it was a better product. More personal service, better shoppers and they were slowly getting better at keeping the inventory databases more up-to-date. On that last point, they have a tough fight as Amazon integrates deeply with Whole Foods. It really breaks your product if a significant percentage of the groceries you order isn't actually in stock. I have Amazon Prime and still paid for Instacart.
  - icelancer 8y ago
    > More personal service, better shoppers But will this survive with price slashes? Quality almost never stays the same (or improves) when you get into a price war.
    - SN76477 8y ago
      Instacart shoppers are pissed - this drop in fees coincides with an adjusted payout for shoppers. http://www.slate.com/blogs/future_tense/2017/11/20/workers_at_instacart_planned_a_no_delivery_day_strike.html http://www.slate.com/blogs/future_tense/2017/11/20/workers_a...
      - repsilat 8y ago
        It also coincides with them raising a crapload of money (hundreds of millions iirc) at a significantly higher valuation than they had a couple of years ago.
deleted 8y ago
[deleted]
Fire-Dragon-DoL 8y ago
I still buy from Amazon, however since I moved to Canada I was quite disappointed: In Italy you get (from amazon), 2 years warranty on every product (yes I returned a phone that died on me at 1 year and 8 months old, factory problem), prime costs 40 bucks rather than 90 and the product quality is higher because there are various local products on it. The canadian one is very messy, has all the downsides of the u.s. one but none of the benefits (e. g. No family view, wtf). Still, support is great

62 points by prostoalex 8y ago

Everyone knows you should never get involved in a land war in Asia, never go in against a Sicilian when death is on the line, and most importantly, never get involved in a price war with Amazon.

baybal2 8y ago
Alibaba, somehow does it still. It seems to me it is more like Amazon is adapting to Alibaba's moves than the other way around. For example, their move towards opening up to Chinese dropshippers is totally is a preemptive castling maneuver against Alibaba getting more foothold, and them lobbying for America to quit UPU is that too.
- TeMPOraL 8y ago
  > their move towards opening up to Chinese dropshippers This is something I don't understand in general. How is dropshipping products from China anything more than scamming the few people who either didn't realize they're dealing with a dropshipper, or aren't aware Aliexpress exists? What actual value those dropshippers provide?
  - baybal2 8y ago
    > How is dropshipping products from China anything more than scamming the few people who either didn't realize they're dealing with a dropshipper Given how well they are doing, that is not so few people. > What actual value those dropshippers provide? Turn that around. What value their collaborators on American side of the border provide them with? The answer is their English and marketing skills.
    - TeMPOraL 8y ago
      > Turn that around. What value their collaborators on American side of the border provide them with? The answer is their English and marketing skills. That makes sense. Thanks.
joefourier 8y ago
Is that really the case? Most of Amazon's offerings from what I can see are priced at a premium. AWS is much pricier than competitors, and the physical goods they sell (at least here in Europe) are either on par or more expensive than dedicated European online stores, let alone Aliexpress/Banggood/Gearbest/etc. In the UK/Ireland at least, the main attraction from Amazon is convenience - for those items that are available with Amazon Prime, the shipping is much faster than competitors. Beyond those however, I've honestly had better deals and faster shipping with eBay.
- smacktoward 8y ago
  The thing is that Amazon is so big and has so many other profitable lines of business that, if they want to, they can swallow losses on the one that happens to compete with you for as long as it takes to choke you out. You can try to keep up with that, but since you’re not as big and diversified as they are, you will inevitably fail. What to them is just a paper cut will be more than deep enough to bleed you white. (They’ll raise the prices once they’ve driven out enough competition to assume a dominant position in the sector, of course, but that will come too late to do you any good.)

baybal2 8y ago

It is my first time hearing of Instacart. Are they that popular to the extend that they deserve comparison to Amazon?

the_clarence 8y ago
You’re probably not living in the US
- jccalhoun 8y ago
  I live in the USA and while I had heard the name "instacart" I didn't remember what it was and had to look it up. I don't live near a major city though.
minimaxir 8y ago
Instacart has popped up quite a few times on HN: https://hn.algolia.com/?query=Instacart&sort=byPopularity&prefix&page=0&dateRange=all&type=story https://hn.algolia.com/?query=Instacart&sort=byPopularity&pr...
askafriend 8y ago
It's a nearly $10B company now.
- whitepoplar 8y ago
  In funny money.

imranq 8y ago

What advantage would instacart have over amazon? Outside of being the first mover.

mcbits 8y ago

Hmm, uBlock failed to catch this ad. Maybe a "sponsored news" filter list is in order.

sjg007 8y ago

I guess the get a lot of customers through the whole foods channel. I would think that diversifying to Trader Joes, Costco, Walmart, Target etc... would help them.

woolvalley 8y ago
Target has target restock and such? I found the proposition fairly attractive, I just wish they added fresh grocery for target.
- sjg007 8y ago
  Some targets sell grocery.
  - woolvalley 8y ago
    They do, but target restock doesn't seem to deliver fresh grocery, just the dry stuff.

dleslie 8y ago

It's funny, as a Canadian, Amazon is its own worst enemy. Hitherto there weren't many competitors that could match, or even compete with, Amazon's stock and delivery speed. Walmart is close, as is Costco, but Amazon is where it's at. For quite some time Prime was... Not a good value for us. Then we got Video and Music, to a certain extent, and it's a fair value if the content you want is there. But the problem, and why myself and many peers have cancelled prime and started shopping elsewhere, is that the basis of trust in the quality of their stock has fallen away completely. The amount of garbage with four stars or more is scandalous, and the likelihood of receiving a knock off product is too high. Opening a box to find a product similar to but different from what you intended to buy is all too common. Amazon, get your shit together before you irreparably harm your brand.

rolleiflex 8y ago
Your experience with review gaming is fairly universal, it's not specific to Canada. Amazon reviews are fundamentally untrustable at this point, to the point there are multiple startups providing 'fake or not' services for them. I've stopped buying anything from Amazon about two years ago. When you start to price compare, you realise how bad of a deal Amazon has become real quick. For the majority of the stuff I was buying, Amazon prime was marginally more expensive. For a minority of them, it was substantially (30%+) more expensive, and I had no idea.
- dleslie 8y ago
  Oh, in case it wasn't clear: as a Canadian, Prime has been of dubious value. We don't have catalog parity either, but that has been less of an issue for a few years now.
  - Marsymars 8y ago
    Depends on the Amazon services you use. Amazon Music Unlimited is cheaper than other music streaming services in Canada if you have Prime, so taking that price difference into account, I'm basically paying $40 just for the unlimited photo storage. (I don't use Amazon Video, and always select the slowest shipping option for the environmental efficiency.)

matthewmacleod 8y ago

In the UK, all of the traditional supermarket chains moved pretty early to build their own online grocery platforms. The services are all generally pretty good. They seem to have successfully made that transition and kept most of the grocery market for themselves (with the exception of Ocado, the online-only service, which I guess is a slightly weirder example due to their supply arrangements with one of the existing chains). As such, I can’t really imagine anyone else entering the market, or Amazon being an effective competitor. I don’t think I’ve ever encountered anyone using the Amazon service here. Is there some obvious reason the same kind of market change didn’t happen in the US?

rolleiflex 8y ago
Same in Turkey as well, Migros and Carrefour kept the market to themselves by offering delivery fast, early. Migros had an online grocery store in 2000, even! That's early. I think US is uniquely suited to such a thing because of its sheer size. A supermarket company that has not built effectively a parallel supply chain cannot accommodate allowing a guy from New York and a guy from San Francisco to shop using the same stock, especially if perishable, because there is no profitable way to ship something from CA to NY in a few days. That effectively means CA and NY are, so far as groceries go, completely independent markets, and that creates challenges that being a supermarket does not inherently give an advantage in handling. In contrast, UK or Turkey are countries that are sized small enough that a lorry can cross in a day, given the need. That allows you to act like you have a 'supermarket' in the middle of the country, and you're taking orders by the phone, and sending them to their way. That mental model is much easier to handle for a supermarket chain than doing continental-scale logistics that Amazon is adept at.
- matthewowen 8y ago
  I'm not convinced thats the reason, because that isn't how the online grocery stores in the UK work: from my recollection, you're effectively shopping from your local store and the options reflect that.
  - 8y ago

randallsquared 8y ago

Haha. I moved to NYC this year. I used Instacart for months, because I'd have to sign up for another service to use something else, and they mostly seemed equivalent, and I may even have had some YC-brand-loyalty, even though I was quite unhappy at times with Instacart. Instacart will often allow me to order more of something than is in stock, because they have no real concept of "in stock". For any order of more than 5-6 types of items, chances a very good that something will be missing, so you can't rely on them for tonight's dinner -- instead, you have to order the night before so that you have time to stop by the store yourself on the way home from work the night you want to make the meal requiring all of those ingredients, to get the thing(s) they allowed you to select but "couldn't find". I have placed orders through Instacart which didn't happen at all because they "couldn't find" anything in the order and it was all do-not-replace. I have placed an order through Instacart mid-day which was shopped, and then delayed until my SO finally called them, whereupon she was told it would be the next morning, but not to worry, everything had already been shopped, and had been put in temperature controlled holding! But then the next day most of the order was refunded before a few things were delivered, because the shopper "couldn't find them". Instacart will commonly put frozen food, bags of chips, dish soap, and 2L sodas in the same bag together, and then roll the dice on whether things are crushed, too warm, or otherwise came to ruin. I may have a lot of anger built up at Instacart. Although I've also become increasingly disgruntled with Amazon, at least I was already signed up with Prime, so I decided a couple weeks ago to try PrimeNow. I don't think I've used Instacart since. I cannot stress how different the experience was: When ordering from Amazon (not the individual grocers), PrimeNow wouldn't let me order more 2L sodas of my usual brand/flavor than were in stock. When I ordered something crushable, it was in a separate bag, and uncrushed. When I ordered something frozen, they put an icepack in with it. Instacart slashing prices is laughable. Price is not their main problem. I would gladly pay twice as much, if only I could count on them, but as it is, it's possible now that I'll never again use Instacart.

chevman 8y ago
My wife and I live in Minneapolis and our experience over the past 2 years has been basically the same as yours, expect with the companies reversed. Instacart has been generally top notch in their logistics and customer service. Small issues now and then, but rectified quickly and pro-actively. Amazon PrimeNow and their Amazon restaurant delivery has been a total mess. Cancelled orders hours after placing them, unexplained delivery glitches where a courier attempts a delivery and leaves with all the merchandise if we don't answer the door knock immediately, etc. I'm not shy in letting customer service know when there are problems and even the refund process is a mess - we've had charges refunded 3, 4, 5 times (like I spend $100 and they end up refunding me $300 dollars!). Tried to explain to Amazon and get in to crazy unintelligible email threads with offshore service centers. Finally just gave up on the whole thing with them. Will try again in a couple years and see if things have improved.

ronyeh 8y ago

The article didn't lay out exactly how instacart is now cheaper. Does it factor in the 5% whole foods discount you get from being a prime member?

resters 8y ago

Is this true? Instacart actually just raised prices a week or two ago.

apapli 8y ago

Prediction, instacart go bust in the next 36 months. What I have learned after nearly 2 decades in sales is that if an organisation needs to drop their prices to compete with a larger, more cashed up competitor, then their value proposition is comparably weak and certainly not sufficient to carry them in its current form over the long term.

pj_mukh 8y ago
"It has also removed the 5% service fee for its Express members, a charge that caused much controversy among customers in the past." This was pretty much my only qualm. I'm heading back to Instacart. Pound-for-pound, it was a better product. More personal service, better shoppers and they were slowly getting better at keeping the inventory databases more up-to-date. On that last point, they have a tough fight as Amazon integrates deeply with Whole Foods. It really breaks your product if a significant percentage of the groceries you order isn't actually in stock. I have Amazon Prime and still paid for Instacart.
- icelancer 8y ago
  > More personal service, better shoppers But will this survive with price slashes? Quality almost never stays the same (or improves) when you get into a price war.
  - SN76477 8y ago
    Instacart shoppers are pissed - this drop in fees coincides with an adjusted payout for shoppers. http://www.slate.com/blogs/future_tense/2017/11/20/workers_at_instacart_planned_a_no_delivery_day_strike.html http://www.slate.com/blogs/future_tense/2017/11/20/workers_a...
    - repsilat 8y ago
      It also coincides with them raising a crapload of money (hundreds of millions iirc) at a significantly higher valuation than they had a couple of years ago.

deleted 8y ago

[deleted]

Fire-Dragon-DoL 8y ago

I still buy from Amazon, however since I moved to Canada I was quite disappointed: In Italy you get (from amazon), 2 years warranty on every product (yes I returned a phone that died on me at 1 year and 8 months old, factory problem), prime costs 40 bucks rather than 90 and the product quality is higher because there are various local products on it. The canadian one is very messy, has all the downsides of the u.s. one but none of the benefits (e. g. No family view, wtf). Still, support is great