Instacart was founded in 2012 by serial entrepreneur Apoorva Mehta, a former Amazon.com employee. He had an idea, based on what he knew about Amazon’s business model, and left the company to start his new venture.
Instacart has since grown to serve 5,500 cities in all 50 U.S. states and Canadian provinces, working with more than 350 retailers and 25,000 grocery stores. The business has been built with the assistance on those retail “partners” who have been happy to open their data files and give Instacart access to their customers.
In the rush to respond to consumer desires for online shopping, nearly every retailer made the fateful decision to bring Instacart inside. In doing so, those retailers turned over contact with their shoppers to Instacart’s gig workers, severing the direct relationship.
In the rush to respond to consumer desires for online shopping, nearly every retailer made the fateful decision to bring Instacart inside.
With the onset of COVID-19, Instacart’s growth exploded by over 200 percent. Online shopping has grown from single-digit percentages to nearly half of grocery purchases, wildly accelerating a trend that was already happening.
Instacart announced in March 2020 that it planned to hire 300,000 additional workers to meet demand. This was just before a threatened walkout in protest of a lack of PPE equipment for those workers.
Worst of all is Instacart’s control of shopper interaction.
A recent Wall St. Journal article shows that some cracks are beginning to show on the retailer relationship front. Fees are taking all the profit for some stores. Instacart ad campaigns are contradicting grocery messaging. Worst of all is Instacart’s control of shopper interaction.
What was originally a risky strategic move by retailers has turned into an act of self-immolation. As the world has celebrated the bravery of retail workers, and retailers have responded with temporary hourly wage increases, Instacart has continued to build its brand on the backs of those retailers and its own gig workers.
Instacart claims has no plans to compete with its retail partners. As if. The company continues to gorge itself on the inside operations of major retailers, and its continued growth demands that it continue to disrupt the existing models for brick & mortar. Given the founder’s history of learning a business and disrupting it, it’s difficult to see a different way forward.
Instacart claims has no plans to compete with its retail partners.
When that happens, retailers will only be able to reflect on the decision to let the giant green Trojan horse behind their firewalls.