Instacart has raised another $200M at a $4.2B valuation

https://techcrunch.com/2018/02/12/instacart-has-raised-another-200m-at-a-4-2b-valuation/

by smaili • 8 years ago

126 144 8 years ago

spiderPig• 8 years ago

Wow, so they've raised close to $1bn so far! Wonder how many of these delivery services like Doordash, Postmates, Grubhub, Caviar, Uber eats etc will survive the next economic downturn.

dalbasal• 8 years ago

That may not matter, necessarily. If 3 of these fail but one becomes a £10bn company, that's ok. Some investors win, others lose, it averages out to normal returns.

VC is supposed to be risky.

jimmy14• 8 years ago

As a former restaurateur, I would like to tell you, contrary to popular opinion, during the last major economic downturn in 2008 (2009 for me since I was in a southern state, and the downturn hit us a bit later than most), spending money out to eat actually went up.

The theory goes a little something like this -- people actually spend more money on themselves to cheer themselves up when life gets shittier. So folks, too depressed to cook, would go out and at least try to eat, drink, and be merry.

Now how this correlates to these dining services has yet to be determined.

jotm5• 8 years ago

Surprisingly, most poor people order takeaways the most around here, as well.

radiorental• 8 years ago

It's call the Lipstick Effect, aka Lipstick Recession Indicator.

https://www.investopedia.com/terms/l/lipstick-effect.asp

And just as a somewhat tangential but related story to the phenomenon, British soldiers distributed lipstick tp the liberated but gravely ill women of the Bergen-Belsen concetration camp in WWII, it lifted their moral just enough in some cases to help save their lives.

lazerpants6• 8 years ago

I'd like to posit an alternative argument. That the increase in business was more due to demographic shifts than to the "lipstick effect". Around 2007 the entire generation of millennials was finally of age to go out and spend money eating. This is the largest demographic group of Americans. Even if people 16-30 were spending less money per person eating out, the volume of individuals spending money on eating out was sufficiently high to increase business.

whoisjuan• 8 years ago

UberEats will likely win in the long run... On-demand is just a long-term game of leading and losing money... Uber has the distribution and the money that will allow them to lead and lose for longer than anyone else.

How much money can all these companies lose before finding themselves in a dead-end? (no positive cash-flow, no more investors willing to invest, no more local market first mover advantage).

People who deliver for these companies will do it for the ones that can give them more business and larger commissions. People who order from these companies will do it from the ones with the largest selection and the lowest fees... Only Uber can pull-off the economies of scale to arbitrate those two sides without running out of money.

mathattack• 8 years ago

UberEats will struggle unless they didn’t service issues. They are slaves to the whims of drivers who can cancel orders at any time.

matte_black• 8 years ago

Terrifying, considering this one will be one of the first companies to go the minute this roaring economy goes sour.

jedberg2• 8 years ago

From an outsiders perspective this looks like a bad investment. But I'm an outsider, so I know I don't have all the information. I would love to get an insiders perspective on why this is a good investment.

My two main concerns:

1) Amazon and Whole Foods: Are they not a concern?

2) Economic downturn: Will people still order groceries at a premium?

rabidonrails• 8 years ago

>1) Amazon and Whole Foods: Are they not a concern?

I think they are a concern, not necessarily to Instacart but to all of the grocery chains that need to compete with Amazon/WF. Since Instacart already has the tech/infra/domain knowledge to build this service out, Instacart's value goes shooting up.

buildawesome• 8 years ago

opinions: 1. instacart gives companies besides amzn/wf a logistics platform to ship out retail goods. It makes these other companies more competitive. This is why you see a company like Target acquire Shipt. 2. it won't be a premium if self-driving cars exist. it might be a waiting game for investors, just like how uber and lyft are floated right now.

cryptoz4• 8 years ago

2) Economic downturn: Will people still order groceries at a premium?

I'm not sure about the data and large trends for this, but here's my anecdote: Right now Instacart is the cheapest way for me to get groceries. Someone with a gun took my driver's license from me a few months ago, my bike was dismantled by thiefs, and I don't live within walking distance of a grocery store.

Lyft/Uber there and back is $20. Bus there and back is $6 (but with added time and stress). Instacart is $5-6.

Yes, eventually, it will be easier for me to bike there or to drive there, but not right now. Right now the cheapest way for me to get a large grocery trip done is Instacart.

So maybe they could survive. Not everyone is in my position, but someone who works two jobs, doesn't have a car and lives far from the store...that could describe a lot of people in the near future.

jotm5• 8 years ago

Might be time you move elsewhere, I think...

lazerpants6• 8 years ago

Someone with a gun took my driver's license from me a few months ago

Unless this person was a police officer, and you're glossing over a lot of the story, you can obtain a new one at your local DMV and resume operation of motor vehicles...

roymurdock5• 8 years ago

I assume instacart has a liquidity event (IPO) lined up for the near future (next 12 months), and a few late stage and previous investors are laying down a cash runway to get the company there. Notably this round ($200m) was less than their last round 1 year ago ($400m) so it seems growth has slowed and its time for an exit.

So its not a bet, its a holdover cash infusion until the IPO, and is not exactly risky given how mature and well-capitalized the company is at this point.

The only real bet is that they'll be able to IPO before a market downturn, which seems pretty safe, I have yet to see anyone put forth and truly plausible triggers for another large global recession - there are no debt and enforcement chains I can see that would drag the system under again. But I'm not a financial expert, just an armchair economist, and if I knew what would trigger the next recession I wouldn't be posting here ;)

jjxw2• 8 years ago

From one armchair economist to another I suspect the Federal Reserve will have something to do with what I wouldn't call a "recession" per se, but a slowing of growth through interest rate hikes.

gruez3• 8 years ago

I have yet to see anyone put forth and truly plausible triggers for another large global recession - there are no debt and enforcement chains I can see that would drag the system under again

that's not an indication of anything. has there been anyone who were able to predict the last few recessions with reasonable accuracy?

lazerpants6• 8 years ago

It's really important to point out here that market downturn =/= recession. They often occur simultaneously but some market downturns are unrelated to recessions.

Xyik• 8 years ago

competition is a good thing, it encourages all competing parties to strive for a better product.

from an investment point of view, its a bit similar to Lyft vs Uber ... pretty much the exact same business, but there is always room to eat market share.

jedberg2• 8 years ago

Competition is good for consumers but not investors. Investors want monopolies.

bearcobra• 8 years ago

2) Economic downturn: Will people still order groceries at a premium?

My wife and I have found that online ordering saves us money. Delivery from one of the local stores (Save-on-foods) costs $8-15. Instead of grabbing random items off the shelves because we're hungry or the store put up an enticing display of sugary cereal, we plan out our meals for the week and only buy what we need. That easily offsets the cost of delivery, while also giving us extra leisure time and saving on gas/vehicle wear & tear.

jpalmer• 8 years ago

3) The grocery stores in my area (midwest) already provide this service at no additional markup and free delivery if you spend over $100.

pj_mukh• 8 years ago

"1) Amazon and Whole Foods: Are they not a concern?"

I'm guessing this raised happened because of Amazon/Whole Foods [1]

https://www.forbes.com/sites/bizcarson/2017/11/08/instacart-...

jxub2• 8 years ago

Another valueless "disruption" being injected play money to destabilise the semblance of healthy capitalism we had on a macro level.

Venture capital enables subsidies to speculative companies in hope of a small probability of profit, which destroys perfectly good small companies [0] , and acts as a libertarian version of socialism [1]. This exposes the fabric of a normal economy to small stressors, a couple of which may hit it big and destroy entire industries. This has its brutal repercussions [2] which are not only economical, but also social, as the sum of jobs destroyed is bigger than the new ones created, at least in low innovation sectors, and which makes extremist movements grow out of the general frustration with the state of things (isn't Trump the result of "disruption" in politics too?).

However, in my opinion Universal Basic Income will fix all the major problems acting effectively as a universal VC - and paradoxically a healthy one as not guided by buzzwords or credentialism, which should be the only way any subsidy work, as it frees everyone from black swan risks which are fruit of unexpected outcomes of technological advances (and a good thing per se), and enables them to work on bettering the world in an amazing way (my speculation). Until the AI comes along... Well, that's for another story.

[0] https://m.signalvnoise.com/venture-capital-is-going-to-murde...

[1] https://medium.com/@willszal/venture-capital-as-socialism-47...

[2] https://www.technologyreview.com/s/515926/how-technology-is-...

Edit: build an argument

Judgmentality• 8 years ago

Even though I agree with you, it would make for a much better conversation if you provided some evidence yourself instead of insisting the onus is on others to prove you wrong.

jxub2• 8 years ago

You're right, I sound like a prick even though I hadn't meant it.

I'll grab some data later on to construct a more compelling case against this type of funding.

jotm5• 8 years ago

Prove it yourself or get downvoted to shit (not by me). This isn't a real discussion, it's HN.

clay_the_ripper4• 8 years ago

I have never had a good experience with instacart. I’ve ordered from them probably 10-15 times and every single time, without fail, they either forget an item or replace an item with another item that I don’t want. This makes the service unusable, because if I’m cooking dinner that night and want to order instacart, there’s a high likelyhood I’ll be missing something crucial for my recepie, meaning I’ll have to go to the store anyway.

Not to mention the shady fees. The last time I used instacart, there was a box checked called “service fee”, I clicked on it to see what it was and it said “this $10 charge is optional and helps us keep running instacart”. Meanwhile the tip for your driver box is not checked. I bet a large number of people assume the service fee is the tip, and leave tip blank. Blatant tip stealing.

Plus they mark up everything you buy, and obfuscate this so it’s impossible to really know how much extra instacart is skimming off the top.

Amazing prime now on the other hand has never messed up an order. They always deliver on time. The prices are actually cheaper in some cases than in store.

I can’t wait for instacart to go out of business.

ftoo• 8 years ago

The service fee thing sounds like a class action lawsuit waiting to happen. Lawyers, start your engines...

usaphp• 8 years ago

Amazing prime now on the other hand has never messed up an order.

Not sure if it’s possible in prime now (could not find it) but I like the option in Instacart to describe an item you need which is not present in their directory, it saved me lots of times when something is not listed on prime now and I can just request it using Instacart, worked perfectly for me every time

kcorbitt• 8 years ago

I suspect the fact that Amazon is so good at food delivery is exactly why Instacart has been able to raise at such a high valuation. Amazon's purchase of Whole Foods, their Amazon Go store, and generally competent execution of grocery delivery has put the fear of $DIETY into all the incumbent grocery chains. They realize that they're late to the game and don't have the internal talent to develop an effective and convenient home-delivery competitor, so they're forced to partner with Instacart, who is hoping to commoditize them.

deegles• 8 years ago

I feel like even Amazon doesn’t have enough internal talent to execute on all the projects they want. Grocery stores don’t stand a chance.

Androider• 8 years ago

Exact same experience. Instacart shopper cannot find extremely common items and tries to replace them with 2-3x more expensive options.

The whole model of the shopper walking the isles to pick the products is wrong. It's inefficient and a recipe for disappointment, because what you see on their web page is just a guess at what the store has and the shopper can find.

I too have used Instacart probably 10 times, but never will again. It is also all but guaranteed that Whole Foods will drop Instancart like a hot potato for their own in-house service, so the valuation is completely wrong in my opinion.

ssewell• 8 years ago

Amazon Prime Now is already starting this (https://goo.gl/fSF4DR) in select markets. I used this last weekend and the delivery was perfect! You can opt to have an out-of-stock item either left off or replaced with a similar item. They will even send an SMS to request confirmation if they need to use a substitute product, giving you an opportunity to provide more feedback.

askafriend• 8 years ago

For me, the worst grocery delivery service is still miles better than going to a store and shopping for groceries.

I'm OK with missing items, I'll just get a refund and deal with it. It's still far far better than dealing with a physical grocery store.

I'm sure there are millions of others like me.

pnathan2• 8 years ago

I'm OK with missing items, I'll just get a refund and deal with it. It's still far far better than dealing with a physical grocery store.

Curious. Why do you say that? I use Instacart as a timesaver, or as a way to accomplish what I can't due to other obligations.

fizwhiz• 8 years ago

Really don't know why you're being downvoted, but I agree.

I prefer protecting my time whenever I can (read: I'm lazy) and I've personally found instacart to be an invaluable service. Whether it's a late night wine delivery from BevMo, bulk shopping from Costco (I don't have a membership and almost never remember to bring bags with me to their store), or just the weekly stuff from Safeway/Wholefoods, it's really been a godsend from the POV of saving time that I can repurpose for anything else.

I don't know about the millions comment, but if you're willing to pay a premium for the convenience then it's certainly worth it. I certainly feel that way.

ascorbic• 8 years ago

Don't you have stores that will do the deliveries themselves? That's got to be a better system than using a third party like Instacart.

zjaffee• 8 years ago

But there are so many services out there, and instacart isn't a particularly good one. There are services like fresh direct/amazon fresh which are based on delivery as a primary concept, and there's the services spun up by the individual grocery stores (which don't have the same crazy fees as instacart, and generally have more accurate listings).

Especially given that wholefoods is now going to deliver direct which was one of the primary uses of instacart (delivery from premium stores), demonstrates that their utility is fading.

s73v3r_2• 8 years ago

I can't agree. If you're missing an item that you needed for that night's dinner, then you now are doubly inconvenienced, first by having to pay that convenience fee, and now second that you have to spend your time to go to the store anyways and get what was missing.

angryasian• 8 years ago

I don't agree but to each their own. Now with self checkout, 4 major supermarkets near me and I tend to go later at night.. I really don't see the problem

ericlewis• 8 years ago

This has been exactly my experience too, and I've been using Instacart since day one. "Apologizing" for them often. A combination of Amazon prime now and Amazon fresh has seemed to work out.

I occasionally use Instacart just to see if its improved. But I hardly trust them to get everything I want, and I'm surprised when an order goes without a hitch. Probably not the surprise they are looking for when trying to "surprise and delight".

pnathan2• 8 years ago

I've never had an issue with Instacart. I order from them.... occasionally. Great service.

The fee structure is weird, agreed.

tvanantwerp• 8 years ago

Similar experience. The app is fine, but the quality of shoppers usually isn't. Lots of forgotten items, unacceptable replacements, or just getting the wrong thing entirely. Once had a shopper who didn't know cucumbers from zucchini. Another time, we ordered 2 pounds of shrimp and got...2 shrimp. Just two little shrimp! Honestly, who would even think it makes sense that we would've ordered two individual shrimp? I've had so many bad experiences that I don't ever plan to use Instacart again.

ggg99903• 8 years ago

I routinely buy one shrimp because I don’t like shrimp but I cook it for my baby as part of getting her diverse foods.

paulcole• 8 years ago

Plus they mark up everything you buy, and obfuscate this so it’s impossible to really know how much extra instacart is skimming off the top.

Do you ask Whole Foods what they pay for bananas? Do you care what the markup is at Walmart? Who cares how much InstaCart is charging.

If you're pinching pennies, InstaCart isn't a service for you.

clay_the_ripper4• 8 years ago

I’m not against companies making money. Instacart should be compensated for the service they provide. So just tell me “this delivery costs x dollars” or show me the percentage you’re charging me for the order “10% of total” so I can make an informed decision about how much I’m paying to have my groceries delivered. Instead they hide the true cost of the service that I’m paying for. I have no idea if I just paid $10 or $50 extra vs going to the store myself. Really this is the least of my complaints. If the service worked well (ie actually told me what was in stock/out of stock instead Of replacing items with a bunch of stuff I don’t want) I would have a lot less of a problem paying a little extra.

Gargoyle• 8 years ago

I used them as my sole source of groceries for about 3 years and had no problems with products or deliveries at any point.

I do agree about the fees, which I always unchecked and I always tipped the driver in cash despite Instacart urging me not to. In my case the driver was also the shopper on every delivery, but I understand that's not how it always works and tipping cash is a bad idea when they're different people.

acct17712• 8 years ago

For our anecdotal evidence, what area do you have these experiences?

ggg99903• 8 years ago

Why are you excited for Instacart to go out of business? Why not just stop using it?

gruez3• 8 years ago

maybe

Blatant tip stealing.

[...]

Plus they mark up everything you buy, and obfuscate this

hunter23• 8 years ago

I agree. I use instacart every few months, but I will NEVER use them to buy groceries for a dinner I'm preparing that day. I've had too many instances where they didn't have the meat I needed, so I had to order out. They are not useful for folks who cook a lot and care about their ingredients.

They really really need real to have real time inventory for users like me. The shopper model worked when they were just starting off because it allowed them to launch in tons of cities without even the groceries approving but now they need to move to a model where they get the grocery store's inventory; the current method is just plain inefficient.

gruez3• 8 years ago

The last time I used instacart, there was a box checked called “service fee”

i used it a few months ago, and there was no checkbox (it was mandatory)

jasonbarone• 8 years ago

Similar experience, I hate to say it. Instacart's support has been pretty poor as well. If your delivery person gets an item wrong or delivers expired goods, good luck trying to get a refund because you'll be presented with a "you can return it yourself". Something go wrong with an alcoholic order? It's even worse because alcohol sales are non-refundable. I've had orders where the delivery person brought the wrong item and Instacart just ghosted me on my support emails and tweets until eventually they said my order was done too long ago to resolve.

octernion14• 8 years ago

as an engineer at instacart, it's very disheartening for me to see the top-rated comment on HN is "I can’t wait for instacart to go out of business."

even if we did not provide value to you (which i apologize for -- it is a priority of ours to improve the replacement experience in particular as it is very frustrating to customers), i am not sure why that implies that we do not provide a valuable service for others and why you would wish ill on us.

perhaps it is because you think of us as an overall unscrupulous company ("shady fees", "mark up everything you buy"), which i would contest -- we strive for transparency when possible (see [1] for screenshots around how we describe the pricing of our service). but the larger point remains -- why do you think that there can only be one victor here, and that is has to be amazon? (or "amazing" as you put it).

right now, amazon is very explicitly coming for the grocery industry -- an $800+ billion industry that is almost 100% offline -- and we are attempting to be one of the (hopefully many) independent companies that enables it online. grocery companies have built amazing fulfillment pipelines and relationships with both farms & customers that we are building a front-end and logistics system for.

anyways, i do not speak for instacart as a company, just for myself as an employee who usually enjoys HN.

[1] https://imgur.com/a/j47ls

kayhi2• 8 years ago

Never used Instacart, but your link to show transparency, doesn't actually state what the mark up is.. 2%, 10%, 25%, order minimum or there's fee..

Transparency to me, would mean I place order and know how much it will cost, instacart mark up, service fees and if a tip is included.

rmaus• 8 years ago

I don't have stake in this one way or the other, but will you argue in favor of Instacart's '$10 service fee' (as mentioned by parent commenter)?

petra2• 8 years ago

> why do you think that there can only be one victor here, and that is has to be amazon?

Historically, online businesses have 1/2 winners that "take all". That's assuming the winners could build a warehouse near each city. seems possible.

So the question who will be the one besides Amazon?

From one point of view. Walmart will likely win in the low-cost grocery pickup business. And on top of that they will do deliveries. The way Walmart will choose that delivery is: is it cheaper than delivery costs for Walmart(for chilled deliveries)? and can it scale ? . Does instacart fit ? it seems not.

So it's hard to see how instacart wins.

trs80• 8 years ago

Isn't it illegal to offer a "store credit" instead of a refund in cases where IC forgot my items and I paid debit? Seems like a really shady way to bring customers back.

Don't get me wrong, I enjoy the whole concept of online ordering but the IC UI forces users into choices that benefit IC by default.

cmclaughlin• 8 years ago

Overall I really like Instacart and quite frankly, I've come to depend on it. Shopping with kids is difficult... it's much easier to plan ahead and shop when I have a little free time. So congrats on the funding!

I understand some of the frustrations about replacements. Originally the shoppers were pretty good about calling. Recently the app was updated for 1-1 chat and interactive replacement choices. However, it seems the shoppers are to busy to use the feature... I've had a few notifications for replacements, only to click on it and find the shopper has already checked out.

Personally, I accept that limitation of the platform and make sure I choice "no replacement" if there's any chance I'll be disappointed.

tfehring3• 8 years ago

Saying “we charge markups, but we won’t tell you what they are” is still not sufficiently transparent, in my opinion. Yes, Amazon and grocery stores do the same thing (at face value, anyway) by not disclosing their COGS. But the key difference is that my next-best alternative to Instacart is to just go to the grocery store myself. My next-best alternative to getting something delivered from Amazon isn’t to get it more cheaply from a brick-and-mortar Amazon store, or to buy it directly from their suppliers - it’s to get it from a different retailer entirely, and I can trivially compare all-in prices between other retailers and Amazon. So I can easily assess whether it makes sense from a cost/benefit perspective to buy something on Amazon, but I can’t make the same assessment for Instacart.

I do think the service creates value. But I still hope that, at the very least, it soon faces enough competition that it’s at least forced to be fully transparent about the cost of its service. I want to see one number - the difference between what an order of groceries costs me on Instacart all-in, and what it would cost me to go to the grocery store and purchase the same items myself. As long as I can’t trivially find or calculate that number, I won’t use Instacart again.

abawany• 8 years ago

My experience with Instacart has been pretty great so I was shocked at the GP vitriol as well. In my case, Instacart has been a huge help - my brother, who is unable to drive for medical reasons, uses your service considerably to get his weekly groceries. Once I figured out the substitutes scheme, it worked like a charm.

Density• 8 years ago

I appreciate you as an engineer, and to weigh in against an Amazon troll, but like please keep hn neutral

bm1362• 8 years ago

There are a subset of users on HN that can be hyperbolic. I've worked at a few well known companies and every time they come up here you get some vocal minority outraged about the product/pricing/culture/tech/anecdotal experience etc. I think it's truly toxic (yet entertaining) and definitely deflating as an employee. There is a lack of empathy for other people, companies and a deep inability to disconnect the two. I've noticed a hyper-rationalism here that reduces every company and product into the sum of it's parts and deems it outrageous- which to me comes across as unhealthy (reminds me of going to lunch with an engineering team that optimizes the route, their orders, seating, etc).

Congrats on the raise and good luck with everything.

clay_the_ripper4• 8 years ago

You’re right, this was a bit harsh. I’m sure lots of good people work at instacart, and this was not intended to seem like I’m excited for anyone to lose their job.

I guess a more accurate statement would be “now that I’ve discovered amazon prime now is available in my area, I’m excited for the competition between these services to offer me a better quality product at a better price”.

Sorry if I offended. Cheers.

itronitron• 8 years ago

In order for instacart to survive, it needs to partner with regional grocery chains by providing them with the 'ecommerce' side while the grocery chains provide delivery. I live in a metro area where a local chain now provides excellent delivery service (and the employed delivery people won't accept tips) and hope they succeed long term. I don't use Amazon for groceries although it might be available, and I never shop at Whole Foods because their stores are way too large. Whole Foods would dominate if they roll out 'whole foods Express' stores which would be much smaller (think 7-11) so that people can get in and out without feeling like they are walking through the Natural History Museum. Families buy the most groceries and are the most time constrained, but I'll never use instacart until they drop the whole gig-economy frontline workers as contractors bullshit.

trashcan• 8 years ago

I really like how Favor includes the receipt from the restaurant with your order. So it's crystal clear how much extra you are paying.

deepuj• 8 years ago

Similar experience here. Walmart is also terrible at this. Amazon Fresh/Prime Now is reliable 90% of the time. But I've had them cancel deliveries just 1 hour before scheduled time once. Would never trust any of these services for any important items. Not to mention the ridiculous markup on some items.

spraak• 8 years ago

Yeah, I've had the same experience with Instacart vs Amazon Prime Now

notyourday2• 8 years ago

Instacart is going to get slaughtered. If it was public, it would be in a GTZ (Go to Zero) basket. Its business has a critical flaw that was only kind of workable when Amazon did not own WF.

Amazon WF same day delivery would be picked from WF stores by the people who work in those stores and are trained in those stores, not Joe Random Gig Worker who does not know how swiss chard is different from the rainbow chard, and AMF would do it for no markup to WF price.

Vertical integration in the last mile grocery business would crush anyone who is not vertically integrated. The only way for non vertically-intergrated Instacart to complete is to pivot into SaaS business selling its platform to the independent store operators for something like $1 per order but there's just no way $1 per order software platform would command that valuation.

jostmey• 8 years ago

I've had the exact opposite experience. Instacart worked really well for me, and Amazon Fresh was well, never that fresh. I suspect the quality of the service varies on geographic location

traek• 8 years ago

Amazon Fresh is a different service from Prime Now. Prime Now also delivers from local grocery stores (e.g. in LA, I can order groceries from Sprouts and Bristol Farms).

anonfunction• 8 years ago

A few more things instacart does that really bother me:

1. The time slot changes as soon as you click checkout, what I mean is while browsing I'll always see "Available Within 1 hour" then when it actually is time to checkout that option is gone. It happens virtually every time and I've never seen it happen the other way around or happen while shopping and refreshing or going back and forth between shopping and checking out. This leads me to believe it's an intended trick they are using to get people to shop even if the time they want isn't available.

2. They don't provide drivers with any sort of cart to actually deliver the groceries with. One delivery driver had to lug water bottles and other heavy items from down the street where he could find parking into my building and up to my apartment. Amazon Fresh gives their drivers a handcart to help with deliveries.

3. After several orders of mine were never delivered and Instacart offering a $5 credit (after wasting hours of my time waiting for their large delivery window) I had a driver tell me that drivers get to keep orders that are not delivered and sometimes they pick really good orders and say they couldn't be delivered.

I still use them because it's convenient but wish they would treat their users with more integrity and also manage their delivery drivers better by providing supporting tools like a cart or keeping tabs on drivers that may be taking orders for themselves.

silencio• 8 years ago

Instacart not supporting their contractors - well, I guess they're still contractors, I don't know what happened to wanting to switch them to employees - is my biggest gripe.

While I was pregnant and stuck at home, I received a bunch of my roommate's 1-2x weekly Instacart deliveries. Without fail the majority of Instacart drivers tried to refuse to go up our one flight of stairs with 1-2 grocery bags. One cursed me out while bringing the bags upstairs. Some left the bags next to the gate. Mostly only women would bring it up without complaining, "you're sooo biiig giiirl go put your feet up!" And then fuck me, we misunderstood the $$$ Instacart fee as a tip so the people doing their jobs didn't get tipped :(

This is omitting the stupid shopping mistakes like 1 leek instead of 1 pound of leeks, and the amazing chat session I had with one shopper that asked me where to find something I'm buying for the first time, at a store I've never been to.

I have never had this problem with Good Eggs, never had this problem with Prime Now, only had it once or twice with Postmates and Caviar. Something's not being incentivized correctly over at Instacart.

zaidf• 8 years ago

To be fair, Amazon Prime also does this.

s0rce• 8 years ago

I've never used instacart but all the problems you've described I've had with Prime Now (Bay Area). Instacart also appears to have cheaper prices on some whole foods 365 items than Prime Now does...

gehwartzen3• 8 years ago

I clicked on it to see what it was and it said “this $10 charge is optional and helps us keep running instacart”.

I have never used Instacart but it boggles my mind that such an option would exist. It's the sort of thing I might expect to be asked entering a museum or a non-profit community health clinic but why on earth would anyone feel inclined to pay extra to fund a for profit private company beyond any required charges?

vthallam• 8 years ago

As soon as Uber launches UberEverything , Instacart will be bleeding tons of money. I already left Postmates and Seamless for UberEats. Fast, predictable and more options.

If Uber could get more grocery delivery services and keep the onus of packing things on the stores vs delivery boys picking things, it will be more reliable.

subpixel• 8 years ago

Imagine that Netflix launched as a courier service that would take your order and then go to the video store and try to get it and bring it to you. That seems kind of crazy even with the knowledge (in hindsight) that videos would later be digitized and Netflix would be in a position to move from middleman to market-maker.

But I just don't see any opportunity for Instacart to get out of the middleman role. Maybe they can make a lot of money helping grocery conglomerates try to spend their way out of a technology deficit vis-a-vis Amazon. But if that were true they would they need hundreds of millions of VC dollars?

ryanmarsh• 8 years ago

I know these businesses are very regional. Where we are Instacart has some insane prices and Shipt is absolutely kicking their butts on service. I'm having trouble understanding the $4.2B valuation given their execution.

habosa• 8 years ago

As I remember, Instacart's main business was Whole Foods delivery. When Amazon bought Whole Foods they obviously lost that market, but there was some optimism presented because now suddenly every store has to compete with Amazon and would look to Instacart as a ready-made provider of this service.

But I am not so sure this will work out. Instacart builds some of their fees into item prices. If you're shopping at Whole Foods you're already signaling some price insensitivity, and you likely won't notice a few nickels added to these already premium items.

However if you shop at somewhere like Safeway, this may not work. The price competition is way more intense and consumers are much more sensitive to the price of essentials.

Maybe the idea is that anyone who orders groceries from a hip mobile app like Instacart is someone who can afford the convenience premium? I am just not convinced that they can really ever recover from Amazon here. Plus these other chains may want to do business with Instacart today, but in the long term they'll probably invest in their own delivery services and cut out the middle man.

Instacart is a pretty legit business, but $4.2B is a lot for a middleman in an industry that is synonymous with low margins.

lobster_johnson• 8 years ago

Instacart hasn't lost Whole Foods. You can still get deliveries. (Though who knows whether this will last, or whether it can compete on price with Amazon's own offerings.)

bluetidepro• 8 years ago

I really hope this money goes towards their customer service infrastructure, and the quality of their workers. As an Instacart Express customer (their premium offer for free delivery) since 2013, I can say the customer service has gone downhill significantly. I can elaborate some here more...

- Their quality of workers have gone down. I don't know if they have just lowered the bar for who they hire, or if the workers are too focused on competing orders that they just don't care anymore. I'm not exactly sure.

For example, in the app there is a setting option you (as a user) can set to explicitly request a phone call me if there is any replacements to confirm them. In the past year, I don't think any workers have followed this setting. And I understand that is maybe because Instacart has added some of that functionality in app, but that doesn't really work all the time. I have also recently had more and more Instacart workers who will make the "replacement" requests in the last 2 seconds of shopping so you have no ability to actually "approve/deny" the things they pick. I believe they do this on purpose so they don't have to do as much work trying to communicate with their user they are shopping for. It probably shaves off time they have for completing other orders. So, by this "evil" tactic I've seen them start to use more and more, you can't actually control the replacements. You just get what they assumed you may want for the replacement. This is incredibly frustrating as a user to have happen to your order. Instacart has been good at refunding me for the bad replacements, but if they would have just called (like I marked in the app), we could have resolved the issue in store, and it would be all good. I don't understand why Instacart still has this setting if no workers are going to follow it anymore. They need to get this sorted out. Either informing their workers, or forcing app users to explicitly approve/deny in app before it closes that opportunity.

- Their up-sell fees have gotten outrageously greedy. It seems they are just rounding up to the highest potential possible and then charging that. They are transparent that some stores have higher prices, I understand that, but it's frustrating when certain items are way too up-priced. Meat being a perfect example. If you just want to get 1 ribeye steak, the app will say it will be $20, but then when you get the piece of meat it will still have the price label on it saying it was say $8. Instacart doesn't do any price adjustment to factor that and just charges $20, unless you contact their customer support and complain. On top of that, last time their customer support wouldn't even change it until I complained on Twitter. Then they finally took care of it.

- They used to give debit/credit card refunds for mistakes. Now they just give you a credit to your next order. I absolutely HATE this practice that companies sometimes do. It's so anti-consumer. You can't call it a refund if I'm forced to use your service again to actually be redeemed. That's a credit, not a refund. I don't get why they changed to this model, other than to speculate that their poor customer service has bit them in the butt so it's easier to give the user "monopoly" money to be forced to come back to use it, rather than just giving them a true refund. I'm not sure.

Those are just a few things that I've started to notice way more frequently. And I'll be 100% clear, this has all happened within the last year. I had 0 problems until the past year. I have no clue why it took such a dramatic fall. In the past year, there hasn't been a SINGLE order where I haven't had to contact customer support to fix something. And it's getting obvious that even their support is caring less and less about helping. Like making me have to go as far as get "social media justice" for them to fix their problems.

It's a bad trend I've seen. I'm optimistic that they can turn it around, and hopefully this money can help with that. I will not be renewing my Instacart Express this year, that's for sure. Will probably give them a few orders to redeem themselves after that and see. If it's still poor service, they will have lost a loyal customer all because of poor quality/scaling. But I'm also just 1 user. I get everyone may have different experiences.

s73v3r_2• 8 years ago

So with that money, can they finally afford to pay living wages to the people who make their service possible?

veritas3241• 8 years ago

Surprised nobody has mentioned a different, sort-of competing model. Here in Nashville (and I assume other locations), Kroger offers ClickList[0]. Basically, order ahead of time via their website and select when you want to pick up from the store (w/o leaving your car).

It doesn't have the convenience of delivery, plus you typically have to order a day in advance, but it seems like the benefits would be that a) the people doing the picking are employees of the store, b) you're unlikely to not have a deliverable order, and c) you're probably out anyways and can schedule around your pickup.

Maybe this is more valuable outside of bigger cities, but I see people using it all the time around here. I haven't used it myself quite yet.

[0] https://www.kroger.com/topic/clicklist

free2rhyme214• 8 years ago

Instacart's biggest issue is not knowing real-time inventory. Amazon will never have this issue, because they just bought Whole Foods. Instacart, on the other hand, relies on crowdsourced shopper data to manage this.

The results is basically a hit and miss experience. My guess is they hope to get this inventory data direct from the stores one day, but who knows if they will.

Instacart has raised another $200M at a $4.2B valuation

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