Instacart stops selling alcohol for compliance reasons

http://pandodaily.com/2012/12/11/instacart-stops-selling-alcohol-for-compliance-reasons/

by MediaSquirrel • 14 years ago

22 22 14 years ago

thejteam• 14 years ago

I know nothing about Instacart, but are they selling the items themselves or are they just a delivery service? Although I imagine an alcohol delivery service has its own problems, specifically with regards to age verification. This shouldn't surprise anybody, alcohol law is complicated. They should feel lucky they have not been hit with heavy fines over this. Everybody in California should feel lucky they can buy alcohol at a Safeway, over here in Maryland chain grocery stores(in fact all non-franchise chains) are not allowed to have liquor licenses.

martey• 14 years ago

I know nothing about Instacart, but are they selling the items themselves or are they just a delivery service?

From the article:

"Instacart employees pick up the groceries from a local Safeway and bring them to a user’s door. But that’s where compliance becomes an issue. According to the California Department of Alcoholic Beverage Control, all transactions of alcoholic beverages must be made directly through the vendor that holds the liquor license – in this case, Safeway. An Instacart shopper is not allowed to simply buy alcohol off the shelves and sell it like any other grocery item. So, instead of a customer paying Instacart when buying booze, the money should go to Safeway, and then from Safeway to Instacart."

duckkg5• 14 years ago

I've used InstaCart a few times and the employee told me they stop by Safeways to pick up the groceries. If Safeway doesn't have something you ordered, the InstaCart person texts you asking if you want a refund on that item or a similar item.

patrickryan• 14 years ago

I saw this coming, especially with their "Send beer to your friend in San Francisco" promo a few weeks ago. There are just too many regulations on alcohol.

rachelmaesmith• 14 years ago

Oh yeah, my free beer! I'm assuming the promo is no longer? Regardless of this change, I'll still use Instacart. It's a great service with quality customer service that's only getting better.

MediaSquirrel2• 14 years ago

Fortunately, Swig! (http://swigme.com) is still 100% legal and open for business.

Swig! is an instant beer & alcohol delivery service that partners directly with licensed brick & mortar retailers to enable online ordering and one-hour delivery. Unlike Instacart however, we did our homework and engaged liquor licensing attorneys to vet our model.

Disclosure: I'm the founder of Swig! When Instacart was still selling booze, we competed with them.

citricsquid• 14 years ago

> According to the California Department of Alcoholic Beverage Control, all transactions of alcoholic beverages must be made directly through the vendor that holds the liquor license – in this case, Safeway. An Instacart shopper is not allowed to simply buy alcohol off the shelves and sell it like any other grocery item. So, instead of a customer paying Instacart when buying booze, the money should go to Safeway, and then from Safeway to Instacart.

How do you comply with this?

shardling• 14 years ago

That quote itself seems to spell out the only way they really could -- the money goes directly to the brick+mortar partner, and then to Swig.

MediaSquirrel2• 14 years ago

We have deals directly with the licensed retailer. The money for the sales goes straight to them.

eridius• 14 years ago

Oh that's neat. I love the Instacart model. I even paid the $100 for a year of free deliveries (I figure, if I get 25 deliveries, it's worth it, and I'm already close to that). I'll have to check out Swig as well.

HorizonXP• 14 years ago

I'm not sure how to feel about you submitting this particular article, and then plugging your own startup. I feel like it is against the common courtesy of HN. Correct me if I'm wrong.

46Bit• 14 years ago

A million Stanford undergrads cried out in fear.

natrius• 14 years ago

My freshman year, Safeway began their online delivery service. They didn't card for the first month or two, which got them plenty of business from our dorm. Good times.

rdl• 14 years ago

Anyone doing any business with alcohol really should check the laws first. I don't think this will seriously hurt InstaCart (I'd personally use them for food or cleaning supplies; I have too much alcohol already), but if you had an alcohol-centric business, this could be a big deal once you get traction.

One of the big things is in many states you can never discount alcohol or give away free alcohol. You can do stuff like free food, but even making it conditional on alcohol purchases is bad in some states (but not others).

rumpelstiltskin• 14 years ago

"It’s called due diligence."

And this is called talking out of one's ass. It's easy to armchair quarterback from a cozy cubicle at Pando HQ. When you run an actual company, especially as a solo founder, you'll realize how thin your bandwidth gets stretched. Unless it's core, you adopt a 'cross that bridge when you get there' mentality. Which is exactly what Apoorva did here.

Seriously, once you go down the 'due diligence' road, there are a million things to check up on. Focus on the core to get up and running, fix things as they break and worry about the rest later.

abbasmehdi• 14 years ago

Couldn't agree more. When you are a startup founder you are often times inventing a new way of doing something. Often there are no pre-written rules, you make them up as you go along and you find yourself doing things previously thought to be unthinkable. Most problems do have a work-around. I will not be surprised if in 2 weeks this founder solves this trivial problem by going to locally owned stores and working out a cash-flow arrangement (independently owned stores will be delighted by the lead-gen).

calbear81• 14 years ago

I would agree that it's easy to armchair quarterback but I think it's reasonable to say that this should have been expected or at least had come up in ANY standard analysis of potential risks when evaluating a startup that delivered alcohol. If you've bought alcohol, you would know that there are legal requirements to sell it. It's no different than considering other factors that could affect a delivery service like liability if your drivers get in a car accident or tax issues around reselling groceries, etc.

pg• 14 years ago

Incidentally, of all the startups we've funded, Instacart is one of the ones we ourselves use most. Jessica can't stop talking about how great it is. You learn how useful grocery delivery when you have small children like we do, and Instacart is by far the best option for this.

Instacart is one of those rare products that's surprisingly great. I.e. you don't realize how good such a thing could be till you try it. A lot of the best startups have this quality. I wish we could figure out a way to identify them when they apply to YC, but at the moment I admit we can't.

jl• 14 years ago

I just got a delivery 30 minutes ago, in fact. For years, I'd used Safeway.com's delivery services and now that I have used Instacart, I'll never go back. The UX is 100x better, delivery is much quicker (and cheaper), and I can order on my phone.

someperson• 14 years ago

> You learn how useful grocery delivery when you have small children like we do, and Instacart is by far the best option for this.

Woah, I've been reading PG essays and the HN comments by you and the other YC partners for several years but didn't realize you two have kids!! Congratulations! I imagine they'll have incredible futures ahead of them growing up in such an intellectually stimulating environment/family!!

Again, congratulations PG/JL! I'm sure you two will be wonderful parents! :-)

jhong• 14 years ago

I just tried it out. agreed it is a great experience, but i wish they were more upfront about their pricing. I figured they were just charging the delivery fee on top of safeway's prices, but later realized they are also marking safeway up by 5%. I'm sure most people won't notice it, and most people wouldn't really care about it even if they did know about it (myself included), but somehow discovering it on my own I couldn't help but feel a little bit duped.

westicle• 14 years ago

Now this thread has been pg-jacked, I can't help but feel that the submitter's unashamed plug for swig! has severely backfired.

No doubt when instacart sorts out the regulatory hurdles involved in alcohol sales they'll have a bunch more subscribers courtesy of hn.

And so it goes.

Instacart stops selling alcohol for compliance reasons

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