Instacart

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Instacart
Instacart logo and wordmark.svg
Type of site
Private
Founded2012; 7 years ago (2012)
Headquarters50 Beale Street
San Francisco, California, U.S.
Area servedSelect cities in the U.S. and Canada
OwnerMaplebear Inc.[1]
Founder(s)Apoorva Mehta, Max Mullen, Brandon Leonardo
IndustryRetail
ServicesGrocery Delivery
Websiteinstacart.com
Native client(s) oniOS, Android

Founded in 2012, Instacart is an American technology company valued at nearly $8 billion[2][3] that operates as a same-day grocery delivery and pick-up service in the U.S. and Canada.

Customers shop for groceries through the Instacart mobile app or Instacart.com from the company's more than 300 national, regional and local retailer partners.[4] The order is shopped and delivered by an Instacart personal shopper. Up until the end of 2017, Instacart only had operations and services in the United States.

In November 2017, the company announced plans to also begin delivery in Canada.

Service[edit]

Instacart's customers can access the service via the Instacart mobile app or website and begin shopping by selecting their city and store, then adding groceries to their digital cart. Customers can pay with personal debit or credit cards, Android Pay and Apple Pay.[5]

As the business has developed, Instacart has established partnerships with more than 300 national, regional and local retailers.[6][7] Instacart personal shoppers pick, pack and deliver the order within the customer’s designated time frame—within one hour or up to five days in advance.[8][9].

For orders of $35 or more, the delivery fee is $3.99. With an Instacart Express membership for $9.99/month or an annual fee of $99, customers get unlimited, free delivery on orders over $35. Retail partners set the price of individual items on the Instacart marketplace. Today more than half of Instacart partners offer customers same as in-store pricing on the platform.[10]

On April 11, 2019, the company expanded its services to offering an on-demand option for its workers, in order to allow workers to work more flexible schedules.[11]

History[edit]

North American Expansion[edit]

Instacart was founded by Apoorva Mehta, a former Amazon employee. [12][13] The company launched its service in the San Francisco Bay Area in 2012.[14]

In September 2016, the company announced an expansion to their North Chicago Zone,[15] and in October 2016 also announced the expansion of their Orange County and Minneapolis coverage areas.[16][17]

As of March 2017, Instacart serviced 36 markets, composed of 1,200 cities in 25 states: Arizona, California, Colorado, Connecticut, District of Columbia, Florida, Georgia, Illinois, Indiana, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Hampshire, New Jersey, New York, North Carolina, Oregon, Pennsylvania, Tennessee, Texas, Virginia, and Washington.[18]

Partnerships[edit]

In November 2017, Instacart announced a partnership with Loblaw Companies to begin delivery from select Loblaws, Real Canadian Superstore, and T&T Supermarket locations in Toronto and Vancouver.[19][20] By the end of 2018, Instacart will deliver from these banners in 16 Canadian markets.[21] They also offer delivery for products at Walmart Canada stores, Staples Canada and M&M Food Market.[22]

In January 2018, the company acquired Toronto-based Unata, a white-label platform for grocers.[23]

Wage theft and low pay[edit]

In March 2017, Instacart agreed to pay a $4.6 million class action settlement stemming from the misclassification of its shopper employees as independent contractors. The suit alleged 18 violations, including improper tip pooling and failure to reimburse workers for business expenses.[24]

In November 2016, the company removed the option to leave a gratuity. Backlash against the policy forced the company to reinstate the option only weeks later.[25]

In November 2017, many Instacart workers participated in a strike action, alleging wages as low as $1 an hour. Instacart claimed that the strike had no impact on its operations.[26]

In February 2018, Instacart mistakenly withheld tips given by customers to shoppers, blaming a software bug. In addition, customers were often charged for service fees that were supposed to be waived.[27]

In April 2018, Instacart instituted a controversial 5% service fee on all orders.[28]

In November and December 2018, Instacart instituted a new pay system for its shoppers using customer tips as part of the shoppers' base pay; shoppers claimed this pay system resulted in substantially lower pay. As shoppers boycotted the lower-paying orders, Instacart customers posted on social media that their orders were being delayed.[29][30][31]

After an online organizing campaign in which shoppers posted examples of payments as low as eighty cents per delivery attracted media and customer attention, Instacart announced in February 2019 that it would revise its pay system and give back pay to some workers.[32][33] Under the new pay system, tips were no longer factored into the minimum base wages of $7 for a full-service shopping order and $5 for delivery only, but shoppers said they were still being underpaid, with wages sometimes as low as $2.74 an hour.[34][35]

Funding[edit]

The company had a $2 billion valuation by investors as of May 2015.[7] Forbes named Instacart "the Most Promising Company in America" that same year.[36]

In March 2017, it was reported that Instacart raised $400 million in new venture capital which valued the grocery delivery service at approximately $3.4 billion.[37][38]

In February 2018, the company raised $200 million in a funding round led by Coatue Management, as well as Glade Brook Capital Partners and existing investors.[39] In October 2018, Instacart raised $600 million in a funding round led by hedge fund D1 Capital Partners; the round valued the company at $7.6 billion.

In December 2018, Whole Foods, which had been bought by Amazon in 2017, dissolved its partnership with Instacart.[40]

References[edit]

  1. ^ "Terms". Instacart.
  2. ^ Captain, Sean (2019-04-11). "Instacart offers drivers more flexibility on when and what they deliver". Fast Company. Retrieved 2019-05-08.
  3. ^ "Instacart wins $271 million in new funding in November: source". Reuters. 2018-11-14. Retrieved 2019-06-20.
  4. ^ "Instacart raises another $600M at a $7.6B valuation". TechCrunch. Retrieved 2019-06-20.
  5. ^ "Instacart Announces Integration with Apple Pay". Instacart (Press release). September 9, 2014.
  6. ^ "Greater Pricing Transparency". Instacart (Press release). April 23, 2015. Retrieved May 7, 2015. When that badge says 'Prices are same as in-store' (which is most of the time!), it means that the prices for that store's items on Instacart are, on average, the same as the prices that retailer regularly charges in their physical stores (more details below). For stores where the prices on Instacart represent a markup over in-store prices, we clearly display that prices 'May be higher than in-store.'
  7. ^ a b Manjoo, Farhad (April 29, 2015). "Instacart's Bet on Online Grocery Shopping". The New York Times. Retrieved May 7, 2015. Last year, it grew from serving just a few markets to 15 cities, and this year, it plans to expand to even more.
  8. ^ "Instacart Launches Same-Day Grocery Delivery Service in Winchester". Shenandoah Country Q102. Retrieved 2019-06-10.
  9. ^ "The Fresh Market Expands Instacart to All Stores". Progressive Grocer. Retrieved 2019-06-10.
  10. ^ "Grocery stores charging Instacart customers higher rates". WMAR. 2019-04-02. Retrieved 2019-06-18.
  11. ^ Silman, Jon (2019-04-12). "https://www.pymnts.com/news/delivery/2019/instacart-on-demand-option/". PYMNTS.com. Retrieved 2019-05-08. External link in |title= (help)
  12. ^ Lien, Tracey. "Apoorva Mehta had 20 failed start-ups before Instacart". latimes.com.
  13. ^ "Instacart Bags $2.3M to Become the Amazon of Groceries". Wall Street Journal. October 25, 2012. Retrieved 19 January 2016.
  14. ^ Demicheva, Valerie (8 March 2013). "Concierge grocery shopping". San Francisco Chronicle. Retrieved 19 January 2016.
  15. ^ "North Chicago, there's more of us to love!". News at Instacart. 2016-09-27. Retrieved 2017-03-07.
  16. ^ "We're Doubling Our Orange County Coverage!". News at Instacart. 2016-10-10. Retrieved 2017-03-07.
  17. ^ "Minneapolis, We're Expanding!". News at Instacart. 2016-10-04. Retrieved 2017-03-07.
  18. ^ "Instacart Service Areas". Instacart. Retrieved 2017-03-07.
  19. ^ George-Cosh, David; Bensinger, Greg (28 September 2017). "Instacart Is Expanding to Canada in Amazon Battle". The Wall Street Journal. Retrieved 17 November 2017.
  20. ^ Kopun, Francine (15 November 2017). "Walmart, Loblaws face off over home delivery of groceries". Toronto Star. Retrieved 17 November 2017.
  21. ^ "Loblaw expanding online grocery pick-up and delivery business across Canada". Global News. 2 May 2018. Retrieved 6 May 2018.
  22. ^ "Walmart launches 1-hour grocery delivery in GTA with Instacart partnership". CTV News. 13 September 2018. Retrieved 14 September 2018.
  23. ^ Sawers, Paul (16 January 2018). "Instacart acquires Canada-based grocery ecommerce platform Unata". VentureBeat. Retrieved 16 January 2018.
  24. ^ Del Rey, Jason (23 March 2017). "Instacart will pay $4.6 million to settle a class action lawsuit with its workers". Recode.
  25. ^ Del Rey, Jason (20 February 2017). "Instacart is playing games with its workers' pay — and will eventually suffer for it". Recode.
  26. ^ "Instacart: Strike last week had no impact on operations". Food Dive.
  27. ^ Del Rey, Jason (23 February 2018). "Instacart says it mistakenly withheld tips from some of its workers". Recode.
  28. ^ Carson, Biz (April 24, 2018). "Instacart Is Fixing One Of The Most Controversial Parts Of Its Grocery Delivery Service". Forbes.
  29. ^ Hanbury, Mary. "Instacart shoppers say that customers' orders are likely delayed because of frustration with the company's new payment system". Business Insider.
  30. ^ Hanbury, Mary. "Instacart workers are threatening to boycott the company over a payment policy change that they say has cut their wages". Business Insider.
  31. ^ Elejalde-Ruiz, Alexia. "'We're being mistreated': Instacart shoppers complain of pay cuts as company shifts to new model". chicagotribune.com.
  32. ^ "InstaCart walking back tip policy, will provide back pay for tips drivers never got". NBC News.
  33. ^ Hanbury, Mary. "Instacart is reversing a controversial payment policy that workers say drastically cut their wages". Business Insider.
  34. ^ Captain, Sean (February 22, 2019). "Drive for Instacart and you could make $29.05 for an hour's work—or $2.74". Fast Company.
  35. ^ "Working for apps like Instacart is 'world of uncertainity' for its delivery drivers". Tampa Bay Times. February 28, 2019.
  36. ^ Solomon, Brian (January 21, 2015). "America's Most Promising Company: Instacart, The $2 Billion Grocery Delivery App". Forbes. Retrieved May 11, 2015.
  37. ^ Primack, Dan (2017-03-01). "Instacart is raising a new funding round". Axios. Retrieved 2017-03-07.
  38. ^ Fickenscher, Lisa (2017-03-09). "Instacart now valued at $3.4B after major investment". New York Post. Retrieved 2017-03-09.
  39. ^ Lynley, Matthew. "Instacart has raised another $200M at a $4.2B valuation". TechCrunch. Retrieved 2018-02-27.
  40. ^ Carson, Biz. "Instacart And Whole Foods To Dissolve Delivery Partnership, Over 350 Shoppers To Lose Jobs". Forbes.