Grocery delivery: Has its time finally come?
Instacart, the fast-growing grocery delivery service, has expanded to Miami, its 16th city. Beginning Tuesday, customers in Instacart’s initial delivery area can order from Whole Foods Market, Costco, Winn-Dixie, BJ’s Wholesale Club and Petco and have everything delivered by Instacart in as little as one hour. Instacart customers do not need a Costco or BJ’s membership to shop from those stores. As of now, Publix is not included in the service.
“We had thousands of requests for service in the Miami area, and strong interest from retail partners such as Whole Foods Market and Winn-Dixie, so the time was right,” said Apoorva Mehta, founder and CEO of Instacart and a former supply chain engineer at Amazon.
Launched in San Francisco in 2012, Instacart connects customers with personal shoppers, or independent contractors who shop for and deliver grocery orders, providing their own transportation. This eliminates the need for expensive infrastructure such as inventory, warehouses, trucks and full-time drivers, Instacart said.
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Costly infrastructure was one of the downfalls of grocery shopping and delivery services that have tried and failed, including the national player Webvan in the 1990s, Publix and Farm Stores. Instacart and other on-demand services rely on technology to make the logistics and customer experience as efficient as possible.
Indeed, Instacart has shifted its emphasis in the past year; instead of depending on delivery fees and product markups for its revenue, the company now partners with existing retailers. For the consumer, this means most of the prices are the same as in the stores (and when they are not, the information is disclosed).
Instacart, named “America’s Most Promising Company” by Forbes magazine in January, has grown exponentially — from serving a single city in 2012 to 15 metros, including New York, Chicago and Austin, Texas. In 2014, it brought in $100 million in revenue, according to Forbes. Nationally, it is becoming a marquee name in on-demand delivery, an exploding category of startups that includes companies such as Uber, Lyft, Postmates, Airbnb, Caviar and Shyp, all of which have launched in the Miami market.
Instacart has raised $275 million from venture capitalists, including a $220 million round in January, to support rapid expansion plans that included Miami. It ranks as the fourth most-funded startup in the category, according to a recent report on the on-demand economy by CB Insights.
Instacart’s initial delivery area in Miami covers Miami Beach, downtown Miami, Brickell, The Roads, Coconut Grove, West Flagler, Little Havana, West Miami, Coral Way, Coral Gables, Key Biscayne, Miami airport area, Virginia Gardens, Grapeland Heights, Allapattah, Civic Center, Little Havana, Wynwood, Midtown/Edgewater, Buena Vista, Liberty City, Brownsville and Little Haiti.
North Miami, South Miami, Aventura and the western suburbs are not in the initial area but could be added as demand increases. “Once we build up our user base in our initial zone, ... what we usually see is requests from other areas spike, and we open other zones in the very near future,” said Maxx Freedman, who directs Instacart’s city launches. A Fort Lauderdale launch is not in the immediate plans but “is definitely on the road map,” he said.
“Once you sign up, you can see what stores serve your ZIP code. ... You browse through the different stores and you can order from multiple stores at the same time and add items to your cart,” said Freedman. Customers can browse by categories — for instance, produce — or search directly for a particular item, such as avocados. “When you are ready to check out, you choose the delivery option. It’s all up to the customer.”
Options include one-hour delivery for $5.99; two-hour delivery for $3.99 or a scheduled delivery (you pick the day and hour) for $3.99. Instacart will launch the service with 60 “personal shoppers” in Miami and will ramp up as needed, an Instacart spokeswoman said.
Whole Foods Market was one of the first national grocery chains to partner with Instacart. The grocer reports significant incremental sales gains in cities Instacart serves. “Instacart has already proven itself as a strong partner for Whole Foods Market in 15 other cities, and we’re very excited to now offer our Miami customers this great shopping and delivery experience,” said Juan Nuñez, president, Florida Region for Whole Foods Market.
New customers can open an account at www.Instacart.com or by downloading the app; their first order of $10 or more is delivered free. Instacart also offers Instacart Express, an annual $99 membership that eliminates delivery fees for all orders of $35 or more. Customers can sign up for a free two-week trial at www.instacart.com/express. In the Miami area, all who place their order on Tuesday will receive a month of free deliveries through Instacart Express.
To celebrate the Miami launch on Tuesday, Instacart will offer an only-in-Miami perk: Deliveries also will be made via a Boatsetter chartered delivery vessel that can deliver on the dock or on deck within the company’s delivery zone.
Follow Nancy Dahlberg on Twitter @ndahlberg.