Instacart raises $55 million to revolutionise the way we buy groceries

The same day grocery delivery start-up company, Instacart, is becoming one of the fastest growing online shopping ventures, with revenue growing 15 times in the last nine months alone.

The concept behind Instacart is simple, a consumer puts in an online order for groceries and then a personal shopper collects and delivers the groceries to the consumer. All the personal shopper needs to be an employee of Instacart is access to a smart phone and a car. They then get paid according to how quickly they are able to deliver the groceries.

Born out of a need to supply grocery items in a timely manner, Instacart promises to deliver a convenient service without compromising on quality. CEO and founder, Apoorva told the New York Times, “I had this problem of never having groceries in my fridge and never having the motivation and energy to go to the store, most grocery services, including AmazonFresh, [were] too cumbersome.”

Mehta who spent two years working at Amazon.com, has managed to raise over $55 million from investors including Andreessen Horowitz, Sequoia Capital, Khosla Ventures and Y Combinator to fund Instacart’s growth.

Other services required an order to be submitted hours in advance, and quite often were not the exact product he would normally purchase. Instacart solves this problem by paying staff living in the suburb (or close to) and therefore able to shop at the same grocery stores the consumer would normally visit.

How Instacart Works

Instacart is different from traditional online shopping services like Amazon Dash in the sense that it does not require any costly storage warehouses, delivery trucks or full time employees. Instead it relies on part-time workers with reliable transport and existing supermarkets. Staff can choose when they are going to be available, and accept the next job on the list. This freedom allows for a constant supply of workers, to meet the supply of orders coming in. The current demographic of staff is stay-at-home mothers and college students, two groups who require flexibility in their work.

The online shopping service makes its money by charging a delivery fee (around $3.99 per order) and a mark-up of approximately 20 per cent on most items. Instacart has 50 permanent employees and over 1000 contracted shoppers. They pay depending on how skilled the shopper is, and the shopper is also able to earn commission and tips.

Australian Alternatives to Instacart

Currently the Instacart service is only available in America, but there are a couple of similar services you can use here in Australia. Both Woolworths and Coles offer app-based grocery shopping with a home delivery service. That said, they can be expensive and often the produce you get isn’t the best quality. Another alternative is using a jobs forums site such as Airtasker or Gumtree. Airtasker allows consumers to post any task (including purchasing, collecting and delivering groceries) on the marketplace board. People will then offer to complete your task for a fee, which you can then choose to accept. Ultimately, the result is the same as Instacart but allows you to have more control on how much you will pay for the service.