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Founded in 2012, Instacart is an American technology company that operates as a same-day grocery delivery and pick up service in the U.S. and Canada. Customers select groceries through a web application from various retailers and the order is delivered by a 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 begin delivery in Toronto and Vancouver.[2]

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

Contents

ServiceEdit

Instacart's service is mainly provided through a smartphone app, available on iOS and Android platforms, apart from its website. Some of its participating stores allow access through their own websites on a desktop browser. Customers can pay with Android Pay and Apple Pay on their respective platforms.[3] Initially Instacart shoppers simply went to a store and purchased the ordered items at retail and, in addition to the delivery charge, added a markup of 10 to 20 percent.[citation needed] As the business has developed, the firm has established relationships with grocery firms which share their (store) existing markup, allowing Instacart users to shop at in-store prices.[4][5] For stores that do not participate in Instacart's partnership program, mark-ups range from 15%-40%.[6] [7] 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 from more locations. [8]

HistoryEdit

Instacart was started by Apoorva Mehta, a former Amazon employee who had twenty failed start-ups before Instacart. [9][10] The company launched its service in San Francisco, Mountain View and Palo Alto.[11] The startup company had a $2 billion valuation by investors as of May 2015.[5] Investors include Kleiner Perkins Caufield & Byers (KPCB), Comcast Ventures, Dragoneer Investment Group, Thrive Capital, Valiant Capital, Andreessen Horowitz, Khosla Ventures, Sequoia Capital, Y Combinator and Angel Investor Martin Romero. As of January 2015, total funding was about $275 million.[12] At that time, Forbes named Instacart "the Most Promising Company in America".[13] In 2016, Whole Foods Market Inc. invested in Instacart in conjunction with its partnership.[14]

In April 2015, the firm had about 200 employees. Actual shopping and delivery is done primarily by independent contractors, though a new policy will allow some Instacart shoppers to choose to be part-time employees.[15][16] During 2014, Instacart expanded to 15 cities: Atlanta; Austin; Boston; Boulder; Chicago; Denver; Houston; Los Angeles; New York City; Philadelphia; Portland, Oregon; San Francisco; San Jose; Seattle and Washington, DC, with plans to expand further in 2015.[5] In September 2015, the company hired Ravi Gupta as its first CFO.[17]

In September 2016, the company announced an expansion to their North Chicago Zone,[18] and in October 2016 also announced the expansion of their Orange County and Minneapolis coverage areas.[19][20] 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.[21] 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.[22][23]

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.[24][25] By the end of 2018, Instacart will deliver from these banners in 16 Canadian markets.[26] They also offer delivery for products at Walmart Canada stores.[27]

In January 2018, the company acquired Toronto-based Unata, a white-label platform for grocers to offer their own grocery delivery service.[28] Unata will continue to operate independently, as a subsidiary of Instacart.[29] The company also offers a service for personalized flyers and digital coupons to mid-sized grocers.[30]

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.[31] 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.[32]

As of April 2019, Instacart is valued at close to $8 billion. [33]

ControversiesEdit

Treatment of workers as independent contractorsEdit

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.[34]

Temporary removal of option to leave gratuityEdit

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.[35]

November 2017 strike actionEdit

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.[36]

Software bugsEdit

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.[37]

Service feesEdit

In April 2018, Instacart instituted a controversial 5% service fee on all orders.[38]

Pay systemEdit

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.[39][40][41] 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.[42][43] 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. [44][45]

ReferencesEdit

  1. ^ "Terms". Instacart.
  2. ^ Rastello, Sandrine (15 November 2017). "Loblaw Gives In to Home Delivery With Instacart Partnership". Bloomberg News. Retrieved 17 November 2017.
  3. ^ "Instacart Announces Integration with Apple Pay". Instacart (Press release). September 9, 2014.
  4. ^ "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.'
  5. ^ a b c 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.
  6. ^ https://newfoodeconomy.org/a-reddit-user-calculated-instacarts-markup-its-pretty-high/
  7. ^ https://www.nytimes.com/2015/11/05/technology/personaltech/the-high-price-of-delivery-app-convenience.html
  8. ^ 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)
  9. ^ https://www.latimes.com/business/technology/la-fi-himi-apoorva-mehta-20170105-story.html
  10. ^ "Instacart Bags $2.3M to Become the Amazon of Groceries". Wall Street Journal. October 25, 2012. Retrieved 19 January 2016.
  11. ^ Demicheva, Valerie (8 March 2013). "Concierge grocery shopping". San Francisco Chronicle. Retrieved 19 January 2016.
  12. ^ "We've Closed $220M Series C Round of Financing Led by Kleiner Perkins Caufield & Byers". Instacart (Press release). January 13, 2015. Retrieved May 7, 2015. Yesterday we announced that we’ve closed a $220M round of Series C financing led by Kleiner Perkins Caufield & Byers (KPCB). Other participants in the round include Comcast Ventures, Dragoneer Investment Group, Thrive Capital, Valiant Capital and previous investors Andreessen Horowitz, Khosla Ventures and Sequoia. This brings our total funding to date to approximately $275M.
  13. ^ Solomon, Brian (January 21, 2015). "America's Most Promising Company: Instacart, The $2 Billion Grocery Delivery App". Forbes. Retrieved May 11, 2015.
  14. ^ Huet, Ellen; Barinka, Alex & Giammona, Craig (September 23, 2016). "Whole Foods Invests in Instacart at 2014 Valuation". Bloomberg News. Retrieved 2016-10-19.
  15. ^ Manjoo, Farhad (May 21, 2014). "Grocery Deliveries in Sharing Economy". The New York Times. Retrieved May 7, 2015. It operates according to a decentralized business model that borrows from services like Uber, Airbnb and other firms in the so-called sharing economy.
  16. ^ O'Brien, Sarah Ashley. "The Uber effect: Instacart shifts away from contract workers". CNN Money.
  17. ^ Loizos, Connie (September 29, 2015). "Instacart Hires Its First CFO: Ravi Gupta". TechCrunch. Retrieved 30 September 2015.
  18. ^ "North Chicago, there's more of us to love!". News at Instacart. 2016-09-27. Retrieved 2017-03-07.
  19. ^ "We're Doubling Our Orange County Coverage!". News at Instacart. 2016-10-10. Retrieved 2017-03-07.
  20. ^ "Minneapolis, We're Expanding!". News at Instacart. 2016-10-04. Retrieved 2017-03-07.
  21. ^ "Instacart Service Areas". Instacart. Retrieved 2017-03-07.
  22. ^ Primack, Dan (2017-03-01). "Instacart is raising a new funding round". Axios. Retrieved 2017-03-07.
  23. ^ Fickenscher, Lisa (2017-03-09). "Instacart now valued at $3.4B after major investment". New York Post. Retrieved 2017-03-09.
  24. ^ George-Cosh, David; Bensinger, Greg (28 September 2017). "Instacart Is Expanding to Canada in Amazon Battle". The Wall Street Journal. Retrieved 17 November 2017.
  25. ^ Kopun, Francine (15 November 2017). "Walmart, Loblaws face off over home delivery of groceries". Toronto Star. Retrieved 17 November 2017.
  26. ^ "Loblaw expanding online grocery pick-up and delivery business across Canada". Global News. 2 May 2018. Retrieved 6 May 2018.
  27. ^ "Walmart launches 1-hour grocery delivery in GTA with Instacart partnership". CTV News. 13 September 2018. Retrieved 14 September 2018.
  28. ^ Sawers, Paul (16 January 2018). "Instacart acquires Canada-based grocery ecommerce platform Unata". VentureBeat. Retrieved 16 January 2018.
  29. ^ Galang, Jessica (16 January 2018). "Instacart Acquires Toronto-based Unata to Build More Online Grocery Solutions". BetaKit. Retrieved 16 January 2018.
  30. ^ Zaleski, Olivia (16 January 2018). "Instacart Acquires Coupon and Voice-Shopping Startup Unata". Bloomberg News. Retrieved 16 January 2018.
  31. ^ Lynley, Matthew. "Instacart has raised another $200M at a $4.2B valuation". TechCrunch. Retrieved 2018-02-27.
  32. ^ Carson, Biz. "Instacart And Whole Foods To Dissolve Delivery Partnership, Over 350 Shoppers To Lose Jobs". Forbes.
  33. ^ Captain, Sean (2019-04-11). "Instacart offers drivers more flexibility on when and what they deliver". Fast Company. Retrieved 2019-05-08.
  34. ^ Del Rey, Jason (23 March 2017). "Instacart will pay $4.6 million to settle a class action lawsuit with its workers". Recode.
  35. ^ Del Rey, Jason (20 February 2017). "Instacart is playing games with its workers' pay — and will eventually suffer for it". Recode.
  36. ^ "Instacart: Strike last week had no impact on operations". Food Dive.
  37. ^ Del Rey, Jason (23 February 2018). "Instacart says it mistakenly withheld tips from some of its workers". Recode.
  38. ^ Carson, Biz (April 24, 2018). "Instacart Is Fixing One Of The Most Controversial Parts Of Its Grocery Delivery Service". Forbes.
  39. ^ Hanbury, Mary. "Instacart shoppers say that customers' orders are likely delayed because of frustration with the company's new payment system". Business Insider.
  40. ^ Hanbury, Mary. "Instacart workers are threatening to boycott the company over a payment policy change that they say has cut their wages". Business Insider.
  41. ^ Elejalde-Ruiz, Alexia. "'We're being mistreated': Instacart shoppers complain of pay cuts as company shifts to new model". chicagotribune.com.
  42. ^ https://www.nbcnews.com/nightly-news/video/instacart-walking-back-tip-policy-will-provide-back-pay-for-tips-drivers-never-got-1438458947681
  43. ^ https://www.businessinsider.com/instacart-reverses-tip-payment-policy-2019-2
  44. ^ https://www.fastcompany.com/90309043/instacart-drivers-say-this-data-proves-theyre-still-being-underpaid
  45. ^ https://www.tampabay.com/business/working-for-apps-like-instacart-is-world-of-uncertainity-for-its-delivery-drivers-20190228/