Instacart: Nothing Like Uber

Instacart also helps the shoppers become more efficient by providing them with proper in store routing when shopping. The company achieves this by organizing customer shopping lists and utilizing its database of in-store item location data (ISILD).

Instacart (CART) aka Maplebear Inc. provides online grocery shopping services to households in North America; to be honest, you probably already knew that. The company went public via IPO today at a price of $30/share which was good enough for a $9.9 billion valuation.

The IPO

Shares rose 12.33% in today’s trading to finish at $33.70/share which was worth all the hype of an IPO that netted $660 million. There was strong demand from market participants throughout the day as shares were up 43% at their peak before settling down to a fair (or fairish) valuation.

The Company

Unlike UberEats, Instacart partners with several large grocery stores chains to achieve its economies of scale. Basically Instacart focuses on delivering groceries while UberEats focuses on delivering food from local restaurants. When Instacart partners with a grocery store, that grocer gets access to all the households (customers in need of groceries) on the Instacart platform. Customers can then order items from the store’s inventory, and an Instacart shopper will then pick up the items and deliver them to the customers doorstep. In addition, the grocer will typically pay Instacart a commission for each order placed through their platform as it drives foot traffic, and therefore revenue, for the grocer.

Tech Under The Hood

You might have guessed a lot of what was written above because the gig economy (Uber, Doordash, and Lyft) is nothing new but the tech supporting Instacart is actually revolutionary. Instacart is able to empower their retail partners and their customers by deriving efficient delivery routes, predicting the time to deliver an order, and estimating the amount of staff required in a store on a given day at a given time. This allows retailers to fulfill more orders at a high rate and low cost.

Instacart also helps their shoppers become more efficient by providing them with proper in store routing when shopping. The company achieves this by organizing customer shopping lists and utilizing its database of in-store item location data (ISILD). When ISILD interacts with a customer’s shopping list, it provides the most efficient route for the shopper at a particular store from the moment they walk through the door. You can think of ISILD digesting a shopping list like: go left, walk past two aisles, turn right, walk halfway down the aisle, item 1 (granola bars) are on your left hand side, 4th shelf from the floor.

instacart in store shopping diagram — Source: Instacart

How the company manages (and predicts) shopping and delivery times is even more exciting. Instacart measures the amount of time that passes between each grocery item being picked up. “We can combine data across many shoppers by taking a weighted average. For instance, if shopper A picked an item from produce, texted a customer, and then picked an item from bulk goods, then we know that the amount of time elapsed between produce and bulk goods is not entirely reflective of the real-world distance traveled. That particular data point would be down-weighted accordingly.” -Instacart

instacart time between food diagram — Source: Instacart

Somewhere In Between Palantir and Uber

Instacart is data mining grocery stores, their customers, and their shoppers to create a matrix of grocery item trends, shopping/delivery times, and shopper experiences. Grocery stores have never met a technological offering like Instacart that is data mining (likely with AI) to enhance a shopper’s experience within their stores. Instacart’s databases and matrices are constantly growing as the needs of North American households change and grocery stores change. Every grocery store would be wise to partner with Instacart because the company’s insights could enable grocers to offer new products, services, or layouts to support their customers. Don’t be surprised if in the future you see one or more of the following:

Instacart’s valuation inflate
Instacart purchase a grocer
Instacart become the leader in AI for retailers

They’re a growing company and they seem to have all the right bones in place for a massive expansion. Can Instacart capitalize on the tech, and AI buzzword play, for grocers and soon to be retailers abroad?

2 thoughts on "Instacart: Nothing Like Uber"

tailsbanting says:
September 21, 2023 at 9:44 am
I’ve never used Instacart but from the people I’ve talked to about it. They’ve said it helps them with their budgeting as well.
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Davion says:
October 5, 2023 at 10:06 am
Great explanation but the stock price has taken a dip. Is this a good time to buy?
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