Back of the envelop calculations: A typical delivery would cost 1 hour of someone's time. At minimum wage this would cost ~$5. So $99 buys you 20 deliveries. If you batch up 3 customers every hour than $99 can pay for 60 deliveries.
If your order twice a week for 50 weeks than customer gets 100 deliveries for $99. So net/net Instacart would have gap of 40 deliveries = $33. So in essence they would eat up $33 per customer as loss which you can simply be viewed as customer acquisition/retention cost.
I think this is brilliant model. $99 for 3 hour deliveries would be very attractive to upper middle class. It also illustrates class of powerful business models which are simply based on swapping time for money and leveraging the exchange rate between time and money to be minimum wage.
fyi - SF min. wage is $10.24/hr - although I just got an invite to the app and if it's true to their word I'll use it all the time - I was using safeway delivery before as I don't have a car currently and it's a real pita to do groceries w/out - even zipcar will cost around that much plus your time
If your order twice a week for 50 weeks than customer gets 100 deliveries for $99. So net/net Instacart would have gap of 40 deliveries = $33. So in essence they would eat up $33 per customer as loss which you can simply be viewed as customer acquisition/retention cost.
I think this is brilliant model. $99 for 3 hour deliveries would be very attractive to upper middle class. It also illustrates class of powerful business models which are simply based on swapping time for money and leveraging the exchange rate between time and money to be minimum wage.