“The one thing that we got extremely right about the Webvan investment was that there would be huge consumer demand for home delivery of groceries," he says. "It’s just taken time for technology to finally catch up."
I don't understand this at all and would really appreciate any enlightenment.
What has changed in technology in the past 12 years to enable home grocery delivery? Broadband? Cloud storage? HTML5? AJAX? Flat design? Mobile? And if any of these (Mobile being the most likely), how would they affect viability?
I suspect the thing that has changed more is us. We are probably more open to "low tech" evolutions: lack of privacy, increased trust of strangers, crowd sourcing, always being connected. Or maybe some clever hackers figured out a better way of doing something new with the same basic technology.
Frankly, I can't imagine what these 10 programmers would be doing today that couldn't have been done in 2001.
All of these new services that enable poor or lower-income people to serve rich people (Uber, TaskRabbit, Instacart) have been enabled by two main things: an economic recession that permanently eliminated a lot of jobs and the recovery which drove economics gains to the 1%, and smartphones, which allow the customers or workers to send or receive requests at any time.
> All of these new services that enable poor or lower-income people to serve rich people (Uber, TaskRabbit, Instacart) have been enabled by two main things: an economic recession that permanently eliminated a lot of jobs and the recovery which drove economics gains to the 1%
The 1% don't use Uber, TaskRabbit, or Instacart; they have actual personal drivers, servants, and chefs.
I'm using the word "1%" in the recently popularized figurative sense, the people who make enough money to outsource things like hailing a taxi or doing grocery shopping.
That sort of makes your point an exercise in circular logic then: The recovery drove money to people who spend money on goods and services. Well yes, the people who work in fields that are doing well now are more likely to spend the money they get paid on new products.
I think (or at least surmised) that the circular nature of the argument is part of the point. Previous economic happenings increased the wealth/income gap, but these new services have arrived which allow the wealthy to increase their standard of living while creating income for the lower classes, thus decreasing the gap to an extent.
You are 100% correct. The one percent do not use any of those services. As a one percenter mentioned to me, "why would I have a random person pick me up at the airport? My wife picks me up. And she does my shopping."
Probably the biggest risk to crowdsouring is a reestablishment of the middle class. That will drive wages up to the point where these services end up too expensive or too poorly executed (by bottom of the barrel labor).
On a positive note (for these companies), I don't see the middle class coming back any time soon.
-- For the user, it's easier than ever to place an order. Internet connection speeds are fast, smartphones have snappy native apps, 3G is everywhere -- so you can order groceries on the ride home. You can quickly download 100 images of products on the bus ride home and pick the ones you want (for example).
-- For Instacart, processing those orders at scale is also easier than ever. EC2 instances are cheap and easily provisioned, payment processing is easier thanks to a bevy of services, and online use of credit cards doesn't have the riskiness and stigma associated with it in the 90s.
-- For the shopper going out to buy groceries, communication is easier than the 90s. With broadband and smartphones, they can send updates back to Instacart servers faster and have them processed automatically (as opposed to the 90s, where a cellphone call would have information transmitted by voice, which would have to be processed by a human). Smartphones alone enable a larger volume of information to be communicated back to Instacart, and have it be as simple as the shopper checking off items purchased or scratching off items not available.
-- For Instacart again, dynamic routing, inventory updates, and scheduling are much easier (in theory) because of the timely updates from shoppers, as well as the enormous amount of computing power available. Couple that with GPS tracking and you enable some sort of accountability for the shoppers, as well as a better customer experience for the user ("your shopper is 3 minutes away, on Van Ness...")
It's similar to how UPS revolutionized package shipping with point-by-point delivery updates.
That said, as a former Instacart patron, I feel Instacart has a long way to go before it's as entrenched as Amazon.
1. When did UPS revolutionize package shipping? 5 years ago, 10 years ago, or longer?
2. Couldn't someone who ran a delivery service (i.e. UPS, DHL, FedEx, etc) have been in place to do this sort of thing 10 years ago or even longer? I mean sure, it's easier and more accessible than ever now, but it doesn't look like a showstopper to me. The convenience of having someone else do your groceries for you is so convenient for most people. It's on the level of convenience of paying the neighbor's kid to mow your lawn.
Too many deliveries had missed or swapped items, and although customer service was always excellent, it got a little tiring. Also, my perception (although I never actually checked) is that prices were slightly higher than driving down 2 blocks to Safeway and using my loyalty card there.
What might bring me back is a cost incentive on repeated purchases, say by offering 10% off if I sign up for regular monthly deliveries of common household items.
I agree that I don't see how THESE GUYS can succed, but I feel that with the infrastructure, and automation technology that Amazon has developed/purchased over the past 12 years the home delivery of groceries is a slam dunk to be successful.
The world was ready for Webvan back then, it was taking off, but the fatal flaw was their legendary dot-com overspending did them in.
The Webvan implosion was so big that it left a lasting stigma around that entire business model that made people assume that you'd need a Webvan-size spending budget to ever attempt it again.
Instacart has a clever twist of offloading the actual transportation and storage, the most expensive and complex aspect of grocery delivery, work onto self-appointed local providers who solve that hard part themselves independently of Instacart.
What has changed in technology in the past 12 years to
enable home grocery delivery?
Perhaps home grocery delivery has been feasible the whole time, and Webvan's failure was one of execution and management. Perhaps Webvan just scared off VCs until now.
An IPO is just a means of transferring ownership. It doesn't say much about the viability of the business model other than that people might believe in it.
Congrats to the team on securing funding! Can't wait to see you guys expand!
Personally, I use Instacart every week to buy all of my groceries. I live in Palo Alto, and don't own a car. With Instacart, that's easy, since I don't have to worry about going to the grocery store, and lugging groceries back and forth in a car. So while it may be more expensive to use Instacart, my reduced burn-rate of not having to own and maintain a vehicle makes it a net cost-savings.
Sure, but it removes that reason for having a car too. In my life, cars are usually used for:
a) Commuting
b) Transportation of goods
c) Travelling (i.e. entertainment)
Generally, that order reflects what I use a car most for (i.e. Most of the time, my car is for commuting.)
Instacart helps remove the need for transporting goods. Amazon helps remove the rest. And I work at a location that makes commuting via bicycle + public transportation extremely easy.
So I don't need a car to commute or to transport goods. So for the few times that I need a car for entertainment, it doesn't make sense to own one. It makes more sense to rent a car from a local Hertz, or to use ZipCar for those one-off situations.
So Instacart is part of the solution, it isn't the entire solution.
As a fellow urban non-car-owner, groceries or other situations where I need to lug a bunch of stuff are the only remaining obvious situation for me where car ownership offers clear advantages over a bike, transit, or Uber. So to your question, yes, but I don't think that's an unreasonable assumption for a lot of city-dwellers.
You can look at Safeway/Trader Joe/Whole Foods prices and compare it to Instacart's to figure that out. That being said, do you ask Safeway/Trader Joe's/Whole Foods what their markup is? The only reason you care is because it's not completely hidden from you.
OTOH, Peapod does grocery delivery around here and just uses the local Stop & Shop's prices, including their weekly specials. I like it since I trust that a major chain will have competitive prices.
First: Congratulations all around. Very exciting to get that much support and validation.
Second: As much as any of us can make comprehensive grocery lists, there's a serendipity to the grocery runs that I'm not ready to give up. Snap decisions can be enablers for future meals. "I need 1 lb. of chicken breast but, hey, wait… maybe I'll get 2 lb. and make double and freeze the rest for next week?" … "Oh shit… tomato paste! Definitely used the last of that a couple days ago; better get some more." It was a no-brainer to ditch the video rental store, but you can't browse fresh groceries from an Apple TV.
Third: I'm not willing to trust a stranger to pick out an avocado that's just the right ripeness for my purposes, nor do I want to type out just how ripe I want my avocado this time.
That's a good point but I personally hate spending 45 mins plus in the grocery store and would love to have someone bring it to my door. I find it to be a huge waste of time. If the ripeness of your avocado is that important to you then you'll still be one of those taking the trip to the store.
One important advantage instacart has over the in-store experience is the filtering and sorting of goods. The amount of toilet paper or cereal to choose from is absurd.
EDIT: After looking at the web app there appears to be no sorting/filtering capabilities but only search. Bummer.
> One important advantage instacart has over the in-store experience is the filtering and sorting of goods.
That's assuming you get what you ordered in the first place, and ripeness of an avocado is barely touching on these problems.
My boyfriend has been experimenting with ordering cat food from various sources in SF. Necessary backstory: regular Fancy Feast comes in two categories of textures: Classic which is a pâté style, and everything else (Flaked, Grilled, Sliced...) which is anything but. Our cat exclusively eats non-pâté food. So we order a 24 can box of flaked/grilled/sliced beef+poultry or seafood, and what shows up at the door? Instacart, Postmates, and Google Shopping Express all got it wrong (I bet AmazonFresh will too when it starts up here) - in fact, I can't think of a single time a person got the cat food order _right_ even though when we go shopping on our own knowing "not classic" we never have a problem reading the boxes clearly labeled as such... To their credit they all resolved the problem, but.. both of us and our roommate order from all three services all the time and something always gets screwed up like that.
If you can live with that, then awesome. We mostly do for convenience's sake, until we get key limes as a substitute for persian limes meant for margaritas.
Considering that Instacart allows you to add notes to your order, or even to an individual item, I'm sure this is something that can be easily resolved. Most shoppers at Instacart have paid attention to the notes, which has been great. I've run into situations where the item I ordered is not available, so they need to replace it with another item. Usually I add a note to my order that tells the shopper to always pick the smaller & cheaper substitution, since I live on my own and only cook 2 days out of the week. So my personal experience has been that it works well, but I can see how there might be variability in experiences amongst others.
When I read "crowdsourcing" in the headline I was expecting more of a discussion about how Instacart was enlisting a broader base of "delivery" people but it sounds like its messengers are still a pretty tight circle. Which makes sense, since, as the article also notes, there's a quality level that probably needs to be attained to be viable.
The strange thing about this is that in the UK, here every major food retailer has been doing this for years. It also has to be said, they don't break-down figures but most folks suspect it's not a profitable activity - it's a market share activity.
This company will fail. I don't see it being profitable on 3.99 per delivery... Nor do I see the interest in the service outside the Bay Area. Enjoy the VC money while it lasts guys
I don't understand this at all and would really appreciate any enlightenment.
What has changed in technology in the past 12 years to enable home grocery delivery? Broadband? Cloud storage? HTML5? AJAX? Flat design? Mobile? And if any of these (Mobile being the most likely), how would they affect viability?
I suspect the thing that has changed more is us. We are probably more open to "low tech" evolutions: lack of privacy, increased trust of strangers, crowd sourcing, always being connected. Or maybe some clever hackers figured out a better way of doing something new with the same basic technology.
Frankly, I can't imagine what these 10 programmers would be doing today that couldn't have been done in 2001.