Last Updated: 20th Dec, 2021
The strain from the emergence of unprecedented Covid-19 has put grocery eCommerce businesses on an upward trajectory. Capitalizing on the eCommerce wave due to consumer transition, Grocery retailers are launching grocery delivery apps as they help in seizing a significant competitive advantage. Though there are a lot of applications available in the market, Instacart remains a pioneer and has radically altered the landscape of grocery delivery businesses.
As the company is reaching new heights even after the pandemic, many entrepreneurs take inspiration and want to launch a business or delivery app like Instacart. To draw a better understanding, let’s take a deeper look at Instacart’s customer retention strategies by dissecting its business model, revenue model, features, and how much it cost to build an app like Instacart.
The Unique Selling Point (USP) of Instacart is to deliver grocery products to the customers’ doorsteps as early as possible. The business model that Instacart follows supports a 3 tier customer strategy. Not being the entity that directly maintains the inventory, the company acts as a host whereas the contractors are responsible for managing inventory and making goods available for delivery.
This unique “no-inventory” business model was an outcome of lessons that the company learned from the failure of its competitors. The 3 tier customer strategy focused on bridging the gap between consumers and contractors who are responsible for making timely delivery of goods.
Below is a detailed study of Instacart’s 3 segment consumer strategy. The key players are:
Instacart has partnered with multiple registered stores that have the independence to operate under the name of their enterprise. The stores have to first enter into a special contract with Instacart to get listed on the website. Then, they can showcase the articles for purchase on Instacart’s website.
Instacart shoppers or delivery contractors shop for the products and later deliver them to the buyer. This segment of the 3 tier system works on a contractual basis. The Instacart shoppers are notified about the orders via a smartphone application. Upon receiving the orders, the shopping personnel collects the items from the nearest store and makes the delivery.
This segment is further divided into two categories:
Read More: How Does Instacart Shopper App Work?
Buyers are the end customers who place orders for groceries using Instacart’s website or mobile application. Since multiple stores are listed on Instacart, buyers have the freedom to choose from their preferred stores. The buyers can also combine items from multiple stores and place orders.
Buyers can also schedule the date and time of deliveries respectively. Payment for the orders placed can be made online.
Read More: How Does Instacart Buyer App Work?
Instacart has penned and adopted a business model that is an amalgamation of the gig-economy, eCommerce, subscription & aggregated business model.
Consumers can also opt for self-pickups directly from the store. All you have to do is place an order for the grocery essentials that you require and select a pick-up time as per convenience.
Now that we have discussed the business model that Instacart runs on, let us learn more about the order economics of the grocery giant by enlisting the revenue streams.
Except for the first order, Instacart charges a delivery sum from customers for every order placed. The initial delivery amount is $5.99 if the order is to be delivered within 2 hours after placing it. The delivery fee for requesting a 1 hour delivery is $7.99. This may vary according to the minimum purchase requirements.
Many SMEs and market leaders like Kroger have partnered with Instacart to integrate its services within the website or grocery delivery platform for better customer reach. Instacart earns profits by charging commissions per order and a partnership fee.
Instacart earns a markup fee priced at 20% of the net cost of the item. The prices listed by some retailers (wholefoods) on Instacart are the same as their in-store prices which leaves a marginal room for profits. However, some stores like Costco list products at a 20% higher cost. The revenue generated from this set of items goes directly to Instacart.
Instacart charges a compulsory service fee of 5% on every order. Also, the customers have to make a mandatory 5% shopper tip for every delivery.
Instacart also provides an annual membership priced at $149 known as the Instacart Express. With the membership, the customers can enjoy free deliveries for orders valued above $35, all year round.
The success of a grocery delivery app like Instacart heavily relies on the features incorporated. Listed below are the category-wise features that enhance the overall usability of the application.
Designing and developing a grocery app like Instacart from scratch requires a lot of investment both in terms of money and time. Further, an entrepreneur has to consider factors such as addressing customers’ pain points, analyzing the strength and weaknesses of competitors, choosing a technology stack, intuitive UI/UX design & layout, necessary grocery app features to integrate, exploring monetization options etc.
Features needed in the Instacart app today can become irrelevant over time. So depending on your requirements, we suggest starting with an MVP and later scaling the system to a full product. In the case of Instacart’s shopper app, you can have a full-fledged delivery app.
Growcer, an MVP grocery delivery solution, comes equipped with web interfaces for admin, buyer, and seller and mobile apps for buyers and delivery staff, all for a price of $3999. The grocery marketplace developed from it can, to a very much extent, work like Instacart.. It is an ideal and practical solution and can also adapt to other business requirements. Our team of experts can also be hired to build a custom Instacart shopper app.
Q1. What are some apps that are similar to Instacart?
Ans. In the grocery delivery market, a lot of apps are similar to Instacart. These include FreshDirect, PeaPod, Shipt, and more.
Q2. Does Growcer’s base copy build a platform that is exactly similar to Instacart?
Ans. Growcer is a readymade solution that can be enhanced to function like Instacart. A few functionalities of Instacart are not incorporated in Growcer’s base copy though it can be customized at an additional cost. Also, instead of shoppers apps, as in Instacart, Growcer comes with a delivery driver app.
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Guncha Kashyap is a professional tech blogger, guest writer, and content marketer. With a master’s degree in Commerce, she likes to explore the prevalent industry trends. She is currently associated with FATbit Technologies as a content marketing and branding professional. Her interests include writing about changing digital trends, the ever-growing gig economy, eCommerce marketplaces, and much more. Netflix and chill happen to be one of her hobbies.
