I'd love to have this service at home, so I'm (selfishly) hoping Instacart becomes hugely successful!
That said, I can't help but wonder whether the company will find a business model with sustainable economics. A lot of really smart people have tried and failed to accomplish this sort of thing before. For example, Amazon invested $60 million in Kozmo.com back in the late 90's, and they couldn't make it work. (Kozmo.com ended up raising a quarter billion dollars before shutting down.)[1]
The main challenge is that same-day, point-to-point delivery is very expensive -- a complex problem. (Most delivery systems in use today rely on some kind of hub-and-spoke design.) Perhaps the wide adoption of smart phones will make point-to-point delivery economically viable for Instacart -- e.g., by giving the company cost-effective access to underused delivery vehicles as needed to satisfy the ebbs and flows of consumer demand.
I'm curious to see if and how Instacart can pull it off.
While I agree that a lot of smart people have tried this before (Kozmo.com, WebVan, etc), I believe that there are significant differences in the approach that we are taking.
Specifically, Kozmo.com was founded in an era where you could IPO without having profits. Having that mentality from day one allowed them to make huge concessions to users such as give them free delivery on everything, and not have a minimum order. For example, you could pay $1.50 for a gum on Kozmo and get it delivered to you within an hour. WebVan, on the other hand spend $1B on building it's own warehouses and fulfillment infrastructure.
Learning from those companies, we have done a lot of things differently. For starters, there is a minimum order of $10. There is a delivery fee of $3.99 for 3 hours and $9.99 for 1 hour. (Would you not pay $4 for someone to do all your groceries?) And, we do not hold any inventory - all of it is sourced directly from local retailers.
It is also important to mention that the time that we live in is very different. People are a lot more comfortable adding their credit card information on web/mobile. Not to mention, the access to smart phones that people have gives customers the ability to shop from anywhere - office, couch, next to the fridge.
We believe we are different from the companies that have tried this in the past. And, we hope we are live in your hometown very soon.
I'm hoping service succeeds also - its an awesome value proposition for consumers. However, I've built a few real-time delivery businesses, and I'm pessimistic.
Real-time operations are costly to manage even though the software has become easier to build. Not being Amazon and not being able to control inventory, and access to that inventory, hurts. However, probably a bigger issue is establishing consumer habit - triggering that need to order at the moment the user wants it. This comes down to establishing a brand (expensive) and also evolving consumer behavior (more expensive). And, these consumers will have to be in the < 200 geographical regions of the US that are dense enough to facilitate < 4hr delivery profitably (its probably less than 50 regions where you could fulfill on 1-hr delivery profitably at any substantial volume).
You could say Uber is a counter example of succeeding in this space. I would argue that they replaced an existing consumer habit with a better one. I don't see that in the same-day delivery space - thus the need for education.
There have been a few generations of these services (Webvan / Kozmo; Licketyship; Ecourier / Shutl; Postmates). Eventually, the cost of tapping into consumer habit vs the small margins of brokering a delivery will create an amazing opportunity. In the meantime, the cost of educating and acquiring users is a big deterrent and if you can build the kind of company innovative enough to solve this problem, its likely you have a prohibitively high opportunity cost.
I think to solve this problem, Amazon needs to bridge the gap between their value and local retailers' stock.
It'd work something like this:
You go online.
You want to buy a new A/V receiver
You find the one you want on Amazon at 9 am
Amazon then asks you where you live
Amazon taps into a database of willing stores that might carry the product. Most big-box stores have web-based inventory checks, so syncing their inventory with Amazon's system would (hopefully) be easier. Amazon offers the service to more specialized outfits; Smaller stores would get support in integrating the inventory system. Amazon would have to make a deal with these stores to make this work.
Using a partnership with UPS/FedEx/et.al., Amazon figures out which locations are still due for visits from a logistics company. Most make residential shipments as the last part of the day.
Amazon tells the store, "A customer requested this receiver, please put it in box size A1 and hand it to the UPS dude with this shipping label."
Amazon pays the retailer below retail, but above cost. The retailer takes it because they want the business; Amazon recoups because same-day shipping is a premium.
It'll be interesting to see how this plays out against Amazon's push into same-day delivery. Amazon is setting up local distribution centers of their own. Instacart is using existing distribution centers (i.e. retail stores).
Both companies need to figure out how to best deliver items locally. This is a big logistical challenge (but luckily it's well researched). In addition, Amazon needs to predict demand locally and ship items to a local distribution center. Instacart can leverage existing supply chains but has to pay a premium for it. If Instacart is willing to operate at a loss for a while, they might actually have an advantage over Amazon and can fully focus on getting the local delivery part of the equation right.
Very exciting stuff and congrats on the launch!
Disclaimer: I met Apoorva a few weeks ago and have been happily using the service since. I'm extremely impressed by how he managed to do all of this essentially alone and can't wait to see what's next.
The techcrunch article title is misleading - they don't want to be Amazon; they're not maintaining warehouses (which may prevent them from crashing like Webvan). They're effectively delivery people that you hire to bring you products from local stores, which is a very different market.
Regardless, there are a lot of dead companies that litter the path for a product like this. I'd be surprised if Instacart succeeds.
This is the most useful service i discovered i recent months. period. I seriously recommend this to anyone in SF. I dont remember the last time i went shopping for groceries. It already saved me tons of hours and money. no-brainer.
disclaimer: my company is in the same YC batch and I know Apoorva personally and was happy to get early access to service.
I love that the website doesn't shoehorn me into a crappy mobile version when I load it, but what happens now is that I get a picture of an iPhone and apparently nothing else—it's not at all intuitive for me to think to scroll horizontally to find the content of the web page, especially with the hidden-by-default scroll bars on the iPhone. To clarify, the horizontal scroll bar that appeared when scrolling vertically while "looking for the rest of the page" was hidden by a thumb for me. I only barely thought to check horizontal scrolling before giving up on the page as somehow broken on my iPhone.
Deatil of what I see (on the left) vs what I probably should see (on the right, after zooming manually):
It's a great idea, in theory. But who's the target market? Wealthy professionals have a wife to bring them stuff or have personal assistants (hard to believe in the world of dual income households, but I have friends that do just this). Young, less wealthy professionals just go pick up the items themselves or have friends pick them up for them. College kids aren't going to pay for such a service, they enjoy taking a break from studying to go pick up something. And yes, I know, I'm sure there are stay at home husbands that do errands for their wealthy professional wives, I just don't know of any.
I have been using past few week while it was in Alpha and I got say, its my favorite service for drink runs like sodas/juices/liquors. Def going to become a regular user. Gonna be following with much interest.
Also, to add to the conversation.It all about timing, right? Now with Amazon being as big as it is and we see companies like Rewinery, Exec, Postmates smashing into this on-demand local delivery space. The time seems ideal for a company like Instacart. I do miss WebVan though.
Monday I was having a conversation with a coworker about the looming major showdown between Amazon and Walmart. My take was Walmart should offer exactly this, allowing them to leverage their massive supply chain and warehouses in every city with more than 5000 people (aka "The Walmart").
Sounds nice. I know some people have been using Exec (YC W12) to do this, but instacart is much cheaper. The only thing that takes all the excitement for me is that it does not have a android version OR a web one....
This looks great. Today I'm sick WFH and could really use some meds delivered. I signed up for an invite... what is the process/wait time like? I may have to try something else if I'll need to wait too long.
You can get your pharmacy orders picked up in SF by Exec (http://iamexec.com). In California your assistant only needs your name, address and phone number to get your prescribed medications.
Have you looked at the financials of this? 10$ for 1 hr delivery means that either the carrier is paid less than that hourly(and I guess at least 20% less than that) or he is supposed to deliver more than 1 package per hour. Considering transportation costs and idle time, I am not sure this will work smoothly. It will work if there is a list of carriers ready to drop what they are doing to go buy groceries and make some money. Basically, it will work in cities with lots and lots of students...
[+] [-] cs702|13 years ago|reply
That said, I can't help but wonder whether the company will find a business model with sustainable economics. A lot of really smart people have tried and failed to accomplish this sort of thing before. For example, Amazon invested $60 million in Kozmo.com back in the late 90's, and they couldn't make it work. (Kozmo.com ended up raising a quarter billion dollars before shutting down.)[1]
The main challenge is that same-day, point-to-point delivery is very expensive -- a complex problem. (Most delivery systems in use today rely on some kind of hub-and-spoke design.) Perhaps the wide adoption of smart phones will make point-to-point delivery economically viable for Instacart -- e.g., by giving the company cost-effective access to underused delivery vehicles as needed to satisfy the ebbs and flows of consumer demand.
I'm curious to see if and how Instacart can pull it off.
--
[1] http://en.wikipedia.org/wiki/Kozmo.com#History
[+] [-] apoorvamehta|13 years ago|reply
Specifically, Kozmo.com was founded in an era where you could IPO without having profits. Having that mentality from day one allowed them to make huge concessions to users such as give them free delivery on everything, and not have a minimum order. For example, you could pay $1.50 for a gum on Kozmo and get it delivered to you within an hour. WebVan, on the other hand spend $1B on building it's own warehouses and fulfillment infrastructure.
Learning from those companies, we have done a lot of things differently. For starters, there is a minimum order of $10. There is a delivery fee of $3.99 for 3 hours and $9.99 for 1 hour. (Would you not pay $4 for someone to do all your groceries?) And, we do not hold any inventory - all of it is sourced directly from local retailers.
It is also important to mention that the time that we live in is very different. People are a lot more comfortable adding their credit card information on web/mobile. Not to mention, the access to smart phones that people have gives customers the ability to shop from anywhere - office, couch, next to the fridge.
We believe we are different from the companies that have tried this in the past. And, we hope we are live in your hometown very soon.
(edits to follow)
[+] [-] jonmc12|13 years ago|reply
Real-time operations are costly to manage even though the software has become easier to build. Not being Amazon and not being able to control inventory, and access to that inventory, hurts. However, probably a bigger issue is establishing consumer habit - triggering that need to order at the moment the user wants it. This comes down to establishing a brand (expensive) and also evolving consumer behavior (more expensive). And, these consumers will have to be in the < 200 geographical regions of the US that are dense enough to facilitate < 4hr delivery profitably (its probably less than 50 regions where you could fulfill on 1-hr delivery profitably at any substantial volume).
You could say Uber is a counter example of succeeding in this space. I would argue that they replaced an existing consumer habit with a better one. I don't see that in the same-day delivery space - thus the need for education.
There have been a few generations of these services (Webvan / Kozmo; Licketyship; Ecourier / Shutl; Postmates). Eventually, the cost of tapping into consumer habit vs the small margins of brokering a delivery will create an amazing opportunity. In the meantime, the cost of educating and acquiring users is a big deterrent and if you can build the kind of company innovative enough to solve this problem, its likely you have a prohibitively high opportunity cost.
[+] [-] dclowd9901|13 years ago|reply
It'd work something like this:
You go online.
You want to buy a new A/V receiver
You find the one you want on Amazon at 9 am
Amazon then asks you where you live
Amazon taps into a database of willing stores that might carry the product. Most big-box stores have web-based inventory checks, so syncing their inventory with Amazon's system would (hopefully) be easier. Amazon offers the service to more specialized outfits; Smaller stores would get support in integrating the inventory system. Amazon would have to make a deal with these stores to make this work.
Using a partnership with UPS/FedEx/et.al., Amazon figures out which locations are still due for visits from a logistics company. Most make residential shipments as the last part of the day.
Amazon tells the store, "A customer requested this receiver, please put it in box size A1 and hand it to the UPS dude with this shipping label."
Amazon pays the retailer below retail, but above cost. The retailer takes it because they want the business; Amazon recoups because same-day shipping is a premium.
Box goes on the truck, truck comes to your house.
Voila, new item by EOD same day.
[+] [-] hyperbovine|13 years ago|reply
[+] [-] jhuckestein|13 years ago|reply
Both companies need to figure out how to best deliver items locally. This is a big logistical challenge (but luckily it's well researched). In addition, Amazon needs to predict demand locally and ship items to a local distribution center. Instacart can leverage existing supply chains but has to pay a premium for it. If Instacart is willing to operate at a loss for a while, they might actually have an advantage over Amazon and can fully focus on getting the local delivery part of the equation right.
Very exciting stuff and congrats on the launch!
Disclaimer: I met Apoorva a few weeks ago and have been happily using the service since. I'm extremely impressed by how he managed to do all of this essentially alone and can't wait to see what's next.
Edit: typos
[+] [-] kevinh|13 years ago|reply
Regardless, there are a lot of dead companies that litter the path for a product like this. I'd be surprised if Instacart succeeds.
[+] [-] vgurgov|13 years ago|reply
disclaimer: my company is in the same YC batch and I know Apoorva personally and was happy to get early access to service.
[+] [-] alanfalcon|13 years ago|reply
Deatil of what I see (on the left) vs what I probably should see (on the right, after zooming manually):
http://i.imgur.com/1Yjfi.jpg
[+] [-] apoorvamehta|13 years ago|reply
[+] [-] zeroonetwothree|13 years ago|reply
[+] [-] anthemcg|13 years ago|reply
[+] [-] endeavor|13 years ago|reply
[+] [-] rokhayakebe|13 years ago|reply
[+] [-] apoorvamehta|13 years ago|reply
[+] [-] applefanner|13 years ago|reply
[+] [-] sethbannon|13 years ago|reply
[+] [-] anthemcg|13 years ago|reply
Also, to add to the conversation.It all about timing, right? Now with Amazon being as big as it is and we see companies like Rewinery, Exec, Postmates smashing into this on-demand local delivery space. The time seems ideal for a company like Instacart. I do miss WebVan though.
[+] [-] SoftwareMaven|13 years ago|reply
Awesome to see a startup rising to the challenge.
[+] [-] imjk|13 years ago|reply
[+] [-] apoorvamehta|13 years ago|reply
[+] [-] jolan|13 years ago|reply
http://www.youtube.com/watch?v=4oClrbijIxA&feature=resul...
[+] [-] makeee|13 years ago|reply
[+] [-] reddickulous|13 years ago|reply
[+] [-] DanielRibeiro|13 years ago|reply
[+] [-] nukethefridge|13 years ago|reply
[+] [-] justin|13 years ago|reply
[+] [-] danielweber|13 years ago|reply
[+] [-] kfk|13 years ago|reply
[+] [-] Philadelphia|13 years ago|reply
[+] [-] apoorvamehta|13 years ago|reply
[+] [-] unknown|13 years ago|reply
[deleted]
[+] [-] RobAtticus|13 years ago|reply
http://postmates.com/getitnow/