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Instacart

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Instacart
Type of site
Private
Founded2012; 12 years ago (2012)
HeadquartersSan Francisco, California, U.S.
Area served5,500 cities in the U.S. and Canada
OwnerMaplebear Inc.[1]
Founder(s)Apoorva Mehta
Max Mullen
Brandon Leonardo
Key peopleApoorva Mehta (CEO)
IndustryRetail
ServicesGrocery Delivery
URLwww.instacart.com
www.instacart.ca
Native client(s) oniOS, Android

Instacart is an American company that operates a grocery delivery and pick-up service in the United States and Canada with headquarters in San Francisco.[2] The company offers service via a website and mobile app in 5,500 cities in all 50 U.S. states and Canadian provinces in partnership with over 350 retailers that have more than 25,000 grocery stores including Albertsons, Aldi, Big Lots, C&S Wholesale Grocers, Costco, CVS Health, Eataly, Price Chopper, H-E-B, Kroger, Loblaw Companies, Petco, Publix, Safeway Inc., Sam's Club, Sprouts Farmers Market, Staples U.S., Target Corporation, Total Wine & More, and Wegmans.[3][4][5][6][7][8][9][10][11]

Orders are fulfilled and delivered by an Instacart personal shopper, who picks, packs, and delivers the order within the customer's designated time frame—within one hour or up to five days in advance.[12][13] Customers pay with personal debit or credit cards, Google Pay, and Apple Pay. The delivery fee is $3.99 for orders of $35 or more and $7.99 under that amount. Regardless of the cost of the order, there is a 5% service fee with a minimum of $2 owed. With an Instacart Express membership for $9.99/month or an annual fee of $99, customers get waived delivery fees on orders over $35, but still must pay the service fee. Customers are also requested to leave a gratuity.[14] Retailers set the price of individual items on the Instacart marketplace, which are mostly the same prices as in-store.[15] Instead of delivery, using the Instacart Pickup option, customers can pickup their packaged orders from the store.[16]

A 2019 study done by NERA Economic Consulting determined that Instacart was responsible for more than 23,000 jobs across the 4 states of California, Illinois, Washington, and New York. This increase was named by Instacart as the "Instacart Effect".[17][18]

As of its most recent funding round, in June 2020, the company was valued at $13.7 billion.[19]

History

Instacart was founded in 2012 by serial entrepreneur Apoorva Mehta, a former Amazon.com employee.[20][21][22] Apoorva was born in India and moved with his family to Canada in 2000.[23][24] He studied engineering at the University of Waterloo and graduated in 2008.[25] He was a participant in Y Combinator's Summer 2012 batch, which eventually led to the creation of Instacart.[26][27] In 2013, Mehta was included on the Forbes 30 Under 30 list.[28] Apoorva previously worked at BlackBerry, Qualcomm, and then Amazon as a supply chain engineer, where he developed fulfillment systems to move packages from Amazon's warehouses to customers’ homes.[29] Before founding Instacart, Apoorva started more than 20 companies.[28] He tried building an ad network for social gaming companies, and developing a social network specifically for lawyers, among other start-ups.[30]

Instacart originally launched in San Francisco.[31][32][33][34]

In September 2016, the company announced an expansion to its zone in North Chicago, Illinois.[35]

In October 2016, it announced the expansion of coverage areas in Orange County, California[36] and Minneapolis.[37]

In November 2017, the company expanded to Canada by announcing a partnership with Loblaw Companies to begin delivery from select Loblaw Companies, Real Canadian Superstore, and T&T Supermarket locations in Toronto and Vancouver.[38][39] By the end of 2018, Instacart delivered from these stores in 16 Canadian markets.[40] In September 2018, Instacart added service from Walmart Canada stores, Staples Canada and M&M Food Market.[41]

In January 2018, the company acquired Toronto-based Unata, a white-label platform for grocers, for $65 million.[42][43][44]

In April 2018, Instacart instituted a 5% service fee on all orders.[45]

In 2018, Instacart announced national expansions with Kroger, Aldi, Sam's Club, Publix, Costco, Sprouts Farmers Market, Stater Bros., BJ's Wholesale Club, HyVee, The Fresh Market, Harps Food Stores, and Lunds & Byerlys.[46][47]

In November 2018, Instacart announced the national expansion of Instacart Pickup, a grocery click-and-collect service, whereby users pick up their pre-packaged orders at the grocery store.[48]

In March 2019, Instacart expanded its same-day alcohol delivery service in the U.S., making Instacart one of the largest online delivery and pickup marketplaces for alcohol in the U.S.[49]

On April 11, 2019, the company expanded its services to offering an on-demand option for its workers, in order to allow workers to work more flexible schedules.[50]

Effective May 2019, Whole Foods Market ended its partnership with Instacart.[51][52]

As of December 2019, Instacart's alcohol delivery service included over 30 new partners in more than 20 states and Washington, D.C. such as Aldi, Sam's Club, BJ's Wholesale Club, Sprouts Farmers Market, and The Fresh Market.[53]

From mid-March to mid-April 2020, Instacart hired an additional 300,000 workers to meet the surge in demand for grocery deliveries during the COVID-19 pandemic.[54][55] Data from Apptopia demonstrated a 218% increase in daily downloads as distancing measures increased.[56]. Instacart also introduced new services in response to the pandemic, including a contactless delivery option, safety kits and guidelines for shoppers, and new sick leave policies and pay for those affected by COVID-19.[57][58] As of April 18, 2020, Instacart reportedly had not provided the safety kits to a majority of its workers, who describe a complicated process to order them.[59]

In May 2020, Instacart began a partnership with Rite Aid, offering its service across 2,400 locations in 18 states.[60]

In August 2020, Instacart entered its first partnership with Walmart in the U.S. to offer same-day delivery services. The partnership is a pilot program beginning in Los Angeles, San Francisco, San Diego, and Tulsa.[61][62]

Controversies

In March 2017, Instacart agreed to pay $4.6 million to settle a class action settlement stemming from the alleged misclassification of its personal shoppers as independent contractors. The suit alleged 18 violations, including improper tip pooling and failure to reimburse workers for business expenses.[63]

In November 2016, the company changed its policy and removed the option to leave a gratuity in exchange for a service fee that would be used to pay workers instead. Backlash against the policy due to lower profits for at least some shoppers and with customers forced the company to reinstate the option only weeks later with modifications that placed the tip under the service fee section on a separate page.[64][65]

In November 2017, some Instacart workers participated in a strike action, alleging wages as low as $1 an hour. Instacart claimed that the strike had no impact on its operations.[66]

In February 2018, Instacart withheld tips given by customers to shoppers, blaming a software bug. In addition, customers were often charged for service fees that were supposed to be waived.[67]

In November and December 2018, Instacart changed its pay system for its shoppers; shoppers claimed this pay system resulted in substantially lower pay and boycotted. Instacart customers complained on social media that their orders were being delayed.[68][69][70]

In February 2019, after an online organizing campaign in which shoppers posted examples of payments as low as $0.80 per delivery attracted media and customer attention, the company announced that it would revise its pay system and give back pay to some workers.[71][72] Under the revised pay system, tips were no longer factored into the minimum base wages, which were newly set at $7–10 for a full-service shopping order (based on delivery market) and $5 for delivery only.[73][74]

In February 2020, Instacart employees in Skokie, Illinois voted to unionize. Instacart said it "will honor" the vote, pending certification of the results. In the lead-up to the election, high-level Instacart managers distributed anti-union literature at a Skokie grocery store where some of the unionizing workers pick up groceries for delivery.[75] About 12,000 of Instacart's 142,000 workers are employees with the option of unionizing.[76]

In March 2020, Instacart workers threatened to strike on March 27, 2020 related to lack of COVID-19 safety measures. A group called the Gig Workers Collective called for a nationwide walk-out to be held on Monday, March 30. They've been asking Instacart to provide workers with hazard pay and protective gear, among other demands.[77]

Funding

Instacart has raised six rounds of funding from notable investors including Andreessen Horowitz, Sequoia Capital, Kleiner Perkins, Comcast Ventures, Thrive Capital, Coatue Management, D1 Capital Partners, Tiger Global and Valiant Capital.[78]

The company had a $2-billion valuation by investors as of May 2015.[5]

In March 2017, Instacart raised $400 million in funding at a valuation of $3.4 billion.[79][80]

In February 2018, the company raised $200 million in a funding round led by Coatue Management, as well as Glade Brook Capital Partners and existing investors.[81] In October 2018, Instacart raised $600 million in a funding round led by hedge fund D1 Capital Partners; the round valued the company at $7.6 billion.[82]

In November 2018, Instacart raised an additional $271 million from investors including Tiger Global Management, bringing its latest round of fund raising to $871 million and valuation to $7.87 billion.[78]

In June 2020, Instacart raised $225 million in a financing round led by DST Global and General Catalyst.[83]

References

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  3. ^ Haddon, Heather; Jargon, Julie (March 12, 2019). "As Food-Delivery Firms Court Smaller Markets, New Hurdles Emerge". The Wall Street Journal. ISSN 0099-9660.
  4. ^ Clark, Kate (October 16, 2018). "Instacart raises another $600M at a $7.6B valuation". TechCrunch.
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  69. ^ Hanbury, Mary (December 4, 2018). "Instacart workers are threatening to boycott the company over a payment policy change that they say has cut their wages". Business Insider.
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  71. ^ Hawkins, Andrew J. (February 6, 2019). "Instacart revises controversial pay policy after accusations of tip stealing". The Verge .
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  73. ^ Captain, Sean (February 22, 2019). "Drive for Instacart and you could make $29.05 for an hour's work—or $2.74". Fast Company.
  74. ^ DiNatale, Sara (February 28, 2019). "Working for apps like Instacart is 'world of uncertainity [sic]' for its delivery drivers". Tampa Bay Times.
  75. ^ Gurley, Lauren Kaori (January 27, 2020). "Leaked Memos Show Instacart is Running a Union-Busting Campaign". Vice.
  76. ^ Gurley, Lauren Kaori (February 3, 2020). "Instacart Workers Win Historic Union Election". Vice.
  77. ^ OLSON, ALEXANDRA; ANDERSON, MAE (March 30, 2020). "Some Instacart, Amazon workers strike as jobs get riskier". ABC News. Associated Press.
  78. ^ a b Kumar, Uday Sampath (November 14, 2018). "Instacart wins $271 million in new funding in November: source". Reuters.
  79. ^ Primack, Dan (March 1, 2017). "Instacart is raising a new funding round". Axios.
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  81. ^ Lynley, Matthew (February 12, 2018). "Instacart has raised another $200M at a $4.2B valuation". TechCrunch.
  82. ^ "Instacart Announces $600 Million in New Funding Led by D1 Capital Partners" (Press release). PR Newswire. October 16, 2018.
  83. ^ Hall, Christine (2020-06-11). "Instacart Pushes Its Way To A $13.7B Valuation With New $225M Funding Round". Crunchbase News. Retrieved 2020-06-17.
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