Instacart and the Growth Challenge Post-COVID 19

1. Introduction

Instacart logo (Instacart, 2020)
Figure 2: Instacart Ecosystem Platform

2. Grocery Industry and COVID-19

E-commerce has changed our behaviour in the last two decades, moving us from brick and mortar to omnichannel. Until recently, the grocery sector has remained sheltered from the forces of e-commerce. Until the COVID-19 pandemic, 3% to 4% of US grocery sales was spent online and forecasted to reach 20% in 2025 (Repko, 2020). The pandemic has transformed the way we live and altered our shopping experience. In March 2020, 31% of American consumers used online grocery delivery services, doubling the amount from August 2019. 26% of consumers used the service for the first time (Brown, 2020). Even after the COVID-19, it is expected to stay high as per Statista (Figure 3) (Banker, 2019).

Figure 3: Online Grocery Sales (2015–2022) Source: Statista, IGD (Banker, 2019)
Figure 4: Most Used online grocery services (CNBC, 2020)

3. Instacart Business model

In this section, the light will be shed on how Instacart work, understand its core business model, customers and stakeholders; by going through the main categories of the business model canvas.

Table 1: Standard vs Instacart Express. Source: Instacart
Figure 5: Instacart Full Business model canvas

4. Instacart Competitive position

Porter five forces methodology was used to understand Instacart competitive position in the market, current and future challenges that face the company and the grocery delivery industry.

Figure 6:Porter five forces of Grocery delivery market

5. Recommendation

In the digital world, disruption happens instantaneously; companies can be easily replaced by new technology or model once it proves that it adds value to the consumer or reduce cost on the value chain. Below recommendation focuses on how Instacart can survive competition in the short run, sustain and increase growth in the long run. Ansoff Matrix was used as a strategy to explain each step of the journey as in figure 9.

Figure 7: Sustainable Product Sales in the US (Nielsen, 2018)
Figure 8: Drivers path to customers from Stores. Source: Instacart Tech Team (Xiao, 2018)
Figure 9: Ansoff Matrix, Instacart Growth Strategy

6. Summary

Instacart has successfully changed the way US citizens do grocery. With the rise ofe-commerce and COVID-19 pandemic, business growth will be accelerated. Keeping up with the rapid growth will be a challenge for Instacart. Instacart started as a platform ecosystem, but that doesn’t mean that it should continue growing in the same direction. Data is the new Oil, with massive access to customers, consumption data, orders spatial information, Instacart will have the opportunity to move vertically in the value chain and be a grocery store. Starting with an alliance will be a safe step into the business. Selling their private label products and expanding gradually until there could be a big acquisition at some point in the future.

7. APPENDIX

Many competitors are rapidly expanding their online presence along with their competitive offering; sparking rivalry in the grocery delivery market as in figure 10.

Figure 10: Large Grocery players Competitive offering. Source: (Steven Begley, 2020)

8. References

· Anon., 2020. CrunchBase. [Online]
Available at: https://www.crunchbase.com/organization/instacart#section-overview

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store