Instacart building out Canadian roster as food delivery wars heat up
Service has earned ‘tens of millions of dollars’ online across 50 markets
Instacart, the grocery delivery service born in Silicon Valley, is continuing its expansion into Canada by adding Toronto-area luxury grocer Pusateri’s to its roster of partner stores.
In just over a year since Instacart launched in Canada, it has sold “tens of millions of dollars” of groceries online, through a contingent of 2,000 personal shoppers across 50 markets, the company said Tuesday. “We are well ahead of anything we would have dreamt from a penetration perspective in Canada,” said Nilam Ganenthiran, Instacart’s chief business officer.
The Instacart app uses independent contractors who pick groceries in-store, check out, then deliver the same day or within the hour. The company started its Canadian expansion with Loblaw’s stores in Toronto in late 2017 and has since added select Walmart locations and additional Loblaw properties such as Fortinos and Zehrs. Instacart says it is now available to 60 per cent of Canadian households.
Pusateri’s is expected to be available in the spring, the firm said.
The gradual process of adding new stores to the app flows from Instacart’s model of sending shoppers to existing stores, rather than setting up separate warehouses with robots doing the picking.
“It’s actually the reason why, up until Instacart, grocery had not taken off online — because everyone tried to build new stuff,” said Ganenthiran, who started his career as a teenage cashier at a Food Basics store in Toronto. “’I’ll build a giant warehouse!’ It’s crazy. You have these stores!”
“These grocery stores have developed around the communities that they serve,” Ganenthiran added. “Imagine having to not only reinvent proximity with the customer, but then carry the right stuff.”
But sending shoppers to real stores means Instacart has to map each new location as well as photograph the items on offer. For bigger chains, which already have planograms that mark where each item is, it’s easier. But often, it means sending people to pace the aisles. The result is a “Google Map for a grocery store,” which plans the most efficient route for a given grocery list.
“It’s almost as much effort to add a store than it is to add a giant chain,” Ganenthiran said. “We now have built a set of tools and processes where it’s extraordinarily easy for us to turn on a grocery store. But it’s the same amount of work for one as it is for 100 stores.”
The biggest barrier, as Instacart continues to push into the Canadian market, is that people want to pick their own produce.
“It’s the reason online grocery penetration is 1.5 per cent,” Ganenthiran said. Still, he said, Instacart is built on “picking the right avocado and making sure the bread isn’t packed at the bottom of the bag.”
To make it work, shoppers go through “grocery fundamentals” training and get pop-up training videos if repeat complaints arise about an issue, such as a shopper forgetting to check the milk’s expiry date. Those with ratings in the top 20 per cent get bonuses.
Early in the expansion, Ganenthiran said, a difference in tipping culture between the U.S. and Canada forced Instacart to tweak how it compensates its Canadian contractors.
“In the U.S., everyone tips for service,” he said. “At the point of delivery, it’s very seldom that a customer doesn’t leave a tip. It’s completely different in Canada. We need to make sure we account for that.”