When Strangers Buy & Deliver Your Gro­ceries

In­stacart, a startup founded by Apoorva Me­hta, adds shop­ping to the shar­ing econ­omy

The Economic Times - - World View - Farhad Manjoo

“You are about to wit­ness a re­mark­able dis­play in in­ep­ti­tude,” tech­nol­ogy in­vestor Michael J Moritz said as he en­tered a Whole Foods store in San Fran­cisco. Moritz, chair­man of ven­ture cap­i­tal firm Se­quoia Cap­i­tal, was wear­ing a green T-shirt bear­ing a logo for In­stacart, a two-year-old gro­cery de­liv­ery startup that Se­quoia has in­vested in. He was here to show me what it’s like to work for the startup: how un­ex­pect­edly dif­fi­cult it is to quickly and ac­cu­rately buy and deliver gro­ceries for a stranger. In­stacart might not sound like a novel ser­vice. It is try­ing to re­vive a dream first floated, and then shelved, dur­ing the last dot-com boom — the dream of or­der­ing your sta­ples on­line and hav­ing them show up at your door a short while later. At least a half-dozen firms of­fer gro­cery de­liv­ery in the US, in­clud­ing Ama­zonFresh, FreshDirect and Pea­pod.

But In­stacart is un­usual. It op­er­ates ac­cord­ing to a de­cen­tralised busi­ness model that bor­rows from ser­vices like Uber, Airbnb and other firms in the so-called shar­ing econ­omy. And it is not only po­ten­tially lu­cra­tive, but also could re­de­fine how we think about the fu­ture of labour. When you buy gro­ceries from In­stacart, it sum­mons a green­shirted “per­sonal shop­per” through the firm’s smart­phone app. The shop­per re­ceives your list, scur­ries through a gro­cery store to pick up your items and then heads across town in his own car to deliver your stuff.

In­stacart’s shop­pers earn $15-30 an hour, depend­ing on how quickly they deliver. That’s quite a high wage con­sid­er­ing the job does not re­quire a de­gree, is part time and can be done dur­ing flex­i­ble hours. It’s sub­stan­tially more than the typ­i­cal su­per­mar­ket worker salary of $9-11 per hour — though with­out ben­e­fits like health in­sur­ance. The work­ers are in­de­pen­dent con­trac­tors.

Still, In­stacart’s suc­cess sug­gests that rather than sim­ply au­to­mate work­ers out of their jobs, tech­nol­ogy might cre­ate new labour op­por­tu­ni­ties for people who haven’t ac­quired for­mal cre­den­tials or skills in an econ­omy where low- and medium-skilled work­ers face a bleak out­look. In­stacart cre­ates work by con­nect­ing af­flu­ent cus­tomers who have more money than time with part-time work­ers who have lots of time, and not enough money.

Un­like ride-shar­ing ser­vices, In­stacart isn’t in­trud­ing upon a reg­u­lated in­dus­try, and poses lit­tle risk to its cus­tomers, so it faces few com­pli­ca­tions that dog other shar­ing com­pa­nies.

The Empty Fridge

In­stacart was founded in 2012 by Apoorva Me­hta, now 27, an en­gi­neer who spent two years at Ama­zon.com. “I had this prob­lem of never hav­ing gro­ceries in my fridge and never hav­ing the en­ergy to go to the store,” Me­hta said. But he found most gro­cery ser­vices too cum­ber­some. They re­quired him to sub­mit his or­der many hours in ad­vance of de­liv­ery, and they some­times didn’t of­fer the mer­chan­dise he was used to get­ting at his lo­cal store. In­stacart does not main­tain ware­houses or trucks. The ser­vice is as­sem­bled out of ex­ist­ing su­per­mar­kets, will­ing part-time work­ers and their cars. The model has many ad­van­tages. It cre­ates vast se­lec­tion for cus­tomers by al­low­ing them to shop at dif­fer­ent stores, from large chains to spe­cialty shops. It al­lows for ex­tremely quick de­liv­ery too. Though he de­clined to pro­vide specifics, Me­hta said the firm had turned a profit in cer­tain mar­kets. In­stacart now op­er­ates in 10 US cities, in­clud­ing New York and Los Angeles, and plans to be in 17 by the yearend. It has 50 full­time em­ploy­ees and over 1,000 in­de­pen­dent shop­pers.

De­spite its low-cost busi­ness model, In­stacart isn’t cheap. The ser­vice charges a de­liv­ery fee of $3.99 for most or­ders, and it also makes money by mark­ing up store prices. The markup ex­plains how it can af­ford to pay shop­pers high wages. But as I dis­cov­ered as I shopped with Moritz, shop­ping is a skill. Though he could talk at length about In­stacart’s busi­ness, he turned out to be a poor shop­per. Me­hta says: “The ad­van­tage to this model is that you choose your own hours. The in­de­pen­dent con­trac­tor model — I’m not sure that’s go­ing to change.”

Me­hta founded In­stacart in 2012

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