When Strangers Buy & Deliver Your Groceries
Instacart, a startup founded by Apoorva Mehta, adds shopping to the sharing economy
“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