Grocery delivery companies are very common in big cities such as New York or Los Angeles. Although speed and price is are key factors when customers choose which company they want to use, different features such as a smartphone app are helping separate companies from each other. One company, Instacart, is looking to change its traditional business model and adopt one based on Amazon’s Prime membership according to Cnet.
Instacart, funded by Y Combinator, allows customers(currently in an invite-only beta) to buy groceries through their app and charges $4 for a three hour delivery or $10 for a hour delivery to San Francisco residents. Now, they have started to offer a subscription service known as Instacart express for $99/year. The subscription gets rid of the three hour fee of $4 and the company hopes that it will remove the psychological barrier to ordering, much like Amazon’s Prime service did for many.
If you’re unfamiliar with Amazon Prime, you pay $79/year and you get free two day shipping on anything you buy as well as free instant streaming to select media content. Instacart takes any order over $10 and sends a staff shopper to gain the items then delivers them three hours later, or one hour if you still want to pay the $10. Instacart CEO Apoorva Mehta mentioned that 100% of beta customers have already adopted the membership and are ordering smaller amounts of food, but are ordering more frequently. This is exactly what the company wanted.
The service is strictly focused on groceries in San Fransicso and Mountain View and Palo Alto, but Mehta said that over time the company would begin to offer other items and expand to new cities. We’ll have to see if Instacart’s new model continues to work as its customer base expands. We’ll keep you updated on Instacart as time goes on. Let us know what you think of the service in the comment section below.
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