Today grocery delivery service Instacart announced a new service, Instacart Plus, a shopping option that has prices competitive with local stores. The company now claims to be “the least expensive option for grocery shopping, period.”
Previously, Instacart delivered groceries from stores such as Whole Foods and Trader Joes’s at a small premium. That price differential is a key element of Instacart’s business model, and is in my estimation how its unit economics function. Instacart Plus is cheaper than normal store prices, with delivery priced in keeping with other Instacart offerings; you won’t pay a higher fee to shop using Instacart Plus.
Instead, you’ll simply pay less for your groceries. How can Instacart offer lower prices on the 10,000 items that comprise Instacart Plus? The company keeps tabs on the price of goods across the community, including at discount stores and other outlets. When a user shops the Instacart Plus store, prices reflected are those that are the cheapest around; Instacart essentially takes all the effort out of comparison shopping, executing the task for you.
Now, some specialty items aren’t part of Instacart Plus. If Trader Joe’s has something unique that you need, you’ll have to snag it from that store specifically, and Instacart will happily bring it to you.
TNW spoke with Apoorva Mehta, founder and CEO of Instacart about Plus. He described it as a way to reach more price-conscious customers; Instacart as a company wants to become “the Amazon of groceries,” according to Mehta. To do so, it must reach more than the wealthy.
I gave Instacart Plus a spin – I use Instacart’s regular options frequently – and found it be as usable as the standard option of selecting a store, Safeway for example, and shopping from it directly. Plus, however, does have fewer images of items. If you don’t know precisely what you want, that could be an issue.
Instacart recently expanded to Oakland and Berkeley. The grocery delivery space is heating up, with Amazon expanding its Fresh service to Los Angeles and San Francisco in 2013, and as many as 20 markets in 2014.
Top Image Credit: Mo Riza