Has the pandemic proven Instacart’s business model?
Instacart, which has seen orders catapult as much as 500 percent during the pandemic, has secured a $13.7 billion valuation in a new funding round, up from $8 billion after the last round in 2018.
The COVID-19 rush helped drive Instacart’s share of online grocery as high as 55 percent in the third week of May, up from about 30 percent in February, according to data from Second Measure.
The grocery delivery app moved well ahead of Walmart, which saw its share shrink from an average of 40-to-50 percent last year to about 25 percent in March, according to Second Measure.
Comparatively, Instacart is believed to be benefiting from its many partnerships.
The company in a statement said it accelerated its launch cadence with retailers since the start of the year and now partners with more than 400 national, regional and local retailers across more than 30,000 stores in North America. The service reaches more than 85 percent of households in the U.S. and more than 70 percent in Canada.
The firm was also able to hire 300,000 independent delivery contractors, known as “shoppers,” since March and announced plans in April to hire 250,000 more to get back to offering one-hour and same-day deliveries.
“COVID-19 created a massive shift for the grocery industry and forever changed how people view the necessity of on-demand services,” said Apoorva Mehta, CEO of Instacart.
The company has also continually upgraded its offering, adding alcohol and prescription delivery over the last year as well as “fast and flexible” and “order ahead” options in April.
Instacart plans to invest the $225 million in funding in shoppers and partners, its new advertising platform and elevating the customer experience.
Investors appear to have few concerns over Instacart’s independent contractors’ long fight for guaranteed pay and benefits or disputes over how tips are handled. In March, shoppers won 14 days of paid sick leave for those diagnosed with the coronavirus and extra safety measures after a threatened nationwide boycott, but their demands for hazard pay of $5 per order and other protections went unanswered.
- Instacart Announces $225 Million In New Funding Led By DST Global, General Catalyst And D1 Capital Partners – Instacart/PRNewswire
- Instacart nabs nearly $14 billion valuation in new funding round – CNBC
- Instacart raises $225 million at $13.7 billion valuation – TechCrunch
- Instacart Valued at Nearly $14 Billion in Latest Funding Amid Online Sales Boom – Reuters/The New York Times
- Instacart Blows Past Walmart in Online Grocery Business – The Information
- Speeding past Instacart, Walmart Grocery is top U.S. online grocery service – Second Measure
DISCUSSION QUESTIONS: Has Instacart proven itself as the delivery partner for grocery with its response to the pandemic? What questions or concerns do you still have about Instacart and its on-demand delivery model?