Instacart, a hot grocery-delivery service company from the Bay Area, is launching in Seattle on Wednesday.
Unlike Amazon Fresh, online-retail giant Amazon.com’s grocery-delivery service, Instacart has no inventory or trucks. Rather than hiring a huge staff and paying them benefits, Instacart contracts with “personal shoppers.” The contracted workers shop for cereal, diapers, produce and more from local grocery stores and deliver them to customers. They work for commissions and pay for their own gas. Instacart plans to employ just two people in Seattle to manage its operations.
“We don’t need to have a large scale for it to be profitable,” said Apoorva Mehta, Instacart founder and chief executive, and a former Amazon supply-chain engineer. “We don’t have any infrastructure.”
In Seattle, Instacart will start with 20 or so shoppers who will select items from QFC and Costco stores. Instacart has no formal relationship with either store. And because Instacart has purchased Costco memberships its shoppers can use, its customers can select grocery items from the warehouse club even if they aren’t Costco members. (Instacart doesn’t plan to make Costco’s nongrocery items, such as flat-panel TVs or patio furniture, available to customers.)
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Instacart will initially deliver in Seattle from the Greenwood and Maple Leaf neighborhoods south to White Center and Boeing Field, and from Puget Sound to Lake Washington.
The company, which debuted in San Francisco two years ago and is now operating in nine cities including Seattle, makes money by charging for delivery. One-hour delivery costs $14.99; two-hour delivery is $3.99. And the minimum order size is $10. Customers can also buy a $99 annual membership to Instacart Express that eliminates delivery fees for orders over $35. Instacart also marks up prices on some items in order to make money.
Instacart will also deliver alcohol, provided the customer is over the age of 21. The company’s shoppers have been trained to enter the expiration date of customers’ identification when they deliver liquor as proof they’ve checked the buyer’s age. The company, which delivers liquor in other markets, said it believes its current training and processes comply with state liquor laws.
Mehta said the company runs criminal and driver’s-license checks on shoppers, and then conducts interviews before contracting with them. It then asks customers to rank their shoppers and stops sending orders to ones that rack up poor records.
Instacart’s cadre of shoppers gives customers options that Amazon Fresh can’t offer. Customers can get items from stores with which they are familiar. They can buy liquor. And they can receive items within one hour.
“Customers want larger selection,” Mehta said. “Customers want instant delivery.”
Instacart, which received funding from some high-profile venture-capital firms including Sequoia Capital and Khosla Ventures, is part of a relatively new breed of tech startups focused on the so-called distributed workforce.
Those are idle workers willing to take on odd jobs such as driving people around town for companies including Lyft or Uber or running errands for customers who use Task Rabbit and other services.
A decade ago, during the dot-com boom and bust, courier companies such as Kozmo.com and MyLackey.com flamed out spectacularly after receiving millions in venture capital, when their costly business models, with full-time employees, failed.
Jay Greene: 206-464-2231 or email@example.com.