Instacart is going public today at a projected valuation of $9.8 Billion. For Grocery delivery. 10 thoughts!
This news prompted me to start watching SIlicon Valley for the fourth time. That show is hilarious and dead accurate.
1. Even though they were not profitable for the first 8 years they were valued (at one time) at nearly $40 billion!
This valuation for companies that don't make money is brilliantly explained by the obnoxious character Russ Hanneman in Silicon Valley
2. This is an exploitative business model competing on price
A death spiral to the bottom
3. The “pay” is remarkably low
Because most people that work for Instacart are classified as contractors minimum wage laws do not apply. If you drive a car for Instacart full time you would probably be financially better off selling your car, quitting and sitting at home.
4. Piece work is borderline illegal
Getting paid for each unit of work is legal as long as it covers minimum wage and respects overtime. By having people work as contractors Instacart avoids minimum wage laws.
5. Delivery is a commodity service
It is difficult to stand out in delivery. I don't use any of these services but if I did I would probably just choose the cheapest: it is hard to differentiate delivery.
6. Business to start: regional franchise
Using the Instacart platform you could coordinate shoppers, drivers, and managers to fulfil Instacart orders as a group. The margins would be tiny but you might be able to make it work because of the piecework model. You would be competing against the individual shoppers. By creating a service team approach you can swarm a store and have a few drivers dropping off and picking up groups and groceries.
This would probably be against terms of service.
7. Business to start: personal assistant (virtual assistant) to manage all purchases for a business or family
This business would take a list of any item: paint, rice, produce, oil change and be a one stop shop for managing it all.
8. Business to start: leasing refrigerators for front door deliveries
To receive deliveries when you are not there or if someone is elderly and may not be able to get to the door. this company would lease and maintain refrigerators that you could put in you front stoop.
9. Instacart co-founder Apoorva Mehta is checking out with a $1.3 billion fortune
Nice! He now leads Cloud Health Systems.
10. DoorDash, which went public in 2020, has a market value of about $31 billion.
Throw in Whole Foods, Uber Eats and Wal Mart. Is delivery REALLY a $50 billion space?