COVID and the Rise of Instacart
COVID-19 has led to the steady decline of many businesses such as restaurants, movie theaters, and other small businesses. However, some sectors such as grocery delivery services have seen an inevitable growth.
The coronavirus was able to transform online grocery shopping which was once more of a luxury rather than a real necessity, especially for older people who are more susceptible to COVID-19 or those with COVID-19 in quarantine. The pandemic proved the ease and necessity of online shopping this year, and the online grocery shopping industry was able to benefit from this.
On January 14, months before the COVID-19 shut down the U.S., the president of Instacart, Nilam Ganenthiran said in a press release that 2020 would be, “the year for online grocery pickup.” Little did he know that this would become the case when many shoppers in the U.S. became terrified of going to the grocery store during the beginning of the pandemic. The lines and newly implemented directions for foot traffic was overwhelming for Americans on top of the fear of somehow becoming infected at the store. The fear would prompt many Americans to look into online grocery shopping alternatives in order to avoid potentially being infected in a grocery store. For example, In one survey asking 1550 people, 55% of responders said they had been purchasing groceries online in 2020 as compared to just 36% in 2018.
“On any given day in March and April the equivalent of a U.S. city was coming online for the first time on Instacart,” said Ganenthiran during a CNBC interview.
Instacart, being the main third party online grocery shopping platform in the U.S., has partnerships with most major grocery chains in North America. The company has over 500,000 independent contractors they call “shoppers” going to stores and shopping for customers’ orders and delivering them to their customers’ doors. Customers pay a delivery fee on top of the bill that depends on the size of the order and how fast they want their order to be delivered, and give the shoppers a tip.
In the early days of COVID-19 many shoppers were protesting how Instacart was handling their safety in the wake of the pandemic. In response, Instacart announced they would be issuing safety kits including a mask, hand sanitizer and thermometer to their shoppers on April 2.
In May, Instacart reported that their customer order volume was up over 500% year over year.
The company's growth has not been easy, with so many Americans looking to order groceries through online sites like Instacart and Amazon Fresh there were limited spots for delivery available on these sites that had many people resorting to waking up at odd hours and pressing the refresh button. As a result, on April 8 Instacart announced the launch of new ordering options in order to unlock more delivery times amid their surge of popularity. In addition to this, Instacart is looking to hire more shoppers in order to help expand its capacity hinting at the fact the company was not ready for its rapid expansion during the COVID-19 outbreak. Instacart has implemented new features that allow its customers to find the first available delivery time as well as being able to order up to two weeks in advance.
“Today 90 percent of customers across North America are able to get Instacart same-day and that’s basically back to pre-COVID levels and we will continue to onboard new personal shoppers to serve even more of the growth that we’re seeing,” said Ganenthiran to CNBC.
It’s clear that COVID-19 was the major force to push the grocery delivering industry to become more normalized. However, the main question remains if grocery delivery services will remain mainstream in a post-COVID-19 world. I could see a future where Instacart opens their own brand of grocery stores and fulfillment centers for deliveries to make their business model more efficient.