Retail Upheaval

Just as Uber owns no cars, Instacart owns no warehouses or trucks. Launched in 2012, the company employs independent contractors in 19 states as personal shoppers who purchase and deliver ordered items from local supermarkets. Instacart partners, like Whole Foods, Costco, and Target, pay the company to serve as an on-demand delivery service. Retailers set food prices; however, Instacart marks up items purchased from nonpartner stores. A Business Insider Intelligence report suggests Instacart accounts for up to 5 percent of weekly sales for some Whole Foods locations, and the two companies recently signed a new five-year deal. Delivery can be in as little as one hour for a fee, but two-hour and scheduled grocery deliveries over $35 are free with Instacart Express, an annual membership costing $99. Pick-up locations are available in select cities.

AmazonFresh home grocery delivery is available through Prime Fresh’s $299 annual membership. Members enjoy free same-day and early morning deliveries on orders over $50 that can include fresh produce from local farmers’ markets and name-brand staples.

AmazonFresh had an estimated $180 million in sales and 2.7 percent of the market in 2014, though it is currently available only in Seattle, select California cities, New York, Philadelphia, and areas of New Jersey.

Google Express started delivering groceries in 2015. With membership ($95 annually or $10 per month), delivery is free except for less-than-minimum orders and fresh/cold items currently o­nly available in Los Angeles and San Francisco. The latter is delivered within a two-hour window. All items come from local stores, such as Whole Foods, Costco, and Target. There are no markups on price, and customers get the benefit of in-store promotion prices—which the other online retailers don’t offer.

Walmart rolled out its curbside pickup and delivery service last year. Customers can get groceries, including fresh produce, the same day within a two- to four-hour window for both services. Pickup is free, but delivery fees vary depending on the time slot chosen. Walmart Grocery has no membership fee, and prices are not marked up. Rather than focusing on dense, urban populations like many e-tail competitors, Walmart is offering its service in mid-size cities like Charlotte and Tucson. Given its extensive network of brick-and-mortar locations (70 percent of the U.S. population lives within five miles of an existing store), Walmart Grocery is targeting local pickup over delivery—a strategy geared toward busy moms out running errands.

ONLINE RETAIL: THE BUSINESS MODEL
Retailers still remember Webvan, which filed for bankruptcy in 2001 after losing money every year. The company expanded too fast before ensuring it had ready customers. According to Grinstead, Webvan “went in with the ‘build it and they will come’ theory of growing a business,” which just didn’t pan out.