retail news in context, analysis with attitude

shopping service Instacart has of bering successful down the road.

Instacart's premise is that it shops at stores for consumers, but is not part of the stores' infrastructure … it makes its money on fees charged to the consumer.

The story notes that Instacart is "powered by a twenty-something who practices extreme ocean sports" and "hopes to dominate Amazon.com in the grocery aisle by using computer systems founder Apoorva Mehta built from his San Francisco apartment." It operates in several markets, plans to expand to 10 major US markets this year, and is funded in part by the same private equity group that funded Webvan, the high profile e-grocery failure that collapsed under the weight of its own unfulfilled ambitions in 2001.

The Mercury News writes that "Mehta, 27, left his job as a supply-chain engineer for Amazon and came to San Francisco, where he found people using Craigslist and TaskRabbit, a website to outsource errands, to get groceries delivered. He said he knew he could come closer to solving the delivery puzzle than his old boss Jeff Bezos did with AmazonFresh.

"Amazon uses a massive network of warehouses, distribution centers and trucks to store and move groceries, and requires that customers order several hours in advance of their delivery.

"Instacart doesn’t own warehouses, and instead contracts drivers — similar to a ride-sharing service — to shop at local chains for items customers have ordered and paid for online, and can deliver within an hour and late into the night."
KC's View:
Here's what I think. Instacart is going to get some traction in enough markets to be interesting, and then somebody like Google or eBay is going to buy it, because its business model is going to work a lot better as part of another company's offering. Guys like Mehta are more interested in building software than actually delivering groceries or anything else - and I say that as a compliment, because it is guys like him who push the industry forward, sometimes against great resistance.