During the pandemic, Instacart was counted as essential service for millions of Americans locked at home. At the beginning of COVID, Instacart noticed high and very unusual demand for items such as toilet paper, canned vegetables and long-life milk.
Following the next few months the growth zoomed. Earlier in 2019 when it was losing $25 million every month, it started generating its first monthly profit in April 2020, netting $10 million
Today, Instacart is creating waves with its strong business model, timely deliveries and a happy consumer base. Lets talk about its strengths, weaknesses, threats and opportunities that Instacart can use to furthering its business and improvign overall quality of its service.
Instacart Overview
Founded in 2012 and headquartered in San Francisco, Instacart has grown to be North America’s leader in grocery deliveries. It has raised over $2.7 billion in funding while being valued at $39 billion.
How Instacart Works – Uber of grocery delivery!
Instacart lets you shop from local grocery stores online, then sends their delivery person – akin to your very own personal shopper to fulfil and deliver your order to you the same day. The company doesn’t stockpile the fresh produce in any warehouse unlike other grocery delivery companies. Instead their shoppers shop at major grocery stores in that particular area. It has a partnership with local grocery store chains for this purpose.
It then sends the order to one of its employees who then acts like a personal shopper and goes to the store, picks up everything on your list, and then drives it to you in their own car.
Instacart SWOT Analysis
SWOT ANALYSIS of Instacart is a framework used to evaluate the standing of a company in order to develop strategies to expand the business further. it is also use to save n ailing business from the analysis.
STRENGTHS
1. Communication: Consumers can schedule their online grocery shopping and delivery via the app or the website. The control is in the hands of the consumers to manage time. This is unlike other deliveries where consumers are just given the date and not the time of delivery. This acts as a strong point in the operations of Instacart.
Customers can communicate directly with the shopper as they are shopping. This is a convinient way as if the consumer is shopping himself without leaving his/her home. Replacements can be suggested, items added or deleted – all so very easy and flexible.
2. Partnerships and Expansion: Partnership with local grocery shops is a very important thing when it comes Instacart as it helps in easy and fast deliveries.
3. Reliable Suppliers
Having credible and trustworthy suppliers ensure the smooth operations of Instacart as they provide the raw material and ingredients to them in a timely fashion in accordance with the supply chain management procedure.
4. Marketing & Promotions
The use of psychological ads with strong messages draw the attention of the consumers.
5. Efficient, Quick & Fast Delivery System
Consumers are msot happy when they get their delivery in 30 minutes. In case they dotn deliver it under schedule they offer complimentary items so as to keep the customer base loyal and wanting more.
6. Pricing Range
Most consumers look at the pricing and they also check out if their competitors are offering less. Instacart products are affordable and are at budget-friendly rates. The consumers can get various sizes and deals of the venture of various flavours.
7. Customer Services
No organisation will thrive if they dont offer a friendly customer service. Ensuring a 24/7 help on their websites and social networks platforms is how it engages with its customers. This goes a long way in harbouring good relationship building amongst the clients and the franchisees.
8. Range Of Products
Customers like variety and everythign to be available under one platform. Instacart offers a wide range of products from household items to fresh food, and from baked food items to office supplies.
9. Highly Skilled Employees
The strenght of any company is based on its people. Instacart continuosly keeps the employees updated on the latest trends and technology. It also offer both non-monetary (employee of the months) and monetary benefits (bonus offers and increments). This keeps the employees inspired towards their work. Learning programs help the company to enhance their performances and boost their skills.
10. Strong & Effective Business Model
The business model of Instacart is inspired by the “Expense-effective shop model”. It includes all the operations which are kept in the past years: Earnings, fees, supply chain and operations, profits, methods and functions.
Also, Read – Instacart Delves Into Digital Advertising To Enhance Revenue
Weaknesses
1. Huge Dependency on Retailers And Shoppers
Instacart’s business model relies depends on other retailers and whther they have stock availability. When it is unavailable, consumers will have to seek a substitute which may be priced higher. or choose not to buy that item at all. When they shop in-person they have the choice to find the item at another store but with Instacart shoppers can either replace the item with the best match or not shop for the item at all.
The retailers can themselves become competitors if they start up their own delivery service or acquire a delivery service. This would mean the eventual loss of customers who are loyal to the brand.
·2. Sustainability: Covid has helped Instacart grow because the need arose for online delivery. They will have to be fiscally sustainable if they are to continue to meet the needs of all of their consumers. The number of shoppers has increased from 180,000 to 500,000 which can be termed as “Lucky Business” because of the pandemic. Instacart will have to modify or better its business model in certain ways to remain sustainable after the pandemic is over.
3. Wrong Item Delivery : As more and more delivery boyes and shoppers increase the quality of grocery and preference of customer goods has declined. Instacart has received poor ratings on its app because of discontent of its delivery personnel..
4. Franchise Related Issue
Instacart is facing concerns because of the disloyalty of its franchise employees. As the business expands and the franchises increase, it becomes challenging to control each worker who may resort to cheating.
5. Operational Difficulties
As the franchisees are located in every corner of the city, it becomes really challenging for Instacart to handle its operations.
4. Need Of High Technology
The business has to keep upgrading the technology so that innovation of their product is maintained. There is a constant need to invest more in their technologies to stand out in the competitive market.
5. Coupons/Rewards: Majority of the It is observed – 40% prefer to use coupons. Instacart currently doesn’t allow applying such coupons on their ordering app. Even though there has been a significant increase in the coupon’s usage from mobile devices, there is still a high and growing demand for physical coupons. Instacart will have to seriously look into this in order to retain loyal and satisfied customers.
OPPORTUNITIES
1.Recommend Better Products And Better Substitutes:
When customers get a “Not Available” when they are looking for a certain product Instacart suggests alternatives of the same. In some cases the customer may not want the replacements due to the following conditions:
o More cost
o The substitute doesn’t match the need
o The brand may not be liked by the customer
Instacart must work on their algorithm aided by artificial intelligence (AI) or Machine Learning to understand the needs of the customer. This can be done by analysing the past data which will give enough insight into customer behaviors so that better recommendations can be made and improved upon so that such opportunities aren’t lost.
2. Scout For Market Growth In International Markets:· Instacart currently has operations in multiple U.S. cities and Canada. It has a vastly successffull product and must think of foraying in ineternational markets like India especially. As the delivery market is heating uo and becoming very comoetitive, global companies are employing strategies to get some piece of the delivery pie.
3. Low-Calorie Menu
Instacart meals must include low-calorie meals on its menu as people are preferring healthy food options . They can use low-fat products and less starch to make their products low calories meals.
4. New Preferences In Instacart
Instacart can include more variety and tastes in its products/meals. E,g: LAVA cakes since their competitors have it.
5. New Trends In The Consumer Behaviours
Because of the new patterns in consumer habits, it has opened up various opportunities. They can utilize cognitive ads to alter the choice-making process of the customers.
THREATS
1. Competition Is At The Door: Each individual retail store is starting or thinking of starting their own delivery models,. Already established like Amazon, Shipt, Cornershop, Walmart groceries or Target. These companies not only have a strong customer base, but they are also backed by strong financials.
2.In-store Promotions and Improved Quality Of Service: Retailers can start their own in-store promotions once the pandemic is over and this is certain to attract their customers back into the store. This has the potential to impact Instacart revenue.
3.Service Quality Scores: Instacart does not rank the best when it comes to service quality either, it is extremely important to look at the above factors to do well with competitors. Improvement is required in the areas of ease of ordering, staff pleasantness/customer service, quality of produce/meat, handling substitutes, and delivering correct items.
4.Pricing: Instacart prices for the products are priced higher compared to that of the original retailer’s prices. This is okay as of now becuase consumers are still staying at home and not venturing out to the grocery stores. This markup averages about 29% and doesn’t consider service fees and delivery tips added per order. With such increased prices the shoppers may not want to pay and may walk to the local grocery store and buy things themselves.
6. Regulated Pressures
Each year the government formulates brand-new laws and policies. Instacart is facing increasing pressures in providing salaries to its staff members and employees. There are 13800 outlets, and their licenses is renewed on yearly basis according to the laws and policies of the government’s authorities. Problems of the license reneval may occur.
The above SWOT analysis of Instacart must serve as a guide for other delivery companies aspiring to be like Instacart to reflect on all the 4 aspects: Strength, Weakness, Threats and Opportunities and better their own businesses.
