Corona is the first virus in the world that has hit every nook and corner of the universe. For the first time, people have experienced maximum sanitization, social distancing, and other hygiene conditions. The pandemic has brought gala differences in the lives of people and the way they were living before.
It has impacted different industries differently like- transportation industry’s ROI goes southwards due to lockdown, quarantine, and social distancing practices, and, on the flip side, the pandemic has popularized the online grocery delivery industry that results in a record-breaking growth.
Let’s understand it with some figures and facts:
- The revenue from online food delivery uplifted by 17% from 2017 to 2018.
- The U.S. online grocery market generated sales worth about $28.68 billion in 2019.
- After the pandemic severely hit the USA regions, the grocery delivery app downloads increased in the range of 150%-200% from February month in 2020 onwards.
It was jaw-dropping growth that’s unimaginable.
Instacart app scored maximum popularity with 218% increase in downloads, followed by Walmart grocery with 160% increase, Shipt app with 124%, and Peapod, Inabuggy, and whole foods apps emerged at the top with a measurable increase in download rates.
In this blog, we will dig deeper into the Instacart success story that’s inspiring new entrepreneurs to build the Groceries Delivery App solution.
Let’s dive in!
The strategy that gives Instacart a boost where its competitors failed
- Three-tier strategy based on the no-inventory model
Initially, the platform has started with delivering groceries, household essentials, and premade meals from the stores to the customers. After experiencing radical growth in 2017, the platform has extended the reach to 150 new markets and began operations in Canada with dozens of retail chains and great deals.
The best part of the strategy that has helped in garnering early success is that the company act as a host and don’t need to maintain an inventory. It takes care of goods delivery because sellers own and maintain the inventory. It bridges the gap between customers and grocery sellers through the platform and ensures timely delivery.
- Addition of unique features
The basic features that an on-demand grocery app solution includes are- list of local grocery stores, a search option along with filters, a shopping cart, delivery scheduling, and seamless checkout. Every other grocery app offering the same features so you need to make the app stand out with the addition of unique features.
Instacart has created a save shopping list feature for later purchase, items reordering from past orders, view the nutritional information of every product, in-app chat with shoppers, and apply filters like- gluten-free, organic, or vegan diets items, and new diet recipes to stay healthy. The same-day delivery is an eye-candy feature that delights the next-gen customers of a fast-paced world.
- A successful partnership resulted in high profits
Understanding the importance of partnership in the online grocery business, Instacart has partnered with multiple stores and get them registered to operate independently under their enterprise name on the website or app.
In addition to the partnership with independent sellers, Instacart has also partnered with Sam’s club to deliver alcohol the same day to turn it into Uber for alcohol. In San Francisco, the Postmates app partnered with Instacart to timely deliver goods during peak hours. Partnership with ALDI is also a great instance that allowed customers to get ALDI groceries at the doorstep.
- Revenue model to monetize on what’s invested
Different grocery apps employ distinct pricing schemes to generate revenue and keep the business in a profitable state. At first, the delivery apps don’t charge even a single penny from the customers for app downloads, followed by tips, upcharges, and delivery fees. However, once the fee structure is created, the app gets enough traction.
Instacart uses five monetization strategies to earn revenue that are:
- Delivery fee: Other than the first order, the customers are charged delivery fees depending upon the minimum purchase requirements met. For delivery within 2 hours, $5.99 is charged as the delivery amount and for the delivery within 1 hour, $7.99 is charged as delivery fees.
- Markup fee: Some stores sell the products online at the same in-store price, but some store sells the products at high prices that create a room for profits. For the stores that are making profits with higher item price listing, Instacart gets 20% of the revenue from the stores.
- Service fee: The app cuts 5% from every order in the name of service charges, which’s mandatory paid by the customers on every order.
- Membership fee: There is a membership plan for privileged customers who want to enjoy express delivery and free delivery benefits. At the price of $149, the annual membership plan is availed where the customers with the order of $35 get the benefit of free delivery all year round.
- Partner payments: Instacart has partnered with SMEs and leading brands to get their services integrated with the platform to increase customer outreach. Instacart makes money from partnership fees and commission against every order.
- Price surge: Instacart increases the delivery charges during peak hours or popular delivery days like- weekends or holidays that helps in earning more profits.
How to build an Instacart like-on demand Grocery Delivery app solution for Canada?
Grocery app development and designing like- Instacart is an expensive affair in terms of time, effort, and dollars investment. In Canada, there are many underserved markets where start-ups get a chance to scale the business at speed and enjoy amazing results. However, considering the fluctuation in demand and supply, we recommend the companies to go MVP to test the market and target audience and if everything goes as expected, the MVP is scaled to a full-fledged app.
Another way to get to the market in the minimum time and dollars investment is a white-label solution, that’s rebranded under your company’s brand. Also, with a breadth of customization options, you can get build and launch an Instacart-like app in a week.
Nectarbits- the delivery app development company excels at building both- a custom app from scratch and providing a readymade solution to meet the business-specific needs. Identify your grocery delivery needs and then get connected with us to take things further.