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Getting home after a long day, you put your keys and bag down, kick your feet up, get comfortable and ease into you couch. Welcome home. Turn on the TV and last night’s channel is still on, an amazing cooking show. “F**k, I forgot to pick up supper on the way home!”
Behold the hero of this story: Instacart. Simply go onto your smartphone, log onto the website, enter your area, do your online shopping — and within the hour, your supper will be waiting for you at your door.
How? Well it’s pretty ingenious to be honest: with a mix and matching of some of the current pioneering companies in consumer convenience, product offering, your smartphone, Instacart is now taking over USA’s grocery retailing and delivery market.
If we skip and jump over the Atlantic quickly to visit the emerging market that is South Africa, some of our own grocery retailers like Pick n Pay and Woolworths have caught on and started their own delivery systems. Have they lit the fuse on the next biggest marketing explosion since the likes of Facebook?
I think they just might.
The story of the two billion dollar Uber for groceries
Founded in June of 2012 in the USA by Apoorva Mehta, Instacart took Amazon’s logistical delivery problems and created an hourly delivery system. What Amazon did for books back in the 90s, Instacart have done for groceries over the past few years but on a scale that would frighten most business owners.
According to Forbes, the company raised US$44-million in June 2014 in a round led by Andreessen Horowitz and another US$210-million at the close of the year. Latest figures value the company at around US$2-billion.
Yes, this has been done before, Webvan clocked an eye brow raising US$453.3-million loss in 2 000 by trying to build themselves warehouses to maintain their goods and products.
Instcart, on the other hand, has no warehouses. No containment centers. No need to upkeep any of the products they sell, because they technically don’t have any products, except a website and an app. The ecommerce company is all about being the middleman; there is no need to actually own anything but a communication system, by the looks of it.
By having no trucks, vehicles and minimal physical infrastructure, Instacart takes a page from Uber’s super scalable business model, which only needs a handful of team members in each city it operates in.
Instacart simply tells the local food retailers where to go and what to take, remaining in the shadows as these retailers maintain their own products and stock. Upon purchasing your order, you’re connected with the nearest available shopper to do your shopping and deliver it to you.
The Wall Street Journal explains Instacart’s grocery minions: “The company generally pays the couriers a minimum US$10 per delivery as well as additional fees based on order size and speed. Couriers say they also accept tips, which can bring their earnings up.”
All I hear is jobs, jobs, jobs for an unemployed South Africa because signing up is easy, and simply requires that you can lift about 25 lbs (about 11 kgs). I am waiting for the love story about the guy who spent thousands on frivolous ordering because he has crush on the Instacart delivery girl; wouldn’t a lovely white wine and fish delivery make the most romantic surprise dinner date?
Check out the whole process behind Instcart’s shoppers here.
The zillion rand opportunity
Okay, so let’s bring this a little closer to home, use some maths and convert some numbers with the exchange rate. If you live in South Africa, you know what I mean when I say that the exchange rate is a love-hate relationship — which in my opinion makes our market a gold mine for venture capitalists and foreign investment.
My maths is a little rusty but if you combine that exchange rate with the rising middle class market in South Africa, you find yourself looking at the reason why musician Rodriguez was able to retire after his South African sales in the late seventies.
Thirty years down the line after Searching for Sugarman, throw in some loathing for grocery shopping, a few scandals on the sell by dates of products (*cough* Spar *cough*), a delivery system already set up by local retailers (*cough* Pick n Pay *cough*), shake it up and you’ve got yourself a gap-in-the-market-martini worth billi…zillions (thank you, exchange rate).
I believe there is one major factor that is holding our nation back from retailing revolutions and that is another gap in the market — between the rich and the poor. Ordering your groceries and getting them delivered makes a Pick n Pay or Checkers priced shopping experience, cost a Woolworths price. That could be the straw that broke South Africa’s back. It’s a cold fact; our population needs access before they can make usage.
The South African population is going through what America did during the 80s and 90s but with 21st century technology, surely we can speed this transition up with a helping hand from service delivery.
Is this the dusk of yesterday’s grocery shopping and a dawn of tomorrow’s retailing delivery systems? If you look at it, it’s just a giant switch between supplier and seller. Now the local food stores become the farms and the online runners become your grocery store.
If you really want to freak yourself out, ponder the thought that food stores marking up their prices according to their own delivery methods, turns prices into a flaccid stop sign on the road of consumer protection. Personally, I love to look at the different packages, search for the best avocado, smell the freshest mango and feel responsible for my decisions. I just like to be there when I buy my food. Then again, put me in Cape Town during the worst of winter and watch me stay home the entire day.
Are we on the brink of what seems to be all-out Grocery-Delivery Wacky Races? Let us know what you think.
Image by Nicolas Mirguet via Flickr