Why and how did Instacart create an ultra-fast delivery craze in the market?

Instacart wants to help grocery stores get in on the ultra-fast delivery craze. The on-demand grocery delivery company announced several new services for retail partners, including one called Carrot Warehouses, which promises to help grocers build out the infrastructure to support 15-minute deliveries. That would cut Instacart’s quickest existing option — 30-minute deliveries — in half.


Instacart’s Ultra-fast Delivery Craze


Instacart CEO Fidji Simo said the details may differ depending on the retailer but “the standard model” for the new service will entail Instacart leasing small warehouse facilities and handling “a lot of the labor and technology.” The retailers will supply the goods and be in charge of inventory and supply chain management. “They would basically leverage all the things they’re extremely good at,” said Simo. “That being said, the thing that is interesting about our model … is we adapt to whatever they want based on their needs.”

Instacart said it has struck a partnership with supermarket chain Publix to offer 15-minute deliveries in Atlanta and Miami in the “coming months.” Simo declined to talk specifics on how the Publix partnership will be set up. The new service comes at a potential inflection point for both Instacart and the ultra-fast delivery craze in the market.


Great Beneficiaries during Crisis


Instacart, a decade-old privately-held company, was one of the great beneficiaries of the pandemic boon for online deliveries. Its valuation doubled twice during the pandemic to $39 billion and its shopper workforce, who are largely treated as independent contractors, also more than doubled to 600,000 people.

Unlike some newer services, which focus primarily on 15-minute deliveries, Instacart also serves a wider range of needs, from two-hour shipments to monthly deliveries, according to Simo. Instacart isn’t the only on-demand delivery company looking to attract customers by adding an ultra-fast delivery craze option. Grubhub announced a partnership last month with ultra-fast delivery startup Buyk, but Buyk shut down and filed for bankruptcy shortly after. In December, DoorDash announced a 10-to-15 minute delivery service in New York City. And Uber announced a partnership last May with GoPuff, the $15 billion startup that offers 30-minute deliveries of essential goods in more than 1,000 cities.


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