3. Executive Summary
• To understand Instacart’s background & business model
• To analyze their core competencies
• To assess the model’s sustainability and make recommendation for future
Rationale
• Porter’s Five Forces Analysis
• SWOT Analysis
Methodology
• Instacart has a lean, low-cost model but is easy to replicate
• The model can be sustained through network externalities
Conclusion
• New and Private firm; less data available
Limitations
4. Industry Overview
Webvan
• Model: Warehouses, Employees, Fleet of
Trucks
Amazon Fresh
• Model: Warehouses, Employees, Amazon
Prime fulfillment
Google Shopping Express
• Model: Employees, Fleet of Trucks
Instacart
• Model: None of the Above
6. Porter’s Five Forces Analysis
Supplier Power (Moderate)
Suppliers can be categorized into large grocery retailers and personal
shoppers. The threat from suppliers is moderate
The bargaining power of the retailers is high but it is in their interest to
partner with Instacart
The personal shoppers command minimal bargaining power today due to lack
of competition to Instacart
Buyer Power (Moderate)
Buyers can always switch to other delivery services or choose to shop
themselves
Instacart has an advantage as they provide the convenience of shopping from
multiple retailers in a couple of hours
7. Porter’s Five Forces Analysis
Threat of New Entrants (High)
The model is easily replicable with very little capital expenditure
Threat of Substitutes (Moderate)
Although there are similar services present in the market, Instacart’s extremely
lean operations and differentiated service gives them an edge over competitors
Degree of Rivalry (Low)
Instacart has specialized in providing a very specific service to a very niche
customer segment
8. SWOT Analysis
•Replicable business model
•Well established grocery stores may
start similar programs
•Success dependent on shoppers
ability to deliver on time
•In store promotions by retailers
•Inexpensive and easy to expand to
other markets
•Fulfill growing market demands
through efficient transactions
•Potential contracts with retailers
•Wide open markets
•Upward reliance on technology
•Competitors are well established
•Delivery/Success is dependent on
external factors
•Difficult revenue model with high
delivery fees
•Resistant consumers might prefer in-
store shopping experience
•Extremely fast Service & lean
operations with low overheads
•Turnkey solutions for retailers
without ecommerce option
•One-stop shopping from multiple
retailers
•Mobile app driven: Appealing to
Gen-Y
•Helping time starved consumers stay
organized
STRENGTHS WEAKNESSES
THREATSOPPORTUNITIES
9. Strategy and
Recommendations
Instacart’s target market is urban professionals and busy moms (higher-end
of market)
They should try to maintain the high markups on the their products
Since model is easily replicable, price war could ensue due to new players
Exploit first mover advantage by expanding in urban areas
Create large network of shoppers which will keep up quick delivery times
Hence times-sensitive are likely to use Instacart instead of new services
Forge partnerships with new grocery chains
Maintain strong two-sided network externality