Tuesday, January 20, 2015

Online Grocery Orders

Ordering groceries online for delivery has been a service that has been around for several years, mostly in the big cities, but has never taken off big time. Start-up cost has been a major issue, and has slowed the growth of such big services as Googles. The real issue is the business model, which for many has involved the building of warehouses and related infrastructure.

Instacart has a different model, which involves using established retail stores, like Costco, as their warehouse and hiring shoppers to do the shopping and deliveries, So there is little startup cost and almost no infrastructure to develop. The service seems to be taking off. The issue for them is whether they can compete in the long term on price, since they are buying from retailers. That will depend on how successful they are, and how much they are able to develop clout in determining prices they pay to their suppliers. Here's a writeup on Instacart.

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