Apoorva Mehta all geared up to take Instacart to new heights
TechCrunch Disrupt SF 2016 held on the 14th of September 2016, saw Apoorva Mehta’s vision and enthusiasm to take Instacart to another level. No doubt it is the pioneer in its league of groceries delivery websites but sure it has a long journey uphill on the way to sustainability and then profitability. He said that they are going to do that by having a positive in cash flow by next year by having more revenue stream than one. He said they are not just trying to cut down their transportation costs but also looking for more way to cut down overall costs and generate more revenue streams.
“We have partnerships with hundreds of retailers who also do a revenue share with us, but we also have CPG companies such as Pepsi, Proctor & Gamble, who promote their products on Instacart,” Mehta said. “As a result of that we have a third source of revenue most people forget about. The key point here is that all on-demand companies do not look the same.”
We can't help but agree with Mehta here. Currently, coupons or discount vouchers are they only way that works for CPG companies which limits their target audience and doesn't really acquire more new customers. With Instacart analytics these companies can identify their targets as well as current users and by focussing on them they can convert them into their loyal customers. This will be a win-win situation for both, the portal and the CPG companies.
The Media and the actual Valley watchers don't really agree on how the company is really performing right now.It is said that in 2014, the company raised additional financing at a valuation of $2 billion. Whereas the market doesn't believe in this. It is said that even a break even for the company is turning out to be difficult, let alone profitability. Low margins, harsh competitions, and aggressiveness for growth are the reasons for this.
Mehta clarifies companies three strategies for becoming a profitable venture:
1. partnerships with grocery stores to drive additional traffic. This means that the online and offline customer that visits a particular outlet will be redirected here.
2. advertising with consumer packaged goods companies. This means extra money from the advertisements over the profit sharing for that particular product.
3. Customer revenue: The profit that instacart earns when someone buys anything off it,
Over the next few years, the CPG advertising revenue might turn out to be the biggest revenue stream for the company, which might mean that the end user of the website gets the benefit.
When asked about the recent drop in the wages of its customers, Mehta said that more CPG investment means more efficient deliveries, which in turn means more orders in one hour and which in turn means more deliveries and hence more profit.
“Four years ago when I started this company none of these things existed,” Mehta said on stage. “You couldn’t get groceries delivered in one hour, you couldn’t get them delivered from all grocery stores in a market. Today Instacart does this, as a result of that we grew to get to this point very, very fast. We went from having three markets to 15 — when you grow so fast obviously you’re going to have adjustments you’re going to have to make. When we think about the wage changes, the reason we had to do so, the wages made sense in three markets didn't make sense for 15 markets.”
In an attempt to lower the time between orders, increasing the frequency of which it can sell products and take off a share of those purchases, Instacart secures Instacart-only express lanes for its couriers.
When asked about Whole foods taking over instacart , Mehta replied with a firm NO. He said, “The reality is that Instacart works with lots of different grocery stores, it just doesn’t make sense for us to even think about selling to a grocery store, not to mention as a company what we want to achieve, the best path for us it to continue being an independent company.”
All said and done , let's sit back and see what fate holds for instacart, while our groceries are being dropped at the door.
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