Uber-like grocery delivery flourishing in Portland

Instacart working to corner grocery crowdsourcing market

Istacart, a San Francisco-based grocery delivery service that employs crowdsourcing strategies similar to Uber and Airbnb, is quickly building a customer base across the country. (Instacart)
Istacart, a San Francisco-based grocery delivery service that employs crowdsourcing strategies similar to Uber and Airbnb, is quickly building a customer base across the country. (Instacart)

PORTLAND, Ore. (The Tribune) — Green Zebra Grocery in Portland is charged up and growing with a new partner, the two-year-old San Francisco-based home grocery delivery service called Instacart.

The new national grocery delivery chain is allowing the little north Portland grocery to spread its healthy food service across Portland and into its environs, says Peter Kohler, Green Zebra’s business development director.

Using Instacart, Green Zebra added 100 new customers to its customer base in its first partnership month.

“We had known about Instacart, but they approached us,” said Kohler in his office at 3011 N. Lombard. “They are growing fast. We don’t give exact numbers, but we’ve added customers across the city, people who wouldn’t normally shop in North Portland.”

Just as Uber is revolutionizing transportation nationally and Airbnb is changing the hotel landscape, Instacart is looking to change the way many people buy groceries in Portland and across the nation.

“We use crowdsourcing to provide convenient home delivery,” said Sarah Mastrorocco, western region business development lead for Instacart, the “personal shopper” organization.

Instacart is rapidly expanding across the country, adding Portland to its customer base in August. Using a smart phone to order from an online catalogue, a customer pays from $3.99 to $9.99 to have groceries delivered from four Portland-area stores: Whole Foods, Costco, Uwajimaya Asian Market or Green Grocers. More stores will be added soon, Mastrorocco said.

Customers can order from more than one store, and Costco requires no membership, she said.

The delivery company is the brainchild of former Amazon software design engineer Apoorya Mehta. It’s now operating in San Francisco, Atlanta, Austin, Boston, Chicago, Denver, Los Angeles, New York City, Philadelphia, San Jose, Seattle and Washington, DC. The company expects to add more cities quickly.

The big, new, locally-grown kid on the block in Portland, New Seasons Market, tried out home delivery but it didn’t work for its organization, said Whitney Krebs, New Seasons marketing coordinator.

“It’s with great regret that we had to discontinue our online shopping and home delivery service three years ago,” said Krebs. “It simply didn’t attract enough customers to make financial sense. We had really hoped to fill an important need, only to discover that the vast majority of our shoppers preferred an in-store experience. At this time we have no plans to make another brave attempt in this direction.”

Krebs said Grocery Bag, another Portland organization, shops New Seasons stores. She also pointed out that Portland also has other delivery options: Store to Door, Portland Pedal Power, Organics to You, and The Grocery Bag.

Each has its own specifications for home delivery.

Generally, Instacart claims its very lack of distribution infrastructure is a competitive advantage allowing it to expand quickly into new markets — two to three weeks to enter a market, versus six to nine months for rivals that rely on traditional distribution facilities, according to the company.

It relies on personal shoppers, contract workers it hires wherever it goes.

The personal shoppers take orders submitted by computer or smart phone. They go to the Instacart store the customer selects and pick up and delivers the groceries. The personal shoppers make $15 to $20 an hour, plus tips, Mastrorocco said. In many cases, delivery can be done in one hour, she said.

“All the personal shoppers need is a smart phone and a car,” she said, adding Instacart has about 4,000 contractors on its payroll nationally. “We recruit and train independent contractors as personal shoppers. We advertise on Craigslist and also hire through our city managers. Contractors can work from zero to 40 hours. We teach them to pick produce, or to choose a ripe avocado,” Mastrorocco said.

Although Safeway does compete with Instacart in some markets, they cooperate in others. Safeway didn’t respond to requests for interviews.

To attract new shoppers, Instacart is offering a free first delivery. Green Zebra is adding to that a $5 discount on the first order, Kohler said.

In comparison, Safeway charges $6.95 to $12.95 depending on the order size and the amount of time allowed for delivery. The Grocery Bag delivers for a charge of $17.50. Organics to You advertises no delivery charge. Portland Pedal Power charges $2.50 and up depending on distance and size of order. Store to Door charges 10 percent of the grocery bill, and no-cost delivery for clients participating in Oregon Project Independence

The service with Instacart is entirely personal, Kohler said. “If you ask for Tillamook cheddar, and it isn’t available, the shopper will call you personally and ask if the brand we have is OK.”

From Uwajimaya, for example, a customer can buy items like coconut milk, taro and curry paste. But a customer might prefer Whole Foods meats. The Instacart customer can choose more than one store.

A client can log on to Instacart and browse, select a delivery time, and give access information such as a building code or directions to an apartment or house. Payment is by credit card.

Instacart is no fly-by-night outfit.

Bloomberg News reported in December that Instacart raised $210 million from investors and it had the option to raise another $10 million, according to a filing with the U.S. Securities and Exchange Commission.

Bloomberg said that Google Inc., Amazon and some supermarket chains are getting into the grocery delivery business, creating increased competition for Instacart. especially in urban areas. In December Amazon introduced a one-hour delivery option for household goods like shampoo, starting in Manhattan.

The venture capital investors include Kleiner Perkins Caufield and Byers, Sequoia Capital and Andreessen Horowitz, among others, according to the New York Times.

Founded in 2012, the company is retreating an old idea and expanding it. Competitors like Fresh Direct in New York have been offering the service for ten years. Google, eBay and Amazon are trying to do same-day delivery. But Mehta says his company is more agile because it doesn’t have trucks or hold inventory.

While Google and others offer to deliver a variety of products from TVs to books to nails, Instacart focuses only on groceries. Mehta claims revenues grew by more than a factor of 10 in 2014, and doubled in the final quarter of last year alone. He didn’t give precise numbers.

While the company employs only around 100 employees, its 4,000 contractors key Instacart’s rapid success.

Avoiding expensive full-time employees, Instacart taps the millions looking for part-time contract work, the kind of person who might drive for Uber or rent out a room through Airbnb.

DELIVERY TO YOUR DOOR

Instacart
Founded: 2012
Worth: $2 billion
Number of employees: 4,000 contract personal shoppers in 15 cities nationally.

Store to Door
Founded: 1989
Where: 7730 SW 31st Ave., Portland
Phone: 503-200-3333

Portland Pedal Power
Phone: 503-764-1415
Email: info@portlandpedalpower.com

Organics to You
Founded: 2001
Where: 2030 N Williams Ave., Portland
Phone: 503-236-6496

The Grocery Bag
Founded: 1992
Phone: 503-245-4595
Email: marty@grocerybags.com

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