Instacart May Hire Out Some Delivery Services

Instacart has shifted its business model again. The on-demand grocery delivery company is now talking to other on-demand delivery companies to handle the task of actually getting groceries to customers, according to TechCrunch.

Instacart has pitched the idea of third-party delivery to Postmates, Lyft, Sidecar, Zipments and other delivery and transportation startups, according to documents that TechCrunch has seen. Under the proposed deals, Instacart wouldn’t outsource all its deliveries, or even all deliveries in a particular city, but would hand off “hundreds of deliveries per day” to a delivery partner and wants to be a “valued long-term customer” of the third-party delivery services, according to an email reportedly seen by TechCrunch. Prices would be at a fixed rate per delivery.

One unidentified source told TechCrunch that Zipments is already doing deliveries for Instacart in New York City. Another source said Sidecar is prepping to start Instacart deliveries too.

Instacart, which operates in 15 U.S. markets and is valued at more than $2 billion, did not comment to TechCrunch for its story.

But this marks the second time in a few months that evidence has surfaced of a significant change in Instacart’s business model. In January, Gigaom reported — and got confirmation from Instacart — that the company no longer sets its own prices for groceries. Instead, Instacart now leaves pricing to the grocers and charges them a fee for its delivery service.

If Instacart no longer sets prices or (in many cases) does actual deliveries, what’s left of the company? One clue comes in what another unnamed source told TechCrunch: Instacart maintains control of both the customer experience — through its mobile app — and of the actual path through which the groceries are delivered, since all deliveries are made according to Instacart’s directions, whether they’re done by Instacart’s own delivery people or a contractor.

That would make Instacart a marketing and logistics company that could conceivably get itself out of the physical delivery part of the process completely. That would make scaling up much easier, since it wouldn’t have to manage an ever-increasing delivery workforce.

Instacart isn’t alone in moving toward a hybrid model for grocery deliveries. Amazon has outsourced the actual last-mile groceries deliveries for its Amazon Fresh service to the U.S. Postal Service in some cities, and for the equivalent to its Amazon Prime Now service in India is using a combination of its own delivery people, third-party services and delivery people from the stores that provide products being delivered.


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