Unless they've got logistics so tight that their delivery cost is less than the grocers doing themselves, I don't see this working for Instacart.

The margins for groceries are already paper thin. Consumers have no appetite for delivery fees so vertical integration and proper logistics is key.

Only path I see for them is getting acquired by a major grocer purely for the platform. That grocer would become the first party integrator. I don't see that happening though as it'd be cheaper for them to do it from scratch in house.

> Consumers have no appetite for delivery fees so vertical integration and proper logistics is key.

At least in the UK, most of the major supermarkets offer delivery for fees of around £4, last I knew. And at the end of the day, much of the US lives in places that aren't that different in terms of population density to the UK.

I might be mistaken but I think that groceries are generally more expensive in the UK, so people there might be willing to pay more for delivery because it's a lower relative cost.

> Consumers have no appetite for delivery fees

Do we have evidence for this? Restaurant and grocery delivery fees in e.g. New York City as passed along without too much trouble.

NYC is a transit city. Car cities, which are the majority of the USA I think, are very different.

Isn't the entire existence of Instacart proof that some consumers do have an appetite for delivery fees?

> I don't see that happening though as it'd be cheaper for them to do it from scratch in house.

Why? I don't think most grocery stores have a ton of IT resources or talent. I used Kroger's home delivery service off and on for years, and the UX was first horrible and then only slightly less horrible. And, in 2017, as far as I can tell, still has no mobile client.

An instacart acquisition, where you get the whole infrastructure, would seem pretty appealing.

They could move into the b2b space - be a delivery service provider for grocery stores. Contract with the grocery chains to provide delivery service, allowing the grocery store to hide the delivery fee.

It could also mean that other grocers will need to bring delivery in-house to compete or instacart will have to start white labeling delivery.

Instacart thrived on price-insensitive markup-insensitive Whole Foods crowd. Remains to be seen if they can convince the price-sensitive coupon-clipping clientele to pay the delivery fee and disregard the random product markups within the app. The average check also drops significantly at the lower end of the market - a dude stopping at 7-11 for a bag of chips, a Big Gulp Slurpie and a lotto ticket is unlikely to be their prime customer in terms of unit economics.

Fighting amazon means giving little to no money to shareholders and reinvest it in expanding business.

It's close to fighting google on the "pay with your data instead of money because we are the largest ad network".