Instacart, a grocery delivery venture, backed by Sequoia Capital, has been getting a lot of press lately. And it’s no wonder that this grocery shopping startup, powered by personal shoppers, is also getting funded for big growth. It has its sights set on battling head-to-head with emerging competitors and big e-commerce players, such as Amazon.
Rise of the digital pluckers
Whether it’s Uber, a similar 50-city taxi service that uses contract personal drivers ordered through an online or app-based registration service, or Instacart, there’s a significant market opportunity for startups and enterprises that cater to the convenience of consumers. A recent research report, Boomer Wellness Culinary Trend Mapping chronicles some of the drivers that attract Boomers, who are the biggest online purchasers of food and beverage, to these types of online-powered services of convenience.
For certain, a main cross-section of these consumers are more affluent consumers, and also older. IBISWorld reports that online grocery shopping is expected to grow at 9.5% annually reaching a near-$10B market size by the year 2017.
As a tactic to compete with Amazon, Instacart offers a $99 annual subscription service in which consumers in the San Francisco can sign up and have their groceries delivered to their homes fee-free. The online delivery service has expanded to several Bay Area cities, Chicago and Boston, where it is just launching delivery.
Orders over $35 without a subscription service cost about $4. The Instacart service’s contracted shoppers source from local-area markets using technology that maps the store and finds the best way for groceries to be plucked.
Chicago’s service was started in September and expanded to include the North Shore suburbs due to the high volume of orders thought to be fueled by a bitter series of winter snow storms. Other competing services include FreshFoodLA.com, Amazon Fresh, and regional services like Presto Fresh, operating in the Northeast Ohio market, and many other national and local market services.
Wal-Mart-To-Go is another online service that is testing in the Bay Area and in Denver.
Peapod is yet another online delivery service- albeit perhaps the oldest- that was purchased by Ahold, one of the top global grocers, which owns a portfolio that includes DC-area based Giant Food of Maryland supermarkets and New England’s Stop & Shop grocery stores, and is seeing continued growth.
Opportunity with Baby Boomers looms large in ’Grocery Shopping 2.0’
Baby Boomers are major consumers of these types of services and convenience and wellness are major drivers of food-purchasing decisions. A lot of media and marketing focuses on Millennials, but Boomers account for 44% of households over $75K.
Of the population between the ages of 50 and 64, 75% use the Internet, almost double the 41% number reported by Pew Research Center just a little over a decade ago. “Young Boomers, who tend to be the most tech savvy, appreciate the freedom that outsourcing grocery shopping and meal prep brings, whether due to the long work hours or a desire to spend leisure time engaged in other pursuits,” says the Boomer Wellness report.
According to Tech Crunch, the Instacart delivery service in Chicago is growing 100% per week. These types of online and digital conveniences services are expected to grow, and much of it on the wings of Baby Boomers’ more affluent, sophisticated lifestyles.
You can find more information about Baby Boomer wellness and convenience trends here.
Add Boomer Wellness: Culinary Trend Mapping Report to your own intelligence library and receive a 5% discount during our promotional period effective through March 28, 2014. Use code PFBoomers.
Photo credit: Instacart