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MailTribune.com
  • Instacart hopes 'share economy' will let it succeed where others have failed

    Online shopping service relies on contractors to deliver the goods — in as little as an hour
  • ATLANTA — Marcus Amison pushes his grocery cart through a cavernous Costco aisle stocked with bulk cleaning supplies and faces the typical shopper's problem — he can't find what he's looking for.
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  • ATLANTA — Marcus Amison pushes his grocery cart through a cavernous Costco aisle stocked with bulk cleaning supplies and faces the typical shopper's problem — he can't find what he's looking for.
    But Amison isn't your typical shopper. He wears the green, branded T-shirt of Instacart, a San Francisco-based grocery service that promises home delivery in as little as an hour.
    Instacart is part of a growing "share economy," in which people provide personal services, unused items or rooms in their homes for profit. Even as this emerging marketplace blossoms into what Forbes predicts will pass $3.5 billion this year, economists debate the effectiveness of an industry that creates thousands of jobs that pay little and offer no benefits.
    Like Uber with car rides and Washio with laundry, Instacart uses mobile technology to connects buyers with people who'll do their shopping and deliver the goods. Orders are made online or through smart phones and relayed to shoppers. The customers save a trip to the store, shoppers get flexible jobs, and Instacart takes a cut for setting up the transaction.
    Amison picks up a shrink-wrapped pack of Kosher Chicken Thighs and scans the bar code with his smartphone. He uses a company-issued credit card to finish the purchase that includes 12 one-gallon jugs of milk, which he loads into the back of his 2000 Dodge Intrepid.
    "Might as well make some extra money when I can," says Amison, who works as a full-time chef at the Marriott Marquis, but makes $15-20 an hour working 20 hours per week for Instacart.
    The company was founded in 2012 by Apoorva Mehta, a former Amazon executive. It is now in 12 cities and announced in June that it had received $44 million in financing from investors.
    It is going to have to compete with a growing field of grocery delivery businesses, including Grab a Buggy and ColdLife Organics. Also on the horizon, Amazon Fresh and Walmart-To-Go are piloting similar programs on the West Coast. The competition is stiff for good reason: at stake is the $586 billion of total retail grocery sales last year, of which online orders represented less than 1 percent.
    Instacart hopes to bypass competitors with the flexibility of an independent contractor fleet and speedy turnaround times.
    The company profits by charging a small shipping fee ($3.99 for two-hour delivery) and by marking up the prices on certain goods by as much as 20 to 30 percent.
    Instacart doesn't own any warehouses or delivery cars, a stark contrast to the previous face of grocery home-delivery, Webvan, which crashed in 2001 after spending $1 billion on warehouses and infrastructure.
    "There was the supply chain, real-estate issue, spoilage, and then add logistics and delivery to that," said Matt O'Connor, an Instacart "city launcher" who set up the start-up's operations in Atlanta. "Having one company do all of that is a little bit of a fool's errand."
    As companies like Instacart rapidly expand, they create a new type of service employee. The companies require workers, who are independent contractors responsible for paying their taxes from earnings and obtaining their own insurance, to own a smartphone and a vehicle.
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