« Back to home

Grocery Delivery is Ready for Big Time (Again)

Instacart, the grocery delivery startup, last week raised a massive $400 million round of funding, valuing the company at a whopping $3.4 billion.

It seems that the grocery delivery service space is ready for big time...again. Fifteen years ago, the first dot-com bust notoriously disposed of Webvan, the previous internet grocery store that raised hundreds of millions of dollars.

We used the TXN consumer spending analytics app (with a panel of over 3 million payment cards in the U.S.) to analyze the grocery delivery app landscape and see if grocery delivery's time has finally come:

Over the last 18 months (in the chart above), Instacart did well by growing revenue by 2X. A lesser known competitor, Birmingham, AL-based Shipt displayed an even stronger growth of 6X, overtaking Amazon Fresh in the process and growing to about 40% of Instacart's revenue.

Veteran companies (in internet terms - both started in the 90s) Peapod and FreshDirect are still big players in this space, but didn't grow as much over the past 18 months.

Looking at the last 180 days, we see that FreshDirect, having survived the first dot-com bust, is still the largest by total customer spend, with Instacart and Peapod not far behind:

Interestingly, we see that Shipt is way ahead of the game in terms of transactions per customer, hinting at more loyal customers who rely on Shipt more than competitors' customers:

Shipt, the youngest company in the bunch, founded as late as 2014, only raised a total of $25 million in funding - peanuts compared to Instacart's war chest (let alone Amazon's). It also employs an unusual market penetration tactic, starting with the Southeast of the nation and not the traditional "early adopter" markets like San Francisco, New York City or Los Angeles.

Could Shipt become the David to the Goliaths of Instacart and Amazon Fresh? Time will tell, but based on the data so far - the smaller and more nimble company is gaining ground on the competition.

Learn more about consumer spending analytics with TXN.

Comments