How Does Instacart Make Money?Home Business How Does Instacart Work By Rakesh Patel Last Updated: September 11, 2023 218% hike in Instacart app users in just one week! Because, the fear of catching Coronavirus has forced people to shy away from the public, making Instacart their first choice for grocery shopping. Consumers who never believed they would shop online have now popularized this grocery delivery service platform. But, the question arises how does Instacart work? How does it make money? What can you learn from this established startup to develop your own grocery delivery mobile app? Let’s find out.Table of ContentsWhat is Instacart?How Does Instacart Work?How Instacart Makes Money?How to Make Money as an Instacart Shopper?How Much Does it Cost to Deliver Groceries by Instacart?Increased Demand for Instacart During CoronavirusUnique Features of Instacart AppPros and Cons of InstacartFAQsConclusionWhat is Instacart?Instacart is an on-demand online grocery delivery service app introduced in 2012 that allows doorstep delivery of groceries and other home necessities. If it is available in your areas, it enables you to order groceries online from their website or app from nearby grocery stores and get your groceries shipped to your door in as little as 1 hour.The organization has already partnered with more than 30 distributors across the United States and Canada, including Albertsons, Aldi, Costco, CVS, Kroger, Publix, Sam’s Club, and Sprout.How Does Instacart Work?Just like Uber and Airbnb, Instacart has developed its own model where sharing happens alongside collaborations and a brand image. So here is the 3-tiered Instacart consumer approach (Users, Shoppers, Stores) that will help your companies to understand better.How Does Instacart Work for Users?End-user/customer sign up on the app or websiteCustomer browse goods from their choice of local grocery storesAdds their preferred goods to the virtual shopping cartAdd the address and other details and make a paymentThe mobile application notifies the shopper of a list of goodsOnce the shopper buys and delivers the goods, the user may give a tip to the shopperHow Does Instacart Work for Drivers and Shoppers?Here, we will discuss two kinds of shoppers. One, full-time shopper, and the second, in-store shopper.Full-time shopper and in-store shopper both register and create a profile on the app or websiteBoth shoppers receive orders on their smartphones via notificationsBoth shoppers pick up the ordered items manually and put them in the bagFull-time shopper or employee delivers the items to the customer, while in-store shopper does not deliver the stuff but make sure that stuff is ready to pick up, as they are in-store employees onlyOnce their hours are completed, the admin of the platform offers a payment to both shoppersFor StoresGrocery store owners make a partnership contract with InstacartStore owners list their groceries and sell them on the appThey also promote and advertise their business on the platform frequentlyLet’s now understand, how instacart makes money in the next section.Want to Create a Custom Grocery Delivery App?We have designed and developed custom on-demand grocery delivery solutions. Contact us now to get your free quote. Get Your Free Quote How Instacart Makes Money?If we talk about the Instacart business model, it makes money from delivery charges, membership fees, mark-up prices, in-app advertising, and payments from grocery partners.Instacart Revenue ModelMoving ahead, for ordering groceries online made through the website, the company does not charge the stores any commission. The firm, however, has other ways of earning revenue like,Delivery Charges: Any order delivered above $35 by Instacart is subject to a standard delivery fee of $3.99 for scheduled or 2-hour shipment and $5.99 for 1-hour shipping. Orders under $35 are paid with daily or 2-hour shipping at $7.99 and a 1-hour delivery fee at $9.99. Such delivery fees are distributed between both the store and the company.Membership Fee: It encourages its users to access an annual membership. By just spending $99 for a year, consumers can get unlimited delivery on any orders over $355 for a whole year.Payments From Grocery Partner: It offers retail stores a portal to market their items. They charge these partners a fee in exchange for the same. The fees are calculated on the basis of the store’s earnings. The company earns about 3% of the price on each order as a fee for managing fees, sorting orders, and supporting the shop.Mark-up Price: Any shops selling their goods on Instacart give the same prices as their in-store prices, but there are few shops listed on Instacart that have a mark-up of 15% higher than their in-store prices. The revenue from these mark-up prices heads to Instacart, which makes customers pay for them.Advertisement Placement Charges: These are normally charged for supporting the shops, for the facilities in exchange. For instance, you see some advertisements and promotions when you open the application, and certain shops always appear at the top. This is because of the placement fees charged by this app through these retailers.Also read how to build a food delivery app like Grubhub and postmatesHow to Make Money as an Instacart Shopper?For a shopper, getting started on this platform is pretty much simple.You just need to be 18 years oldMust be able to lift 30-plus poundsHave a smartphoneHave a saving accountAnd you’re all set to earn money when you,Download the Instacart shopper applicationAttend an in-person orientation (on-boarding process)Complete the documentation and background check processRegister your Instacart payment cardNow, the question arises how much do Instacart shoppers make? (Full-time shopper vs. In-store shopper)The pay of full-time shoppers depends on the order. On each order, the company offers an estimation of future earnings and promises that shoppers will receive at least $5 for each delivery(batch) and $7 to $10 for each batch of full-service (shop and deliver).The company also says that what you are paid for a given batch of orders depends on the amount of items, type of items, driving distance, and shopping and distribution effort involved.Also, when making deliveries, full-service shoppers often earn tips.For in-store shoppers, there’s a fixed, hourly wage that varies from location to location. They are paid weekly or monthly via direct deposit, depending on their contract.Create Your Grocery Delivery App and Monetize ItBook Your 30-min Free ConsultationHow Much Does it Cost to Deliver Groceries by Instacart?While users make a purchase on the application, there would be the following kinds of fees that occur.Delivery Charges: Just like Amazon, Flipkart, and many other websites, the first purchase will be free of shipping charges. If a customer signs up for “Instacart Express Membership” for $99 for a year or $9.99 for a month, he/she can avail of free deliveries for all purchases on orders above $35. If a customer without Instacart express membership needs a same-day delivery service will be charged $3.99 for orders above $35.Grocery Charges: The prices of grocery stores’ goods on the website have nothing to do with Instacart. It is decided by individual retailers. In addition, you will not always get to take advantage of all the deals in the store. Sales on this platform are open to you, but a special section of coupons could still be available for your store of choice, where you can conveniently browse and purchase.Tipping costs: Most people don’t want to leave their homes right now, and since the Instacart shoppers are doing their job to help them, the company roughly pays 20% of the tip to their shoppers. And it is highly encouraged.Increased Demand for Instacart During CoronavirusWhile in February 2020, people were eating out in restaurants, playing sports, making physical shops crowded, March had hit the Instacart differently or maybe miraculously?As coronavirus made the urge to feel the emergency of the decade, the people have turned to order meals to their homes to prevent being vulnerable to the coronavirus and standing in long food queues. As a result, Instacart CEO Apoorva Mehta said that it received five times as many orders as it did last year for the same period.For many US and Canadian shoppers, the pandemic had changed their shopping habits from store moving to online scrolling permanently, which also led to Instacart hiring personal shoppers about 250,000 overnight. This means the company army expanded from 180,000 to 500,000 in just eight weeks.Instacart, the grocery delivery service company, has also started to sell non-grocery products by partnering with major names such as Walmart Inc, beauty goods distributor Sephora, and convenience store 7-Eleven in the United States.With that, Instacart raised $225 million and the firm was estimated at $13.8 billion in June 2020.As the company focuses more on a spike in online shopping due to new opportunities, it earned another $200 million in its new seed round in the next to next month, valuing the firm now at $17.7 billion. A huge surge in success!However, post the coronavirus, it would be interesting to see how the company plans and tests its strategy to maintain its market share.Ready to optimize your business like Instacart with an on-demand grocery app solution?Hire Us Unique Features of Instacart App User ProfileThis feature helps customers to add their address content and billing information, as well as set potential purchasing preferences. Order history from grocery stores, coupons, loyalty discounts, and gift cards should all be offered for robust customer service.Product SearchProduct search provides a smoother way for shoppers to discover what they want on the home page itself. Highlight the most important grocery stores’ items so that clients can filter outcomes by attributes such as price and color. Filtered product quest lets you optimize visibility and build more purchasing options through all of your inventory.AI-powered SearchRecently, the Instacart app introduced AI-powered search into their mobile application. This feature offers answers to their customer’s questions. With the power of AI, customers of Instacart are now able to discover new ideas or suggestions. Integration of AI-powered search level-ups the personalization game of their app and improves customer experience. You can also integrate ChatGPT into your mobile app.In-app PaymentThis function is to offer as many customer payment options as possible. Cash, credit or debit cards, wallets, vouchers, coupons, and gift cards. When the order is received, send the invoice to the customer and link the order record to the history of orders.CheckoutThis feature includes functionalities like,View and edit local grocery products and whole foodsApply coupon codes, if anySet tip for shopper or delivery personSelect delivery time schedule including dateAdd payment and contact detailsPay and confirm the orderTrack OrdersUsing GPS tracker (tracking technologies) or any other location-based app solutions, allow your customers to track their order delivery and area. This will allow them to be happy without concerns and go on their day, enriching the trust.Product RecommendationYou can provide customers with product recommendations based on their past shopping habits. Because more than 50% of smartphone users are likely to buy products from relevant recommendations on products.Admin PanelThis function helps the admin to manage their business operations like,Handle shoppers and customersTrack area & manage delivery ordersActivate & deactivate shopper accountsManage stores and partnersGenerate reports on serviceShopper PanelTo monitor the account, signify availability, and track earnings, each approved shopper will get access to the shopper panel of the website, or mobile apps. This helps shoppers to track their daily, weekly, and monthly orders in an organized way.Pros and Cons of InstacartProsConsEasy to useConvenient grocery delivery services for you and the family to get your groceries delivered at homeAvailable throughout the United States, Canada, San FranciscoWide range of local grocery store chains optionsFriendly shoppers and driversAccess to many local stores as well delivery windowSame-day grocery delivery services availablePrices are a bit high for services and products than the actual in-store pricesNo coupons, discounts, cashback, or offersAdditional feesFrequently Asked QuestionsHow to be an Instacart shopper and make money?Download the shopper app to sign upJoin as an in-store shopper, part-time, or a full-service shopperGet paid a commission, tips, or by the hourSet your own scheduleCash-out instantlyHow to be an Instacart driver and make money?Sign upRegister as a driver and fill out detailsPick up the goods and deliverCash-out instantlyHow much will it cost to use Instacart?For same-day orders above $35, Instacart charges delivery fees of $3.99.Will you make good money with Instacart?Yes, by joining as a part-time shopper, in-shop shopper, or full-time employee you can earn money right away, as on average, shoppers make an extra $200 to $500 per week.How to create a grocery delivery application like Instacart?Analyze your ideaResearch competitors and companiesFind an application development companyDecide on featuresDesign and buildTest & DeployConclusionAll this points to the fact that Instacart is a service app that is well thought out. The application and business model features are seamless and optimized to improve customer loyalty. We’ll see a lower number of shoppers in retail stores in the coming years, as nearly everybody will start shopping online for anything. So, this is the ideal time for your service company to build a grocery solution in the marketplace. If you have any rough idea or plan, contact the app development company for startups and entrepreneurs and get delivered all possible solutions.Subscribe6 Written byRakesh PatelRakesh Patel is the Founder and CEO of Space-O Technologies (Canada). He has 28 years of IT experience in business strategies, operations & information technology. He has expertise in various aspects of business like project planning, sales, and marketing, and has successfully defined flawless business models for the clients. A techie by mind and a writer at heart, he has authored two books – Enterprise Mobility: Strategy & Solutions and A Guide To Open311 ×WAIT!Do you know we offer FREE 30-min consultation?If you have a project in mind, let’s talk.We are here in Canada. If required, we can meet in person. Click Here To Get Started Trusted by Leading Brands in Canada ×Join our subscribers' list now! Get top insights and news on latest technologies and trends right to your inbox.