SBM4202: Case Study Analysis of Instacart's IS Strategy and Business

This case study analyzes Instacart, a leading on-demand grocery delivery platform, examining its business model, IS strategy, and competitive landscape. The analysis covers Porter's Five Forces, the value chain model, and the role of information technology in Instacart's success. It explores Instacart's business model as a fusion of on-demand, subscription, e-commerce, and sharing economy principles. The study also evaluates the viability of Instacart's sharing economy model, its partnerships with retailers, and its revenue streams. The analysis highlights Instacart's innovative use of technology, its impact on the grocery industry, and its ability to provide doorstep deliveries in major cities. The case study also highlights the role of IT in the company and the viability of the business model.

Running Head: INSTACART
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IS Strategy, Management & Acquisition
Case Study Analysis
(Student Details: )
4/10/2020

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Contents
IS and business strategies Case Study........................................................................................2
Answer 1....................................................................................................................................2
Answer 2....................................................................................................................................3
Answer 3....................................................................................................................................6
Answer 4....................................................................................................................................8
Answer 5....................................................................................................................................9
References................................................................................................................................10

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IS and business strategies Case Study
Answer 1
The Company Instacart is a grocery delivery platform which works on-demand while
facilitating doorstep deliveries every day in all of the major cities of the United States. The
business model of Instacart is technology-driven which boosts the delivery process of
groceries in less than 1 hour to the customers. It has been observed that Instacart is the most
futuristic and promising company in the United States (Pahwa, 2018). Instacart is based on
the sharing economy model. The Company Instacart was initially founded in 2012. Today, it
is in the list of most recent technological developments in the United States. It is because the
innovation of instant grocery delivery in the field of the retail industry has shaken the entire
global market from its novel business model (Pilon, 2020). The company is being considered
as a top leader within an on-demand shared economy presently. In addition to that, Instacart
has also received immense funding in order to expand its grocery delivery operations in the
whole USA (Soloman, 2015).
There is some key information about the company including founders, funding received,
timeline and facts, as follows:
 The company was founded in 2012 by Apoorva Mehta (CEO / Founder) and Max
Mullen (Co-Founder)
 The company Instacart has received a funding of $275 million (Till the mid of the
year 2015) (Pahwa, 2018)
 The company Instacart is headquartered in San Francisco, California, USA.
In this context, the following figure is showing the quick growth of the Company Instacart.

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It is worth knowing that Instacart is one of the top North American leaders in online grocery
delivery (Pilon, 2020). The company is out of the fastest-growing companies in the field of e-
commerce. In addition to that, being the grocery delivery startup, Instacart has been become
famous because of the on-demand feature. Today’s entrepreneurs are trying to learn more
about Instacart Business Model (IBM) in order to understand the whole working and
mechanism in for developing their on-demand delivery firm in the sharing economy
(Soloman, 2015). On the other hand, the key selling features of the company are same-day
delivery and instant pickup. Such kind of services allows the company to bring fresh
groceries as well as other everyday essentials to modern people and families who are busy in
their busy schedule all across the Canada and U.S. In this way, Instacart’s cutting-edge
enterprise technology powers the e-commerce platforms of the global biggest retail players,
while also supporting white-label websites and delivery solutions (MSG, 2020).

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Answer 2
Source: (Mohapatra, 2012)
Porters Five Forces of Instacart
As we know, Porter five forces are as follows:
 Degree of rivalry (E. Dobbs, 2014)
 Threat of substitutes
 The threat of new entrants
 Bargaining power of buyers
 Bargaining power of suppliers
In order to explain the porter’s five forces model for Instacart, entry of the Instacart into the
market already had a huge impact on the other grocery stores of the United States (Kaivo-Oja
et al., 2017). On the other hand, Instacart has so many pricing advantages over its competitors
like Kroger, Sprouts, and Walmart in the USA (Lister, 2018). Apart from this, Instacart is
itself a new market entrant hence there are fewer threats from new entrants in the retailer
industry. Moreover, Instacart’s suppliers form usually part of the Instacart’s competitors, it is

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because they own separate retail and grocery stores. Besides, in the case of Instacart, there is
no high competitive pressure while expanding into the new markets of the United States and
world (Davies, 2016).
Source: (Heinberg et al., 2017)
The Value Chain Model of Instacart
In the context of Instacart, the value chain model has been shown above. It is worth knowing
that the company’s value chain model is typically technology-driven (Pilon, 2020). The value
chain created by the Instacart often boosts the delivery groceries to customers even in less
than an hour. In general, value chain refers to the process or activities through which an
organization adds value to their products and services (Mayer et al., 2014). In addition to that,
the value chain model allows the company to improve areas such as production, marketing,
and the provision of post-sales services. In this context, a value chain can be seen as a set of
activities which are carried out by an organization for further creating value for their key
stakeholder as well as customers. In this context, Porter has been proposed a value chain
model which is often used by the modern companies to examine their activities, while
examining how they are connected. In the case of Instacart, value chain activities are
performed in the way to determine costs as well as profits (E. Dobbs, 2014). Thus, the value

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chain tool is helpful to understand the sources of value for Instacart Company. It has been
mentioned above; Instacart is an on-demand grocery delivery platform that typically offers
doorstep grocery deliveries and other home necessities all across the United States
(Mohapatra, 2012).
Answer 3
In order to explain Instacart’s business model, here in the USA online grocery shopping
statistics till 2021.
Source: (Pahwa, 2018)
Post analysing the above case study on Instacart, it has been found that the business model of
Instacart is technology-driven and follows the sharing economy model. It has been found that
Instacart lays the entire focus on supplying customers with fresh and quality groceries within
24 hours or less than one hour if required, at their doorstep. The modern researchers suggest
that the online grocery delivery model of Instacart has become popular amongst the on-
demand grocery delivery sector of the United States as well as Canada (Soloman, 2015). In
addition to that, this company is the fastest grocery delivery based on the sharing economy
model. Apart from this, IBM is the fusion of on-demand, subscription, e-commerce, sharing
as well as aggregator business model, as the operations at Instacart goes in the following way:

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1. The customers of Instacart first choose the store and then order the groceries on the
Instacart website or app
2. Subsequently, Instacart sends confirmation notifications to the customers in relation
to the order along with the delivery instructions.
3. Later then, the shoppers of Instacart then shop from the store specified by the
customer. In this way, the shoppers deliver the customers the groceries while earning
money in the form of commissions from the Instacart and future tips from the
customers (Pahwa, 2018).
Source: (Pilon, 2020)
The comprehensive IBM and revenue model of Instacart suggests that Instacart got success
among all the other startups because the company is not dependent on their inventory
management. In addition to that, Company Instacart is having a direct partnership with the
already existing brick and mortar stores of the USA who sells grocery to the customers of
USA. The company mainly focuses on delivering quality grocery items with an exceptional
on-time delivery service. Thus, the above-mentioned feature is the key distinctive feature of
Instacart’s Business model. Apart from this, the partnership strategy of the Instacart also

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helps the company to borrow goodwill from the partner stores in the form of the quality
products offered by the company (Pahwa, 2018). In this way, Instacart works on its goodwill
while providing the USA and Canadian customers with good and on-time delivery service. In
other words, it can be said that Instacart generates revenue through delivery fees, mark-up
prices, surge pricing, service fees, service tips, membership fee, and revenue from partners
(Keillor, 2013).
Answer 4
The role of Information Technology (IT) is huge in the success of the great grocery startup of
Instacart. It is clear that the business model of the company is based on innovative technology
(Forbes, 2017). It is the reason behind Instacart invests a lot of expenses into technological
resources in the form of set-up running costs (Farhadi et al., 2012). The role of IT in IBM can
be seen as the business of the company runs on a technology-based model. The grocery
selling platform depends on its Instacart application as well as the Instacart website. In this
way, the technological set-up is the base of the on-demand grocery delivery business.
However, the running costs of technology are costs which are usually incurred to maintain as
well as manage the Instacart application and website (Mayer et al., 2014).
On the other hand, technology allows the company to enable delivery business for people all
across the USA and Canada. With the help of a new technology-based business model,
Instacart has a great future ahead. It is because there are millions of people who want to order
groceries while only sitting at their office or home. Instacart has become one of the most
recent technological developments since its foundation in the year 2012, and hence the
technology integration into business has shaken the world. Such a business model can only be
possible with a deeper understanding of the Instacart’s technology-based business model
(Mayer et al., 2014). The company has successfully demonstrated that one can plan and then
prepare a Grocery business plan on the basis of technological resources such as app and
website and hit the market easily. The recent surveys have found that the amazing technology
used by Instacart can be further used to create a similar business model within the on-demand
delivery segment (Mohapatra, 2012).
At Instacart, the technology-based business processes are typically designed to optimize the
USA customers’ experience. In terms of the technology-based business model, Instacart’s
website is very simple to use (Soloman, 2015). Besides, it allows customers to choose their

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local market, find items, and thereby fill their shopping cart (Pilon, 2020). Afterward, the
customer can add notes before checkout related to replacements in case some items are out of
stock. In this way, after the whole set process, the shopping basket of the customer is
delivered to the customer within a day. Unlike the past, with the help of Instacart, people are
getting their everyday grocery and home items with some clicks on Instacart’s app and
website which shows that IT has a major role in the successful business model of the
company in the competitive edge (Pahwa, 2018).
Answer 5
The business model of sharing economy for the purpose of selling online groceries is viable
as the company is not harming any of the profit and growth of the local vendors, shoppers,
and other businesses (Hamilton & Webster, 2018). The business model based on sharing
economy seems viable in the case of Instacart because ethically this is wrong supplying
products and services through the local suppliers to the customers as per their daily demands
and needs. In general, sharing economy is an economic model often defined as a peer-to-peer
(P2P) based activity of acquiring, offering as well as sharing access to products and services
which are facilitated by community based online platforms such as software app and website
(Chakray, 2018).
The researchers have recently found that Instacart has been partnered with around 350
national and local retailers. These regional, local and national retailers are including ALDI,
Albertsons, Costco, Loblaw, Kroger, Publix, Sprouts, Sam's Club, Walmart Canada,
Wegmans, and many more. The company’s delivery service is available for above than 70%
of Canadian households and 85% of U.S. households. The company is working from more
than 25,000 stores across more than 5,500 cities while delivering in North America since
2012 (Keillor, 2013).
It can be said that Instacart’s way of selling grocery and daily household items is completely
viable. The company has built the best way for people anywhere in the world to shop for
groceries, while also solving issues and creating a magical experience for customers all
across Canada and the USA (Pahwa, 2018). Being an emerging leader, Instacart provides an
on-demand grocery delivery service, through collaborating with crowdsourcing and
supermarkets personal shoppers for bringing customers food from their favourite stores in
less time. The business model of the company is capable to deliver value to their 3 major

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constituents include stores, customers, and personal shoppers. It is because of Instacart’s
strongly aligned business and technology-based operating models (Soloman, 2015). In whole,
Instacart is currently experiencing reported rapid geographic expansion, double-digit revenue
growth, as well as plenty of investment.

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References
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Davies, , 2016. The International Business Environment: A Handbook for Managers and
Executives. 1st ed. london: CRC press.
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analysis templates.. Competitiveness Review, 24(1), pp.32-45.
Farhadi, M., Ismail, R. & Fooladi, M., 2012. Information and communication technology use
and economic growth. PLoS one, 7(11), p.e48903.
Forbes, 2017. What Is The Future Of Information Technology? [Online] Available at:
https://www.forbes.com/sites/quora/2017/12/15/what-is-the-future-of-information-
technology/#182c63f449d0.
Hamilton, L. & Webster, , 2018. The International Business Environment. 4th ed. london:
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Kaivo-Oja, J., Roth, S. & Westerlund, L., 2017. Futures of robotics. Human work in digital
transformation. International Journal of Technology Management, 73(4), pp.176-205.
Keillor, B., 2013. Understanding the Global Market: Navigating the International Business
Environment. 1st ed. england: praeger.
Lister, J., 2018. The Effects of Technology on Work Ethics. [Online] Available at:
https://smallbusiness.chron.com/effects-technology-work-ethics-18716.html [Accessed 31
March 2019].