Instacart continues rapid pace of expansion in several markets

Dive Brief:

  • Instacart has expanded service in Texas, Connecticut, Ohio, Florida and South Carolina, according to Progressive Grocer.

  • The company plants to open in 100 new markets this year alone.

  • Instacart service is now available to shoppers in many areas who visit Costco, Publix, H-E-B and BJ's Wholesale Club.

Dive Insight:

Instacart announced earlier this month it has expanded to four new markets, moving forward with its goal of reaching 80% of U.S. households by 2018. It's latest expansion across five states is hardly a surprise. Earlier this month, Instacart ran a promotion offering its Express service, which offers free delivery on orders over $35 and typically costs $149 annually, free of charge to new customers in Texas and the Midwest.

Rapid expansion like this not only creates buzz and excitement around the Instacart name, but also shows the grocery delivery service can compete with Amazon and other big players in the industry. The company's rapid growth is in contrast to FreshDirect, which recently started operating in D.C. Some analysts believe FreshDirect has expanded too slowly, giving Instacart and others a valuable opportunity to gain an early, important edge.

Throughout corporate America, there are long lists of companies that valued growth over long-term viability and profits, only to flame out. Grocery delivery is no different with food delivery services like Webvan and going under after both underwent rapid expansions and saw millions of dollars of losses. It's a fine line of losing out on future growth to competitors by moving too slow, or moving too fast and not being around at all.

To be sure, Instacart is leaving money on the table in its free delivery promotions, but it might be a necessary gamble to grab market share as Amazon, Shipt and other businesses expand their grocery operations. It also could prove to be a savvy move long term if customers stick around, and the company makes back far more money than it lost on the promotions. If Instacart sees success it could try a similar tactic in other markets, too, setting a firm base for growth. The risk is other companies decide to copy its strategy, but many in the grocery delivery space would classify that as a good problem because it means they are still around.

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Filed Under: Manufacturing Grocery Corporate
Top image credit: instacart shoppers