- Instacart has expanded to four new markets this week, moving forward with its goal of reaching 80% of U.S. households by 2018, the company said in a statement. New locations include Las Vegas; Detroit; Columbus, Ohio; and Rio Grande Valley in Texas.
- Instacart also will enter additional markets in Michigan and Ohio and expand services in Texas, Florida, Kentucky, Tennessee and the Carolinas in the coming weeks. The company will also offer a free year of Instacart Express membership in Texas and other major markets.
- "Expanding a service like ours is not easy," Instacart said. "We’ve spent the last few years expanding judiciously and staying laser-focused on the efficiency and economics of our business model – to make sure that it could someday support a national service.”
Rapid expansion like this not only creates buzz and excitement around the Instacart name, but also proves to naysayers the company is strong enough to compete with Amazon and other big players in the industry.
The grocery delivery service's speed and vision have also vaulted the company ahead of smaller upstarts that are trying to muscle their way into the market. Earlier this year, FreshDirect announced plans to move to D.C., but some analysts feel the company has expanded too slowly, and hasn't capitalized on early success by making inroads in major cities. This lumbering pace left it vulnerable for services like Instacart to take a foothold — and gain a solid head start.
Instacart boasts dozens of grocery partners and $400 million in new financing after receiving an updated $3.4 billion valuation. Still, Instacart should be wary of the issues expansion can bring. The company's growth has already been rocky due to an ever-changing business model and controversy surrounding the company's tipping policy and failure to pay business expenses, among other issues that were settled in a class action law suit last month.
The flame out of past food delivery services like Webvan and Kozmo.com after both underwent rapid expansions and saw millions of dollars of losses should serve as a warning. Food and grocery delivery services may finally be succeeding after these failures during the dotcom bubble, but Instacart still risks stretching itself too thin.
For now, the speed of the expansion makes sense, as the company is likely trying to make its name top of mind in a market where Amazon looms. The web giant has millions of built-in Prime members and significant capital to propel its businesses forward. Only time will tell if Instacart's consumer base will be strong enough to support the company's stretch into dozens of new markets or if its rapid expansion will bring it closer to being the next Webvan.