business news in context, analysis with attitude

The Chicago Tribune reports that Instacart, the San Francisco startup that provides same day delivery of products purchased at area grocery stores, is launching its service in 13 Chicago neighborhoods.

Trader Joe's is the first retailer included in the Instacart offering, with Dominick’s, Whole Foods and Costco expected to be added soon.

According to the story, "Chicago represents one of 10 cities where Instacart is planning to set up operations by the end of next year. Founded last summer by Apoorva Mehta, a former supply chain engineer at Amazon, the company has raised $8.5 million in venture capital to expand beyond its home base of San Francisco. Mehta said he liked that Chicagoans are already well-versed in using grocery delivery services, thanks to incumbents such as Skokie-based Web grocer Peapod, which was founded in 1989 and is now a unit of Dutch supermarket company Ahold."
KC's View:
I've always felt that it is a mistake to label Instacart a "grocery delivery service," because it really is a personal shopping service ... Instacart's relationship is with the consumer, for whom it does the shopping at specific stores, as opposed to representing the retailer to the customer.

Not that this is a bad thing. In fact, serving as the agent for the consumer may be the right place to be ... and if it can get the economics right, this could be a strong niche for Instacart.

I'm not quite convinced that this business model is going to work in the long run, just because I'm not sure how scalable a personal shopping service is. But Instacart says it is working on developing relationships with retailers, which could help it in the long run.