US grocery delivery venture Instacart wants to be Facebook, according to Brittain Ladd.
The former Amazon exec and supply chain consultant notes that Instacart has been making a series of interesting moves as it prepares to launch an IPO later in 2021 or early 2022.
This includes naming Fidji Simo, a high ranking executive at Facebook, as CEO. In turn, Simo recently chose Facebook veteran Carolyn Everson to be Instacart's President.
“I like the changes as it provides Instacart with a more experienced executive team to run the company,” Ladd said in a LinkedIn post.
We’re excited to share that @ceverson is joining Instacart as President. Read more on her appointment & the deep expertise she’ll bring to Instacart as we continue to reimagine the role Instacart can play in the future of food: https://t.co/nozpND3xes
— Instacart (@Instacart) August 4, 2021
Instacart also recently partnered with Fabric to open micro-fulfilment centres (MFCs), although Ladd is less impressed with this initiative.
“Among my concerns are the fact that in off the record discussions with current and former Fabric executives, concerns were raised about its software and technology,” he commented.
“My sincere desire is that Everson and Simo will hire an independent material handling firm, consulting firm, or a system integrator, to throughly evaluate Fabric's solution. In addition, the decision to select Fabric over Attabotics., AutoStore, Addverb, Alert Innovation, Berkshire Grey, Exotec, and Geek+, should be reviewed.”
Ladd insists that he has no financial interests in any of the aforementioned micro-fulfilment companies. “In my opinion, a review is necessary to protect the reputation of Fabric and Instacart. If issues are found, they can be addressed.”
He added: “I support the decision to open MFCs. In addition, I've recommended Instacart to acquire a system integrator allowing it to sell or lease MFCs direct to its grocery customers.”
“Why? Because its grocery customers are actively engaged in discussions with micro-fulfilment companies. Grocery customers of Instacart that install their own MFCs, no longer need Instacart. From a strategy perspective, what I recommend would be a wise move on the part of Instacart.”
He also believes that vertically integrating and opening MFCs will allow the company to pivot away from its grocery customers, and help it to become an online grocery retailer selling direct to consumers.
Ladd concluded: “I’ve also stated Instacart can easily acquire any number of grocery retailers. They’re making a big mistake ignoring Gopuff. Acquire GoPuff. Like now.”
Comments (2)
I think Instacart decision actually makes a lot of sense. They "don't" want to repeat Amazon's mistake. They don't want to compete with retailers in selling groceries. Retailers like Kroger are experimenting with robotic fulfilment via Ocado, but one thing they have learnt is that without end-to-end integration, its a sh*t show. Instacart partnering with a relatively less-known Fabric gives them the leverage to build this deep integration, which they can pass on to the retailers. What instacart is aiming for is deeper partnership with retailers, propping them with cheaper loyalty integrations, infrastructure services and white-label platforms. In return it gets exclusivity contracts where the partnership is secured from competition and they don't have to waste money in fending off Uber and Doordash, which are not even able to get retailers with 0-fee multi-year contracts.
I think Instacart has played it quite well. Maintaining a profitable business, securing a nearly 50% marketshare, and expanding advertisements, international expansion, and other segments like convenience is a winning strategy. Compare them with Doordash, and Uber -- who have lost over 500million to a billion every year --- I think Instacart has done very well. They don't need Uber's hair-brained moves like self -driving, helicopter-propelled deliveries. They need to make sure they keep the costs low, business profitable, stay invested in new IPs, and maintain near 50% marketshare. They are doing that well.