How much will you pay to have your groceries delivered to home or office? As the following Grocery Dive article reports, Instacart has implemented a series of fee reductions to attract more customers in a highly competitive market.
Instacart has significantly reduced fees for home delivery and its Instacart Express membership service, a company spokesperson confirmed to Grocery Dive. News of the new fee structure, which quietly went into effect November 14, was first reported by Business Insider.
The annual fee for Instacart Express, the membership service that offers free delivery on orders over $35, has dropped from $149 to $99. Instacart has eliminated the 5% service fee previously included with each order and set the default tip to 5%. The company is also offering free store pickup for Express members.
Those who shop Instacart without a membership have seen delivery fees drop from $5.99 to $3.99 across North America for same-day and next-day orders over $35 — with the exception of New York City, where the fee dropped from $7.99 to $5.99, and club store orders, which will charge an $8.99 fee. One-hour deliveries are subject to additional fees, according to Instacart. A la carte customers will still pay the 5% service fee and a 5% default tip.
Online grocery sales in the United States have very low penetration, estimated at 1–2% of the total market. In comparison, penetration of the U.K. market is about 8–9% according to Ocado, a U.K. e-commerce grocer. Delivery services have now become a key differentiating advantage for grocery stores. Given that U.S. consumers have a seemingly insatiable appetite for immediacy and convenience, 2019 will be the year of online ordering business for the grocery market vertical in the U.S. Watch players such as Instacart, Shipt (now owned by Target), Postmates, as well as Walmart and Amazon’s Whole Foods as they jockey for position in this hotly contested space.
Overview by Raymond Pucci, Director Merchant Services at Mercator Advisory Group