Dive Brief:
- Instacart said it had temporarily suspended deliveries from Trader Joe's locations in Chicago, just weeks after the San Francisco start-up arrived in the Windy City and announced services from Trader Joe's.
- Instacart said it had begun deliveries from Dominick's stores, and was seeking "a more formal relationship" with Trader Joe's.
- Instacart provides crowdsourced shopping services, i.e, consumers enter the items they want on an app, which then dispatches a delivery person from among the company's members.
- In San Francisco, the Instacart app can get deliveries from Whole Foods, Costco and Safeway.
- The company has said it plans to roll out in 10 cities by the end of 2014.
Dive Insight:
Few industries seem to attract as many dreamers as does online delivery services. For reasons that we cannot fathom, entrepreneurs continually tweak the delivery model, crash, then try again. Our favorite from the old days was Kozmo, which promised it would deliver anything you wanted within an hour! The company was out of business within a few years. But ominously enough, its website recently announced it would return to life soon.
The Instacart thing looks like deja vu all over again to us. First, it seems likely that the announcement on the Kozmo site actually refers to Instacart's plans for New York City, the former home of Kozmo. Second Instacart's recent problems in Chicago reminded us of the early days of Peapod. Back in the Internet boom, Peapod found itself living on ambition and an IPO-driven expansion plan—with a handful of employees working in the vast, empty, ghostly former headquarters of Brunswick Corp. in suburban Chicago. When the Internet bubble burst, Peapod was fortunate enough to have been acquired by Royal Ahold, parent of Stop and Shop. Our guess is that Instacart faces a similar fate—the company makes much more sense as an acquisition or exclusive partner than it does as an independent.
