🚀 New Revenue Streams
Instacart partnered with Uber Eats in May to add restaurant delivery to its services. Users can order from Uber Eats' local restaurant partners via the Instacart app, increasing revenue for Instacart with little cost. David Bishop, partner at Brick Meets Click, said, "The arrangement creates a new source of revenue, with high margins, for Instacart while it exposes Uber Eats in theory to a larger customer pool." Instacart receives revenues for each transaction it refers to Uber Eats.
📈 Expanding Reach
Uber Eats benefits from reaching Instacart's customer base, potentially attracting new users. Fidji Simo, CEO of Instacart, noted that the partnership targets families and suburban consumers, aiming to convert them into restaurant customers. "We know that our customers already go to other apps to order from restaurants. That’s why we decided to prioritize entering this category," said Simo. This collaboration aims to make Instacart users more engaged with the app.
💡 Instacart+ Membership Perks
Instacart+ members can enjoy free restaurant delivery on orders over $35, similar to grocery deliveries. This addition enhances the value of Instacart+, competing with Amazon Prime for grocery delivery. Simo stated, "We really have the best value within Instacart+ being $99 a year, now twice as valuable with the addition of restaurants and not requiring an extra subscription." The partnership allows Instacart to offer extensive options without creating new technology.
🔍 Market Dynamics
The partnership may influence market dynamics. Uber Eats aims to gain market share from rivals like DoorDash, which holds 67% of the restaurant delivery market compared to Uber Eats' 23%. Jon Feldman, an angel investor, said, "This gives [Instacart] the best of both worlds in one app for its members." Instacart might avoid entering the restaurant vertical directly, raising questions about Uber's grocery delivery strategy. Bishop noted, "More grocers could consider partnering with delivery providers like DoorDash to make it easier to order prepared foods from the store."
Will Instacart's new partnership change your delivery habits?
