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Instacart launches premade food-delivery service to take on DoorDash, Uber

By Arghyadeep on Jan 14, 2022 | 04:34 AM IST

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• Instacart aims to compete with take-out meal

• DoorDash and Uber have increased competition in grocery delivery

Groceries delivery app Instacart Inc is launching a service to offer premade foods from supermarkets to capture more customers and better compete in the meal delivery market amid the surging Omicron cases.

The company on Thursday said customers can choose from hundreds of ready-to-eat meals from grocery stores, including Publix, GIANT, Food Lion, Hannaford, Stop & Shop, Martin’s, Kroger, and ShopRite and promises to deliver it within 30 minutes.

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“With our new Ready Meals Hub, we’re dishing up inspiring, more affordable, and nutritious food alternatives to restaurant delivery that make it easier for consumers to break up with take-out this year,” said Daniel Danker, Vice President & Head of Product of Instacart.

“We’re also helping retailers drive more sales and increase their ‘share of stomach’ when it comes to their customers’ daily mealtime decisions.”

The San Francisco-based startup said the service will be available at 4,100 stores in 35 states, and customers can also tack on a few grocery items with their orders.

Groceries and food delivery market

Competition in the grocery delivery segment has intensified over the past year, with DoorDash Inc (NYSE: DASH) and Uber Technologies Inc (NYSE: UBER) stepping up efforts to rival Instacart’s stronghold in the U.S.

“Ready-made meals are not necessarily something people would think to come to Instacart for, and grocery stores have not had an easy time at reaching customers online in this area,” Danker told Bloomberg in an interview.

The U.S. chilled and deli food market size is projected to reach more than $108 billion by 2026, according to market analytics firm Research and Markets.

The San Francisco-based startup said order-ahead items and prepared foods are more profitable for retailers than traditional groceries and packaged goods.

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Bloomberg said when the new organization asked Danker whether Instacart would ever offer delivery from restaurants, he replied the company is focused on being a partner to grocery stores.

“This is cheaper, healthier, and fresh. We’re calling it a breakup with take-out,” Danker said, adding that the new ready-made meal offering is a new approach rather than tapping entrenched behaviors in the meal delivery.

Operation expansion

Market research firm YipitData’s report shows even as Instacart’s average order values are typically 3 to 4 times larger than DoorDash and Uber, Instacart’s customers also order less frequently, as customers spend more on stocking up pantries than on individual take-out meals.

However, Instacart’s average order values have seen a steady decline and were about 15% lower in November than the year earlier, YipitData show.

The startup had also appointed Fidji Simo, former head of the Facebook App at Meta Platforms Inc (NASDAQ: FB), as its new CEO in August last year to expand its operations and go public.

The new prepared-meal hub is built on FoodStorm, a catering order management system that Instacart acquired in October.

Picture Credit: Instacart

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