Grocery Delivery App Development Guide: Instacart Approach Explained

Instacart, an American grocery delivery company, doubled its user base during the first month of the coronavirus pandemic. Since March 2020, Instacart has launched 15 new products and support features. But while the New York Post has named Instacart one of the best grocery delivery services in 2023, the company still only operates in the US and Canada. There may be a wide, uncovered market right outside your window, full of consumer demand and business opportunities for an on-demand grocery delivery app.

We’re here to answer the hottest questions about how to build an app like Instacart for your region or city. Follow our guide to build a competitive grocery delivery business in 2024.

What is a grocery delivery app and how does it make money?

Quick facts about Instacart:

• Has been operating for more than 11 years
• Serves the needs of more than 10.000.000 users
• Estimated valuation exceeds $9 billion

It’s been a long journey for Instacart to become viable.

Instacart founder Apoorva Mehta tried to start more than 20 other services before he launched a really successful product.

Instacart consists of two apps: an app for customers and an app for shoppers. Using the customer app, consumers can find their favorite grocery stores and restaurants, order prepared food and grocery products, and schedule a suitable delivery time. In turn, the shopper app allows people to make money by shopping and delivering Instacart orders. Shoppers can accept orders and chat with customers. A bit later, we’ll take a closer look at the functionality of both of these apps.

The Instacart grocery delivery app is a peer-to-peer (P2P) marketplace. This means a single user can play the roles of customer and shopper. If you need something but don’t have time to go shopping, you can place an order via the Instacart grocery marketplace, and a shopper will deliver it. At the same time, you can make money by shopping and delivering goods to other Instacart customers. This business model is a core component of the sharing economy and has created advantageous conditions for the growth of powerful businesses like Airbnb and Uber.

There are numerous well-known grocery delivery apps on the market right now, including Uber Eats, DoorDash, Amazon Fresh, and GoPuff. All of them use the aggregator model, like Instacart. It means that the company is partnered with several suppliers and is responsible only for the delivery of goods, not for their quality and promotion.

The main alternative to aggregators is the single-store model or grocery store apps. With this approach, companies that sell groceries can build a food delivery app to avoid paying commissions to applications like Instacart and to have more control over the delivery process itself. Think of Walmart or Target apps to have a better understanding of this business model.

Each application has different elements of their monetization model, but the most common means of monetization are delivery and service fees, premium subscriptions, commission from stores, markup on products, advertising, and strategic partnerships with brands.

Instacart charges customers two fees for each order:

• Delivery fee — depends on the order total and varies between $3.99 and $7.99
• Service fee — from 5% to 10% of the order total

In addition, customers can subscribe to Instacart+ to get unlimited deliveries for $9.99 a month or $99 annually.

Delivery and service fees, Instacart+ subscriptions, and paid advertising are the key elements of the Instacart monetization model. Still, Instacart fees are the subject of constant complaints and criticism. There is room for improvement, and maybe you will find a more transparent business model for a grocery delivery app and attract more clients.

By revealing Instacart’s weaknesses, we’ll provide you with actionable tips on how to make your app stronger.

Let’s find out the main features you should implement in your own Instacart-like app.

What features should you implement in a grocery delivery app?

An app like Instacart serves the needs of customers and shoppers. In this section, we list core features for each of these roles.

Common features

To build a great Instacart-like business, you’ll need to figure out your features for a minimum viable product (MVP). There are certain features both customers and shoppers need:

• Sign-up and sign-in

Focus on providing seamless, intuitive access to your app. Let users sign up and sign in using an email and password via a standard authentication procedure or allow simple one-click sign-up and sign-in using a Facebook, Twitter, LinkedIn, or Google account.

• User profile

User profiles are a critical component of a grocery delivery app. At the initial stages of account creation, ask the user for basic information like the user’s name, contact details, mail address, and physical address for deliveries.

As your marketplace grows, allow users to add profile pictures and customize their profiles. Let them choose between several color schemes and fonts or come up with other ideas for differentiating profiles.

• Notifications

Notify shoppers about new orders and messages from customers. You should also notify customers about delivery statuses, new restaurants that join the platform, and new features or updates.

• Payment functionality

An easy-to-use payment gateway is a critical feature of any app like Instacart. Depending on your customers’ preferences and locations, you can integrate PayPal, Braintree, Authorize.net, or other similar services. For example, the Uber Eats and Doordash on-demand delivery apps use the Square payment gateway. Analyze local market needs and popular payment services to pick the best solution for your app.

• Chats

Chat functionality enables a constant interaction between customers, shoppers, and an app’s customer support team. Even the simplest chat functionality may meet the needs of a food delivery service.

• Reviews and ratings

Let users share their impressions of each order. Upgrade shopper profiles with a rating system to increase trustworthiness and transparency on your platform.

Features for customers

You should offer customers the following features:

• Product search and filters

When they open your app, customers may be tired, hungry, or limited by a tight lunch break. Help them find what they’re looking for in the fastest and easiest way. Add a search bar for keyword-based search and add product category, restaurant, and grocery store filters so customers can find what they want.

• Order history

To make ordering even simpler, create a previous orders feature. Collect information about fulfilled orders, let customers pick items from their order histories in one click, and add a reordering feature to shoppers’ profiles.

• Cart

The cart and checkout features should be particularly convenient. On the checkout page, allow users to:

• view and edit cart contents
• change the quantity of products in the cart
• apply coupons and special offers
• provide contact details
• select a preferred delivery date and time
• add delivery instructions

Let users not only pay for orders on the checkout page but also add tips for couriers.

• Location-based features

Another valuable feature is the ability to determine a user’s location. By integrating location intelligence functionality into your app, you can:

• simplify the delivery process by giving shoppers detailed information about delivery destinations
• calculate delivery times so both customers and shoppers have an approximate schedule
• offer location-based advertising so customers see offers from local grocery stores at the top of the list

Features for shoppers

• Order management

When building functionality for shoppers, consider the importance of features for accepting and rejecting orders.

Shoppers want to choose which orders to fulfill. Inform them about order requests and let them accept those they’re ready to fulfill in just one click.

• Admin panel

Remember to create an admin panel to manage relations among your app’s users, modify the app’s content, and provide customer support features. Your admin panel should be simple, but make it convenient to manage:

• users and subscriptions
• Order cancellations and refunds;
• restaurants, shops, and products
• customer support

How to organize your grocery delivery app development process

Thorough planning at the start will save you time and resources in the future. To build an app like Instacart the right way, follow these seven steps:

Step 1 — Get acquainted with the local market

For the best results, pay attention to both your mobile and web-based applications.

Remember that we live in a mobile-first age. Most of your target audience will only order food using mobile devices. So, mobile app development should be your top priority.

A business website will serve to promote your brand. It can also allow you to reach potential customers who prefer using a desktop or laptop instead of a smartphone.

Start with research and find out as much as you can about the demands of your target market. Find out if your potential customers use apps similar to yours. If they do, download those apps, try them for a while, study the reviews, and develop a plan to make your app better.

For instance, even a giant such as Instacart has numerous troubles. One of them is related to software errors, including mistakenly withheld tips. So here comes our key advice that will be useful at each stage of your grocery delivery app development: no matter what you build, make sure you offer a flawless user experience.

Step 2 — Choose a monetization model

Once you know your target audience’s wishes and preferences, as well as the region you’d like to target, come up with an idea for how to make money with your app.

As we’ve mentioned, Instacart employs several monetization models, including delivery fees and subscriptions. However, Instacart’s monetization methods are rather controversial. There have been several cases demonstrating that Instacart raises delivery fees while cutting shoppers’ pay. When developing your own monetization approach, avoid making Instacart’s mistakes and set affordable and reasonable service fees. This will help you deal with the so-called chicken and egg problem young businesses suffer from and will make your service more attractive to existing customers.

Step 3 — Find an engineering partner

Even if you’re a skilled software engineer, it’s a huge challenge to launch an app like Instacart all by yourself. It may take too much time and require the energy you need for important business development tasks.

Hiring a software development team may be one of the most serious decisions on your road to success. You have several options:

• Hire an in-house software development team
• Start cooperating with freelancers
• Outsource building app to a team with expertise in custom logistics software development services

A comprehensive comparison of these options demonstrates the obvious advantages of software development outsourcing. Choose it as your initial strategy. Later, when you have more financial resources and are confident that your app is viable, you may extend your team with local software engineers.

Step 4 — Delegate design, development, and QA tasks

The software engineering partner you cooperate with is mainly responsible for three crucial processes in your app creation:

1. Designing your website and app
2. Developing the app’s user interface and back end
3. Testing your app and handling quality assurance

Step 6 — Promote your idea and test the concept

Before launching your product, warm up your target audience. Use your website, social media profiles, and marketing and advertising methods to inform potential users about your app. Show your competitive advantages and prove that your app is exactly what the local market has been waiting for.

As the very first people start using your app, ask them their opinions, collect feedback, and implement updates to meet their expectations. Doing so will help you move forward and prove your app’s viability to potential investors.

Step 7 — Raise funds for further growth

If you started with your own money, you may already feel the need for external funds and high investment for further growth. There are several options to choose, and you can try each of them to raise the necessary funds:

1. Launch a crowdfunding campaign

If there’s something innovative or extraordinarily useful in your app, you can start a campaign on a website like Kickstarter and attract investments. Crowdfunding platforms mainly focus on revolutionary ideas, so give your app like Instacart unique features to make it attractive to supporters.

2. Partner with an angel investor

More than ten years ago, Airbnb started to grow with money from an angel investor. Now, Airbnb occupies an impressive position in the home rental market.

Browse your LinkedIn network. Maybe an angel investor is among your connections, open to new opportunities, and interested in your presentation and MVP.

3. Government grants

Governments worldwide are trying to support local businesses by simplifying rules, offering more investment, and taking other measures. Obtaining government grants may be rather time-consuming and tedious; however, you have every chance to get a piece of the pie.

That’s not the entire list of ways to raise funds. For more on this topic, check out our research on the most effective ways to raise funds for a startup.

Grocery delivery market trends

Now that you know how to build an application similar to Instacart, let’s talk about key trends in the online grocery delivery market. This information will enable you to create a grocery delivery app with a competitive edge.

Rapid growth

Online grocery delivery apps are more popular than ever. By 2030, the online grocery shopping market will reach 2,159 billion dollars. Young people worldwide prefer to save time and avoid traveling to stores, which is the main driver behind this growth. The global pandemic also played a crucial role in increasing the popularity of online marketplaces and other e-commerce platforms. Now is a great time to launch logistics startups working in online grocery delivery.

Competitive landscape

The online grocery delivery market is growing quickly and offers many opportunities for monetization, but competition is heavy. There are some established players like Instacart and Amazon Fresh, as well as single-store applications such as Walmart or Kroger. Apps like Uber Eats and DoorDash, which are known for delivery from restaurants, are also entering the grocery shopping market. To avoid failure, you should conduct startup market research, consider building an MVP first, and learn about app development trends for creating a product with in-demand features and advanced technological integrations.

Emphasis on sustainability

Eco-friendly practices and carbon footprint reduction are key elements of many industries, including logistics. Online grocery delivery services are focusing on reducing packaging waste, offering more locally sourced and sustainable products, and using advanced analytics and AI to predict the demand more accurately and avoid food spoilage. Also, many delivery services use route optimization software or electric vehicles for deliveries.

Understanding of market trends is essential, but still can’t guarantee you a smooth and effortless software development process. Let’s talk about challenges that you may encounter.

The challenges of building a grocery delivery app

Grocery delivery application development involves several challenges. We cover the most common of them so you can avoid many software project risks and launch a successful app like Instacart.

• Challenge: Retaining customers in a competitive market

Solution: Use AI-driven technologies to provide a personalized shopping experience. Analyze user behaviors and preferences for targeted recommendations. Offer exclusive discounts and make it easier to repeat previous orders.

• Challenge: Offering efficient customer support

Solution: Implement several customer support channels, like live chat, emails, or phone support. Use AI-driven chatbots to provide 24/7 instant answers to customers’ queries.

• Challenge: Keeping customers informed about the status of their order

Solution: Consider opting for location-based app development services or hiring software engineers with experience in this field. They can easily integrate GPS-tracking services like Google Maps into your app.

• Challenge: Coordinating deliveries

Solution: To efficiently manage multiple deliveries at once, use advanced logistics software for route planning and optimization. Consider third-party logistics partnerships to expand your capabilities without significant investments.

• Challenge: Dealing with growing amounts of data

Solution: Partner with a product development company that has experience with custom logistics software or hire experienced engineers in your in-house team. They will be able to create a scalable database and choose the best cloud service provider.

• Challenge: Ensuring data security

Solution: Adhere to best practices in cyber security, such as data encryption or using HTTPS. Ensure secure payment getaways. Conduct regular security audits to prevent breaches and data leaks.

The costs of on-demand grocery delivery app development

We covered all key aspects of grocery delivery app development except one. How much does it cost to build an app like Instacart?

There is no definite answer. The final cost of grocery app development will depend on the number and complexity of features you decide to add, the technology stack you use, and the project timeframe. Grocery delivery applications usually include some advanced features, plus you basically need to create three separate apps with different functionalities: an app for customers, an app for shoppers, and an admin panel. Don’t forget about third-party integrations, such as Google Maps or payment getaways.

To avoid spending several hundred thousand dollars on an app that may never find its target audience, we recommend starting with the discovery phase. The price starts at $12,000, and it usually takes two to three months. During the discovery phase, software development experts, business analysts, and marketing professionals will help you to conduct thorough competitor and market research, create project documentation, build an app prototype, and come up with an accurate estimate and timeline for your project.

After the discovery phase is over, it is time to build a minimum viable product (MVP). MVP for startups usually start at $100,000 and take more than three months to develop. MVP will allow you to put your product to market as soon as possible, start making deliveries, and generate revenue. After MVP is launched, you can add additional features and fine-tune your app with the tech team.

In conclusion

On-demand grocery delivery is one of the most promising niches to enter in 2024, and companies like Instacart are seeing massive revenue.

A viable Instacart-like app can be a core element of your business success. By complementing a high-quality software solution with attractive deals, offering high rates for shoppers, and taking a customer-oriented approach, you’ll have a real chance to grow a powerful company.

As the industry changes, modify your offers according to the latest trends and demands. Study industry leaders and don’t hesitate to implement innovative features.

If you want to learn how to create an app like Instacart, we can help you. At Clockwise Software we have experience working on different products, including SaaS application development, web apps, and building custom logistics solutions. Our team can assist you during every stage, from the discovery phase to the launch.