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 Forbes contributor Christian de Looper has named Instacart the best grocery delivery service for shopping locally in 2020, 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 2020.
What is Instacart and how does it make money?
Quick facts about Instacart:
- Has been operating for more than 8 years
- Serves the needs of more than 200,000 users
- Estimated valuation exceeds $13 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 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.
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 — 5% of the order total
In addition, customers can subscribe to Instacart Express to get unlimited deliveries for $9.99 a month or $99 annually.
Delivery and service fees, Instacart Express subscriptions, and paid advertising are the key elements of the Instacart monetization model. Still, Instacart fees are the subject of constant complaints and criticism.
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 an app like Instacart?
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 in an app like Instacart
To build a great Instacart-like business, you’ll need to figure out the main 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, and email address as well as a 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.
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.
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 app.
- 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.
- 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 in an app like Instacart
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.
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-based 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 in an app like Instacart
When building functionality for shoppers, consider the importance of features for accepting and rejecting orders.
Shoppers want to choose which orders to fulfil. Inform them about order requests and let them accept those they’re ready to fulfil in just one click.
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
- restaurants, shops, and products
- customer support
How to organize your 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 web app and mobile apps.
- Remember that we live in a mobile-first age. Most of your target audience will only order food using mobile devices. So a high-quality mobile app 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 and mistakenly withheld tips. So here comes our key advice that will be useful at each stage of your product’s 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 for 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 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 a software development team in your region
- Start cooperating with freelancers
- Outsource software development to a team with expertise in your niche
Time to hire
According to Glassdoor, in average, it takes 40 days to hire a single software development engineer in the US.
Typically, an app development team needs 4 to 6 specialists, so recruitment may take several months.
On a freelance marketplace, you can hire a team of freelancers in 1 to 5 days.
An outsourcing company can provide you with an entire engineering team that can start to work on your project as soon as you provide the requirements and sign an agreement.
No need to invest extra time in recruitment and interviews.
Price for services
The cost of developers depends on the region. In the US, developers’ rates are the highest in the world and range between $100 and $200 per hour.
Per-hour rates depend on a developer’s skills, experience, and location.
By outsourcing your product development to Eastern Europe, you can save up to 400% compared to in-house development in the US.
Working side by side with a team, you can control the development process and build transparent relationships.
Due to a lack of regulations, cooperation with freelancers is risky.
Good outsourcing companies care about their reputations. After signing an agreement, you can be sure about the quality of deliverables and terms of engagement.
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 stages of your business growth:
- Designing your website and app
- Developing the app’s user interface and back end
- Testing your app and handling quality assurance
We’ve calculated the approximate time frames for each stage.
MVP development and testing
Keep in mind that in this table, we provide the approximate time needed to develop an MVP for an app like Instacart. Further support and maintenance along with developing new functionality will last as long as your app operates.
Step 5 — Iterations and production stage
Most of the modern software development teams use the Scrum framework for organizing the development process. Scrum workflow consists of sprints, during each of which a defined amount of work is done. When all of your app’s features are ready and everything works according to your requirements and documentation, it’s time to publish your app on the App Store and Google Play Market. To get your app published, you need to comply with App Store and Play Store rules. Typically, the approval process takes up to seven days.
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:
- 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.
- 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.
- Government grants
In 2020, government grants are plentiful and profitable like never before. Due to COVID-19-related troubles, 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, if you’re working on a solution that will help us survive in a world of social isolation, 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.
On-demand grocery delivery is one of the most promising niches to enter in 2020, 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.
At the early stage of your brand development, the main challenge is to find a reliable team with enough expertise in designing and developing delivery services. If you’re looking for a professional engineering partner, drop us a line. We have more valuable tips we’ll be happy to share on how to build a market-leading on-demand delivery app.