How to Kickstart an On-demand Grocery Delivery Business like Instacart and Boost your Overall Revenue?

On-demand Grocery Delivery Business
On-demand Grocery Delivery Business

The idea behind a business determines its scope. This meant that any internationally acclaimed business would be detrimental to the profit and even the survival of local businesses. This was the thought process until the on-demand business model came into existence. While operating at an international or at least a national level, these businesses give a lot of scope for local players and service providers.

We have seen it happen with the cabinet industry when a company headquartered in San Francisco gave local gig employment opportunities to the people living in Wyoming and Colorado. This business model has been adopted by a lot of industries and service segments. Some of these segments have directly impacted our lives, and one of the most prominent among those in the food segment.

The food segment is quite lucrative, and it has been estimated that the food delivery market will reach a value of about $1.36 billion in 2021.

The Diversity

The food delivery market is far from being monotonous. On one side, some businesses specialize in delivering restaurant food to the location of users’ homes. There are also grocery delivery businesses that take care to deliver groceries to users. Some apps provide the best of both.

There are different kinds of abs and business models, even within the spectrum of grocery delivery on demand. There are businesses that use their own warehouse to deliver groceries to customers, and then there are chain grocery stores that pick up groceries from the nearest outlet of the user location. There are two different ways in which technology-driven grocery delivery can benefit local businesses. There are aggregators that take an order from a user and provide the details of the order to a local grocery. The onus of delivery falls on the local grocery store.

The most beneficial business model for both users and local grocery shops is when the app takes care of the delivery. Apps like Instacart use this business model.

Outside these prominent business models, there are even special business models where the customer can place an order and wait outside the grocery store to be delivered to their car.

The Different Entities

Now that we know that the Instacart business model is the most profitable and beneficial one, it is important to unravel how an app like Instacart works.

As you may have inferred, the Instacart ecosystem consists of three major entities, the individual buyer, the shopper, and the local grocery outlet.

As the name implies, the individual buyers are the people who placed an order using the app. They are, in essence, the primary clients of the business. These individual buyers’ sole intention is to buy the groceries they need without encountering the hassle involved in shopping. Although it can be attributed to the millennial mindset, this desire has not changed with the social distancing in positions because of the COVID-19 crisis.

The shoppers are not only the segment of gig workers who will take care to perform the shopping in the local outlet on behalf of the user. At times, they are also responsible for the grocery delivery to the home of the user. The shoppers can either work with the app full-time or can be stationed within the store. They do not have the responsibility of delivery, but only filling up the shopping bags in line with the customer’s order.

Not every local store is partnered with a business-like Instacart. The stores that have partnered with these grocery delivery aggregator apps are given a special card machine that the shoppers can swipe with a dedicated card for making their purchases.

How Does An Instacart-Like App Work?

With all these entities in place, it is not easy to understand how an app like Instacart works.

  • The customer downloads the mobile app or opens the website and chooses a store to place the grocery order.
  • The customer adds items to the cart based on the availability at that particular store.
  • The customer can make a payment using digital payment methods like credit cards, debit cards, and Internet banking.
  • Once the order has been placed, a notification is sent to the shopper who waits either at the store or is in the vicinity.
  • The shopper takes care to fill the shopping bag and get it bagged and ready for delivery.
  • The shopper, guided by GPS and navigation, reaches the user’s location with the grocery order.
  • The user can rate their experience with the delivery executive and the local store, enabling the system to become more democratic.

The Methods of Monetization

No business would be complete without a business model that showcases profit. There are different ways in which you can build your profit from a grocery delivery app like Instacart.

  • Instacart charges a flat delivery fee of $5.99 for orders valued over $35 and $7.99 for orders valued under $35.
  • There is also an additional delivery fee associated with express deliveries or during peak hours. On peak hours, an extra two dollars is charged as a delivery fee from the users.
  • Instacart Express is a premium service offered by Instacart where users can get a free two hour delivery on orders above $35. Instacart charges a yearly subscription fee of $149 for users to avail of the service.
  • In addition to this, your app can also mark up grocery items’ prices, so your profit comes from the price difference.
  • You can also include a featured listing where some local grocery outlets can be an additional amount to be listed on the top of search results on even on the main banner of the app.

The Features

The workflow and the monetization models help us deduce the list of essential features.

  • The app should have a shopping list, which can be considered the cornerstone of the entire app.
  • The search and filter functionality will help users arrive at the right product, increasing the possibility of them placing an order.
  • The shopping cart should be easy to access. If possible, it should also have an automatic update feature that will place items in the cart based on the grocery items that were not delivered in the previous order. 
  • Artificial intelligence can be brought in, so it can’t take into consideration the general consumption patterns of users to suggest items based on the intervals between shopping.
  • The customers should be provided with discounts and offer periodically, so they stick to your app and keep up the loyalty.
  • The customer should be able to make payments using multiple payment methods, and for this purpose, your app should be integrated with a versatile payment services provider.
  • The user should be able to schedule deliveries based on their time of availability, and should also be able to choose delivery slots.
  • The mapping and GPS combination should guide shoppers in reaching the customer’s location and update about the movement of the shop or in real-time for the customers.
  • The customer should be able to submit ratings and reviews based on their experience.
  • There are a few additional features like social media-enabled logins that can help you position your app better than your competitors.

The Challenges

Just like any other on-demand business model, the grocery delivery business also has its own share of challenges. However, most of the challenges have been addressed effectively. For example, the data about grocery stores can be obtained from apps that provide an API that has already established an inventory. A customer support team can help take care of wrong orders and refund requests. Data can be effectively used to mobilize more shoppers during times of higher demand.


The profitability and the promising future for an app like Instacart have already been established. Unlike every other on-demand business, the grocery delivery business has a broad scope of audience. It might not be an exaggeration to say that almost every individual is a grocery consumer.

If you are one of those entrepreneurs who have an idea to start your own grocery delivery app business, you might want to start by building your Instacart-like app. Instead of making the app from scratch, you can consider customizing an Instacart clone script.

These clones scripts are easy to customize and cost you relatively less both in terms of time and money. They will also be free from bugs that might interfere with the basic functionality.

All you need to do is get in touch with the company specializing in Instacart clone app development. They will take care of not only to understand your requirement but also to create and customize the app in line with your business.