Instacart is looking to disrupt Amazon.com, Inc. (NASDAQ:AMZN)’s dominance of the same day delivery business having already raised $210 million in a round of financing. Bloomberg’s, Cory Johnson, notes that Instacart is gaining an advantage in the space as it does not own any warehouses or inventories considerably relieving it of any unnecessary expenses.
Bloomberg reports that Instacart has an option to raise up to $220 million according to SEC filings. The startup will look to use the finances to fight off Amazon.com, Inc. (NASDAQ:AMZN) as the race for consumers who are too busy to do shopping heats up. Bullpen Capital adviser Semil Shah believes that Instacart is gaining popularity among retailers due to its interactive business model.
“Instacart is able to give grocery stores data back; it is data that other companies cannot capture. […] It is hard for a large company to get out and do it. Plus Instacart has a different model where they are bringing together a marketplace of personal shoppers who want to work” said Mr. Shah.
Unlike Amazon.com, Inc. (NASDAQ:AMZN), Instacart runs a business model similar to that of taxi giant Uber where it does not have a huge employee’s base but essentially signs labor contracts with normal people. People, who have signed contracts with Instacart, can log into the company when they want to and be assigned deliveries to make; allowing most of them to have separate jobs on the side.
Instacart is already profitable on its business model unlike Amazon.com, Inc. (NASDAQ:AMZN), which was the subject of concern last year due to its suppressed margins in the online space. Instacart will now look offset Amazon.com, Inc. (NASDAQ:AMZN)’s Prime Service that continues to command impressive sales at the back of increased subscriptions.
“What you are really getting at is this idea of being able to deliver something to somebody and capture that data and create that customer relationship. The other piece, which I think, is a key strategic advantage is they are already profitable, but you can also start to spin newer cities,” said Mr. Shah.
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