Instacart, the San Francisco–based delivery service founded in 2012 by former Amazon employee Apoorva Mehta, was originally conceived for the grocery space. Today the company is present in 25 U.S. metropolitan markets and has partnered with such major chains as Whole Foods Market, Costco and Petco, as well as regional players like Marsh Supermarkets, Bi-Rite and Cub Foods. Over the past two years, Instacart has been adding beverage alcohol to its repertoire and has extended that service into more than a dozen of its markets around the country.
Instacart currently offers delivery from powerhouse liquor outlets like the 135-unit Total Wine & More, Texas-based Spec’s Wines, Spirits & Finer Foods, and Binny’s Beverage Depot in Chicago, as well as from grocery stores where permitted. “Beverage alcohol delivery is a logical extension of our grocery model,” says Andrew Nodes, Instacart’s head of retail accounts. “It’s all about getting our users the products they love from retailers they already know and trust.”
Instacart’s business model is somewhat unusual: It stocks no inventory and doesn’t own warehouses or trucks. Instead, the company works with brick-and-mortar retailers and deploys part-time personal shoppers. Through the Instacart app, customers choose a delivery window of one hour, two hours or a scheduled future time. A personal shopper then accepts the order, drives to the store, picks up the requested items and delivers them to the customer.
The idea behind the model is to leverage the power and expertise of existing stores. “Retailers control much of the customer experience—including assortment, pricing and branding,” Nodes says. “They have a strong grasp of merchandising and customer demand, while we offer efficiency and a great e-commerce product.” In some of its partnerships, Instacart shares the retailer’s markup, which keeps prices identical to those in the store. Where no partnership exists, Instacart adds its own markup. In both cases, the company also levies a delivery charge.
Tom Haubenstricker, CFO for Total Wine, says his company is testing a number of delivery partners, including Instacart. Total Wine launched an Instacart partnership last November in Miami Beach and has since expanded into five states. “It’s very early days, but Instacart is proving to be a competent and able partner as we move forward in this space,” Haubenstricker says.
Of course, regulations on the sale and delivery of beverage alcohol can be complicated. State laws vary widely, with many banning delivery outright and others imposing significant strictures. But that hasn’t stopped a slew of delivery companies—including Drizly, Saucey, Minibar, Thirstie, Klink and others—from jumping into this highly competitive space. And it certainly isn’t holding back Instacart, which says beverage alcohol delivery will be a major focus going forward.
Instacart approaches each market differently, but Nodes says the company performs stringent operational and legal diligence prior to launching the beverage alcohol service. “Sometimes we enter a new market with grocery and introduce beverage alcohol several months later,” he adds. “This strategy gives our team a chance to familiarize themselves with the regional logistics and allows our legal team to finalize their due diligence.” John Jordan, senior vice president of customer experience at Total Wine, says Instacart’s personal shopper model is appealing. “Their individuals are in our stores, doing the shopping and packing,” he says.
Nodes sees demand for beverage alcohol delivery expanding. “It has become abundantly clear that customers want options for obtaining alcohol, whether it be in a brick-and-mortar location or online,” he says. “Instacart allows retailers to have an omni-channel approach. We’re an ‘and’ rather than an ‘or’ for our partners.”