Instacarts Company Strategic Position and Potential Product Map - Paper Example

For most tech companies, they have a dream of installing a web-enabled grocery delivery system. In the late 1990s, most of the grocery delivery startups such as Homegrocer and Webvan had raised vast sums of money before they were declared bankrupt. However, what followed was a period of unsuccessful operations indicating that these companies business models were inherently not attractive. Moreover, the rise of smartphone and internet penetration, big data innovation and trust in online delivery resulted in the foundation of online demand economy for the purpose of business survival. Today, there is only one startup that has been able to crack the grocery delivery code (Aoki, & Imai, 2011). For example, Instacart has been able extended its business operations within three years, has grown the company ten times within the last one year, its capital has raised to more than $275 million that makes its value to $2billion. For continuous growth and rise, the startups unique lightweight and friendly retail approach will be required to enhance effective competition in the crowded field of tech giants. I addition, there are other new features that Instacart need to launch for the purpose of accelerating its penetration and growth. The purpose of this paper is to conduct an analysis of the current Instacarts landscape and recommend and prioritize the appropriate feature/ strategies that can enhance development and growth of the company (Aoki, & Imai, 2011).

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Order now

Instacart current strategic position

Instacart is a unique business in that its operations does not rely wholly on the management of its inventory, investing and fulfillment or warehouses. The company capital efficient and has high possibilities of scaling. Furthermore, the organization has already had an installed infrastructure that is important to expand to other cities (Mehrotra, 2013). The company does not experience competitive pressure during expansion since it operates as a partner for grocery stores. In fact, Instacart functions as an arms dealer for stores since their primary objective is to compete to increase their spending and attract more customers. Instacart has been relying on the existing stores thus having access to large SKU selection. Moreover, the company sits on top of other existing brands and their customers clearly understands price and quality dimensions during shopping. Moreover, marketing has been made to be more efficient as customers can select the brands automatically that they are familiar with (Mehrotra, 2013).

Regardless of the various success of Instacart in different fields, the company is currently being faced with some challenges. For instance, making both offline and online prices to match has been a historical problem. While their delivery pricing is considerably low as compared to their primary competitors, the company marks up prices on its partner stores. In addition, these markups are not entirely transparent, and thus there is a possible risk of users feeling being mistreated after discovering that their proposition value is not strong enough than before. Another challenge that is currently facing Instacart is that their models result in high gross margins, but their net revenue margin is considerably low as compared to their competitors who has a great ownership of the inventory. As a result, Instacart operates as a market-maker that lowers the execution risk and reducing the upside capability (Aoki, & Imai, 2011).

Instacart competition (SWOT) analysis

Apart from the basic capacities of the company, Instacart has pricing benefits compared to their competitors like Amazon and Safeway. However, Google has the lowest prices since it does not provide perishable products thus being the adjacent competitor in the market. The product features offered by Instacart are the best than those of the competitors but, Safeway offer similar features, but its website and app have a weaker experience compared to that of Instacart. For Instacart to improve its operations, transparency around the markups as well as the pricing information is necessary (Aoki, & Imai, 2011). Moreover, incorporating loyalty programs and store discount would enable the company to work better. Overall, Instacarts position is better compared to its competitors. Creation of additional services on top of the existing ones can be beneficial to Instacart. Currently, the companys biggest asset is its ability to access various sources of customers data. In addition, the company has a large and scale user base that is attractive but can be further be solidified and leveraged to develop barriers to entry (Reichel, & Lazarova, 2013).

SWOT Analysis

Strengths

An ability to enter into Costco without a membership

Consumer can mainly find in-store products through online selection.

Very convenient shop experience for consumer, especially for people who inconvenient to get in store.

Professional shoppers and unforgettable shopping experience.

Created a lot of jobs Weaknesses

Cannot choose about the produce.

Prices setting by InstaCart, can't intuitive understanding of floating price of the products.

Consumers don't take any store sales, coupons, or rewards into their account through InstaCart shopping.

Service area is too limited, only a small number of U.S. cities have InstaCart.

Opportunities

In the United States and even worldwide, developing more markets.

Cooperating with more grocery stores.

More convenient shopping process.

Build a link between consumers and stores, as far as possible let customers have more reward and discounts from store. Threats

Real grocery stores goods have more variety, and the price is cheap.

Companies like InstaCart will found and competitiveness will increase.

If there is no absolute superiority for InstaCart, it is difficult to gain a foothold in retail industry.

Serve scope is limited in delivery.

Mission statement of Instacart is to help to deliver the future of food by giving millions of customers more time to do what they love while finding solutions to seemingly impossible problems.

The vision of Instacart is to turn to the world upside down by offering consumers the most efficient experience of shopping for groceries.

Figure1: Instacart competitor (SWOT) assessment

Recommendation for feature prioritization (new strategies)

For the purpose of the future roll-out, it would be substantial for Instacart to conduct an evaluation of the strategies of products and service offering. It is important for the company to evaluate and categorize each feature independently. A high-medium-low rating approach can be used for the purpose of sampling the features. In addition, a quantitative analysis can be applied as well as a conversation with the companys decision making the team to enhance the effective balance of features in regards to the companys objectives (Reichel, & Lazarova, 2013).

Each element can be categorized as either customer request, innovation or as a business driver and are all classified as primary types. In addition, the other feature category is the main expected impact that includes: customer retention, delight, acquisition, and revenue. It would be important to categorize features based on the engineering efforts, that is, the workload of planning time need to develop each feature. The final category of the function is other costs which are extra cost required to develop and efficient implement a feature such as sales and marketing costs (Aoki, & Imai, 2011).

For the first quarter of the companys operations, it would be important to combine different features that are crucial at a strategic and capacity position. Features such as engineering efforts are appropriate at this point in combination with others such as innovation, customer requests, and business drivers. For instance, the on sale department is a critical aspect of the organization and customers has identified it as a gap (Aoki, & Imai, 2011). Moreover, pricing can be improved with time as compared to the large competitors. The company can use Pinterest integration feature to create a high acquisition channel with the aim of growth (Mehrotra, 2013). Effective implementation of these new strategies at Instacart would strengthen their mission and vision by providing quality and quantity products and services they provide.

Conclusion

Instacart has a unique structure position, and it is well performing in the market, but the company requires to prioritize in some advanced features to enable them further beat the current competition and continue with its rapid growth. The proposed product roadmap balances of user retention, growth and effective addressing of the competitive pressures would enable Instacart to grow and develop further. The company can leverage its vast scale and data in the long term for the purpose of developing new income-generating activities. Through, practical implementation of our recommendations, Instacart can increase its growth rate and emerge as the grocery market online business.

References

Aoki, K., & Imai, J. (2011). Analysis of Patent Acquisition Competition between Small Company and Big Company: A Game Theoretical Real Options Approach. Journal of Real Options and Strategy, 4(2), 169-206. doi:10.12949/realopn.4.169

Mehrotra, O. N. (2013). Euromissile Crisis: The Current Position. Strategic Analysis, 7(7), 540-544. doi: 10.1080/09700168309430431

Reichel, A., & Lazarova, M. (2013). The Effects of Outsourcing and Devolvement on the Strategic Position of HR Departments. Human Resource Management, 52(6), 923-946. doi:10.1002/hrm.21577