In 2012, Apoorva Mehta, a former Amazon engineer, found himself without groceries. He didn’t want to go to the store. So, he built a service to bring the store to him — and Instacart was born.
Unlike competitors building out their own warehouses and fleets, Instacart relied on gig workers to shop in existing stores. It launched in San Francisco, connecting users to groceries from Safeway, Whole Foods, and Trader Joe’s, and expanded quickly.
Investors loved the model:
- No inventory
- No warehouses
- Scalable via partnerships
- Uber-style labor economics
By 2017, Instacart had raised over $500 million and was quietly becoming the back-end logistics partner for the U.S. grocery sector.
The Pandemic Windfall
Then came March 2020.
As COVID-19 lockdowns spread, demand for grocery delivery exploded. Instacart went from helpful convenience to national infrastructure:
- Orders surged 500% in March–April 2020
- Shoppers tripled overnight, from 200,000 to over 500,000
- Weekly app downloads spiked from 50K to 750K+
- Revenue in 2020 exceeded $1.5 billion, up from ~$500M in 2019
Retailers leaned in — Costco, Kroger, Wegmans, and Aldi partnered with Instacart to outsource delivery at scale.
Instacart raised $265 million in 2021 at a valuation of $39 billion — more than the market cap of Kroger, one of its largest partners.
The Growth Limits Appear
But as the world reopened, Instacart’s growth story hit a wall.
1️⃣ Declining Demand
People returned to stores.
Order volume dropped.
New user growth slowed sharply in late 2021.
2️⃣ Gig Worker Discontent
Shoppers protested low wages, tip manipulation, and safety risks.
Multiple boycotts and media exposés highlighted labor tensions.
Efforts to unionize gained momentum.
3️⃣ Retailer Pushback
Partners like Whole Foods (owned by Amazon) and Walmart pulled back from Instacart or built their own delivery systems.
Margins were razor-thin, and Instacart was still dependent on third-party stores.
4️⃣ IPO Delays
Originally targeting a 2021 IPO, Instacart postponed its public debut as tech valuations collapsed in early 2022.
Its valuation was quietly cut from $39B to $10B, then again to $8B.
The Reinvention Attempt
To stay relevant, Instacart pivoted to a new identity: “retail enablement platform.”
It began:
- Selling ads on behalf of grocery stores (high-margin revenue)
- Offering in-store tech solutions (like smart carts and analytics)
- Building out Instacart Platform, a suite of white-label e-commerce tools for grocers
- Partnering with tech brands like Apple and Meta to embed shopping across devices
It also launched new services:
- Instacart+: A paid membership with perks
- Double Dash: Add items from nearby convenience or liquor stores
- Health & Wellness Initiatives: Partnerships with healthcare systems for grocery-as-medicine pilots
But these moves were late — and the category was now crowded with DoorDash, Uber Eats, Shipt, GoPuff, and Amazon Fresh.
The IPO… Finally
In September 2023, Instacart finally went public on the NASDAQ under ticker CART.
- It debuted at $30 per share, valuing the company at ~$10 billion
- Shares rose 12% on Day 1 — but slid back down within weeks
- Analysts raised concerns about low margins, high competition, and limited growth runway
Instacart emphasized its pivot to advertising and SaaS for grocers — which comprised ~30% of its revenue by mid-2023 — but investor skepticism lingered.
Key Strategic Moves
✅ Smart Early Partnerships
By working with — not against — grocers, Instacart integrated deeply into U.S. food retail.
❌ Overdependence on Crisis Growth
Instacart didn’t diversify fast enough after its COVID windfall. The “Zoom effect” faded quickly.
❌ Labor Model Fragility
Gig-based fulfillment created scale but also PR problems, legal risk, and shopper dissatisfaction.
✅ Retail Tech Pivot
Advertising and white-label e-commerce were smart post-peak plays — but they came late and with stiff competition.
The Numbers
| Year | Valuation | Revenue | Active Shoppers | Notes |
|---|---|---|---|---|
| 2017 | $3.4B | ~$300M | ~50K | Growing fast |
| 2020 | $17.7B | ~$1.5B | 500K+ | Pandemic boom |
| 2021 | $39B | ~$2B | 600K | Peak valuation |
| 2023 | $10B IPO | ~$2.5B | 500K+ | Public debut |
Lessons Learned
- Crisis demand is not sustainable demand. Instacart became essential — until it wasn’t.
- Owning the platform matters. Instacart still doesn’t control inventory or fulfillment. It’s always a middle layer.
- Gig labor is a short-term advantage, long-term risk. What scaled Instacart also undermined its brand and loyalty.
- Tech pivots need time. Ad sales and SaaS aren’t overnight fixes — especially in grocery, where margins are thin.
Instacart built a $39B empire from grocery bags and gig workers.
But surviving the next decade will take more than just showing up at checkout.
