Why Instacart Costs More Than Actual Stores?

If you are here, you probably already know what Instacart is. For starters, it is a delivery service that simplifies the entire shopping experience.

If you are a grocery store owner, you must know that the platform charges higher on certain items when compared to the store prices, while they offer regular prices in certain other cases.

So, why is this so? We will answer all your questions in this article. But before that, let’s understand how Instacart works.

how does instacart makes money

How Does Instacart Work?

Simply put, Instacart is a delivery service that has paired up with convenience stores. Instead of you hunting for stuff at the stores, you can simply order things online from your phone, and have it delivered at your doorstep.

So, coming to the latest controversy…

Does Instacart Always Charge More Than Stores?

Not always. There are partner stores, and there are general stores. Partner stores have paired up with Instacart, whereas general stores are simply on the list of choices, and they charge a higher markup.

This is the reason that you get the store price in partner stores. This also explains why some stores don’t cost as much as others.

How Do The Instacart Decide The Markup?

We understand you can be confused because sometimes there is a markup on products. It just depends on your business model with the platform.

Some customers have expressed frustration over the price discrepancy, but in reality, Instacart does not decide the markup. The stores decide what price to charge when you are shopping through Instacart.

If you are thinking – should I just join Instacart? After all, it would help me in connecting to other customers The answer is, it depends. When you join the Instacart, you end up paying high commission to the platform. You get no data about the users who are buying from you, plus you don’t get reviews and feedback on your services.

How Much Do The Stores Charge In Markup?

The co-founder of Instacart revealed that shoppers are charged about 15% of the money on the stores they are not partnered with. This means when you are shopping less frequently or on a need basis, you don’t need to worry about the bottom line much. However, the big-time shoppers have expressed dissatisfaction over the charges. A $300 shopping bill becomes $345 even without adding other charges.

Various surveys have revealed that the average quote came out to be 23% higher in many stores, which is a big disappointment. And the biggest issue that is plaguing the mind of the consumers is that they don’t even know this until they have the bill in their hands.

So, how do you decide if the price is worth the comfort of staying at your own home while shopping at Instacart? Well, you can start by shopping at partner stores. Some retailers that don’t raise product prices are Publix, Kroger, Safeway, and Petco. Costco and Wholefoods, however, are not partner companies and can have significant markup on the products.

How Does Instacart Make Money?

Delivery Fees

Their major source of income comes from the delivery fee they charge to the customers. For orders below $35, the delivery fee is $7.99 and orders above $35 are charged at $5.99.

Surge Prices

Surge prices are also applicable for customers who might need products delivered during peak hours, or within a short notice. The surge pricing could be $2 or more over the delivery fee you are already being charged.

Instant Express

This is a paid membership with Instacart. You get charged $149 a year for subscribing to this program. The membership provides you with free scheduled deliveries, and 2-hour express deliveries free of cost.

Instacart Pick Up Fees

If you wish, you can also pick up your order, completely packaged and processed from the eligible stores. For premium members with Instant express, this is a free service. If you are not a member, you pay $4.99 for packaging and processing for the time and effort saved in the store. This pickup fee is not a fixed amount and it can change based on the store you are shopping at.

Instacart Premium

This is another VIP membership program, which costs $99. You need to shop at least 20 times over the year to fully utilize your membership. If you are a frequent shopper, this is one of the best ways to save a lot of money on delivery, while you get the full convenience of the service.

So, Should You Sell at Instacart?

Instacart will handle everything – from picking the product from your store to fulfilling the order. You don’t have to boggle your mind amid all the processes involved.

But as they say — nothing comes for free. All the features of Instacart that look so beautiful at first, do come for a cost. You end up giving all control of the customer experience, along with your customers, to Instacart.

This not only hurts your tuning with the customer, but also prevents you from exercising brand control. What’s more, there also are instances wherein you reluctantly have to agree to let Instacart (or other similar platforms for that matter) modify your prices. The result – your customers end up seeing higher cost on items from your stores.

To say the least, your customers get into a loyal relationship with the platform instead of your brand. What’s worse, customers can check for other stores in the area, and can easily switch to other shops if they are offering better deals. Further, if the company crashes, your infrastructure crashes as well. This is the least that you will ever want.

That said, the best option here is to launch your own grocery pickup and delivery service instead of relying on a third-party.

Your Turn

You might argue that starting from scratch is a lot of work you are not prepared for? Well, that’s where Otrack comes to your rescue. The platform doesn’t come wrapped in layers of fees and charges. Neither does it attempt to take your customers away from you.

All Otrack provides is an easy-to-realize platform. It can help you in selling online on the go, while also providing you with full control over prices and discounts.

Sounds good? Talk to us today.


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