[News Inside Business] US Version of 'Market Kurly' Nears Listing on New York Stock Exchange

Instacart, which has officially launched its listing on the New York Stock Exchange, is a grocery delivery company often referred to as the American version of ‘Market Kurly’.

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However, its business model differs from Market Kurly, which sells products from partner vendors as well as private label (PB) and exclusive items directly through its website. Instacart acts as a delivery intermediary by connecting shoppers who can visit stores and shop on behalf of customers based on their purchase orders. When customers select and order items from stores like Whole Foods or Costco via the Instacart website or smartphone app, the partnered stores purchase the items and deliver them to the customer’s doorstep. Because this service focuses on delivery on behalf of customers, Instacart is often called the ‘Uber’ of the food industry in the U.S. Recently, it has expanded its delivery services beyond groceries to include electronics, home decor, and exercise equipment.

Instacart has 7.7 million active customers who spend about $317 per month. Its client base includes over 80% of U.S. grocery stores such as Walmart and Kroger, totaling more than 80,000 stores.

Instacart was founded in 2012 by CEO Apoorva Mehta, a former Amazon.com employee, who succeeded after twenty startup attempts. Before founding Instacart, CEO Mehta launched services like LegalReach and GrouponFood but failed.

The company experienced significant growth following the COVID-19 pandemic. According to documents Instacart submitted to the U.S. Securities and Exchange Commission (SEC) on the 25th of last month for its listing, its transaction volume grew nearly 300% in 2020, the year the pandemic began. However, growth slowed to below 50% starting in 2021 as the endemic phase began. Revenue in the first half of this year increased by 31% year-over-year to $1.5 billion. Instacart also achieved profitability, generating $242 million in earnings in the first half of this year, compared to a net loss of $74 million during the same period last year.

However, growth in its core delivery segment has slowed, and its high dependence on advertising has been pointed out as a problem. When ordering $110 worth of groceries through Instacart, the company’s revenue is only about $7, indicating very low profitability.

Instacart had planned an initial public offering (IPO) last year but withdrew it due to a decline in valuation amid the U.S. economic slowdown. It is reported to be preparing again with the goal of going public by the end of this year. Starting from the 11th (local time), it is expected to begin a roadshow and adjust its final target price. The Wall Street Journal (WSJ) reported that Instacart aims for a corporate valuation of $8.6 billion to $9.3 billion in this roadshow. This is a drastic reduction to less than a quarter of the estimated $39 billion valuation during the online shopping boom triggered by the pandemic in 2021. The lead underwriters are Goldman Sachs and JP Morgan.