Instacart Business Model: Revenue, Growth & Strategy

When Apoorva Mehta founded Instacart in 2012, he wasn’t chasing a trend; rather, he was solving a personal frustration. After working at Amazon, he realized something ironic: you could order almost anything online, except groceries.

That gap became a billion-dollar opportunity.

Today, the Instacart business model is more than a delivery app. 

It’s a story of survival.

But wait! 

Why am I calling this big of a business a survival?

Because Instacart’s biggest partners became its biggest competitors. Whole Foods joined Amazon. Walmart built its own system.

But Instacart is still standing tall. 

How? Well, that’s the rest of this blog explains. 

In this blog, you’ll learn how Instacart makes money, key elements of the Instacart business model, why its old model is fading, and what their new strategy teaches about staying competitive when the odds turn against you.

Ready to dive in? 

Key Takeaways

• The Instacart business model is a multi-sided platform connecting customers, retailers, shoppers, and CPG brands.
• Instacart uses full-service and in-store shoppers to fulfill orders efficiently.
• Instacart revenue streams include delivery fees, service fees, markups, subscriptions, advertising, partnerships, pickup fees, surge pricing, and enterprise software.
• Building an app like Instacart can be done from scratch or using a readymade solution like 6amMart for multi-business flexibility.

Brief history of Instacart

As I mentioned earlier, Instacart started to fill a gap in the market. The idea was simple –  people should be able to buy groceries online with the same ease as ordering anything else. Within a few years of launching, it became one of the biggest names in on-demand delivery across the U.S. and Canada.

In simple terms, Instacart’s business model is a platform-based marketplace that connects customers, personal shoppers, and local grocery retailers, earning revenue through commissions, delivery fees, subscriptions, and more. 

Instacart doesn’t own grocery stores or delivery vans. Instead, it connects local retailers, shoppers, and customers on a single platform. That’s what made it scalable without heavy investment in inventory or infrastructure.

Today, Instacart partners with more than 1,800 retail brands and reaches 100,000  stores as per the Consumer Insights Portal (CIP) of Instacart. The company went public in 2023 and is valued at around $10.06 billion currently, with annual revenue exceeding $3 billion according to the StockAnalysis report. It employs thousands of full-time staff and works with hundreds of thousands of gig shoppers who handle deliveries.

Instacart’s growth wasn’t overnight. It survived intense competition, changing consumer behavior, and even the pandemic, which, ironically, accelerated its rise. From solving one personal frustration to becoming a key player in the grocery tech space, Instacart’s journey is a perfect example of how timing, adaptability, and execution shape a business model’s success.

How Does Instacart’s Business Model Work?

Instacart runs on a three-way connection: customers who want groceries, shoppers who fulfill orders, and retail stores that supply the products. Each side needs the other two to work.

Behind this simple setup lies a complex system that balances partnerships, logistics, and data to make every order profitable.

Let’s break down how these pieces fit together.

The Key Stakeholders in Instacart’s Ecosystem

Customers

Customers use the Instacart app or website to browse products from local stores. They place orders, choose delivery windows, and pay through the platform. Some subscribe to Instacart Express for lower fees. Others pay per order.

Instacart has over 14 million active users, with monthly active users fluctuating between 7-8 million depending on the season. Their customer base grew significantly during COVID, but has since normalized.

Pain Points They’re Solving: Time-consuming grocery shopping and the inconvenience of visiting multiple stores.

Value proposition: Instacart offers convenience by delivering groceries from favorite stores directly to their doorstep.

Shoppers

Shoppers are mostly independent contractors. They receive order notifications through the app, go to the store, pick items from the shelves, and deliver them to customers.

Shoppers come in two types: in-store and full-service. In-store shoppers work at specific partner locations. They pick and pack orders but don’t deliver. They earn hourly wages and work scheduled shifts. Full-service shoppers are independent contractors who do everything: shop and deliver. They work whenever they want, as much or as little as they choose. Payment comes per completed order, which Instacart calls a “batch.”

Workforce size: Over 600,000 active shoppers across North America.

Pain Points They’re Solving: Shoppers want flexible income and control over their work hours.

Value proposition: Instacart provides on-demand earning opportunities, letting them decide when and how much they work while being part of a large delivery network.

Retail Partners

Retail Partners are grocery stores and chains that list their products on Instacart. They range from large chains like Kroger and Costco to smaller regional stores. These retailers pay Instacart commission fees or subscription fees and sometimes use the platform’s advertising tools to promote specific products.

Pain Points They’re Solving: Losing sales to competitors offering delivery. They can’t afford to build their own delivery system. Need online presence but lack technology.

Value Proposition: Reach customers who won’t visit your physical store. Compete with larger chains without building delivery infrastructure. Access customer data and shopping patterns.

CPG Brands (Consumer Packaged Goods)

They are manufacturers of packaged food, beverages, and household products, such as Nestlé, PepsiCo, and Unilever.

They pay Instacart to advertise their products within the app, similar to how brands pay for premium shelf placement in physical stores.

Pain Points They’re Solving: Hard-to-reach customers shopping online. Can’t measure the effectiveness of traditional grocery ads. Difficult to promote new products. Expensive to negotiate in-store placement across multiple retailers.

Value Proposition: Target shoppers at the exact moment they’re deciding what to buy. Measure ad performance with real purchase data. Increase product visibility without negotiating shelf space at every store.

The Multi-Sided Platform Model

Instacart is what’s known as a multi-sided platform. It brings value to each side of the market by connecting them in one place:

• Customers get the convenience of shopping from multiple stores in one app.
  
• Retailers gain online visibility and access to new customers without building their own tech systems.
  
• Shoppers earn money by fulfilling orders on flexible schedules.

Instacart’s Revenue Streams

Instacart makes money in several ways:

1. Delivery fees
2. Service fees
3. Markup prices 
4. Subscription ( Instacart+) 
5. Advertising
6. Partnerships with Retailers
7. Pickup Fees
8. Enterprise Software / Instacart Platform
9. Surge Pricing

This mix of transactional, subscription, and B2B revenue keeps the company flexible and competitive. You will find the details of how Instacart makes money later in this blog. 

Key Activities That Power Instacart

• Order matching and fulfillment coordination
• Technology platform development and maintenance
• Partner relationship management
• Customer acquisition and retention
• Quality control and dispute resolution
• Data analytics and optimization

Key Resources Behind the Platform

• Proprietary technology and algorithms
• Network of shoppers (hundreds of thousands)
• Retail partnerships 
• Customer base and brand recognition
• Shopping data and behavioral insights
• Micro-fulfillment centers
• Caper Cart technology (smart carts)

Cost Structure of Instacart 

• Shopper compensation (largest expense)
• Technology development and maintenance
• Customer acquisition costs (CAC)
• Marketing and advertising spend
• Insurance and liability coverage
• Customer support operations
• Payment processing fees
• Platform infrastructure costs

Distribution Channels

• Mobile app (iOS and Android) – primary channel
• Website platform
• Email marketing for retention
• Social media for acquisition
• Referral programs
• Retail partner promotions

Key Partnerships

• Grocery stores and retail chains
• Payment processors
• Insurance providers (for liability coverage)
• Technology infrastructure providers
• CPG brands for advertising revenue

Instacart’s Business Model Canvas

Here’s a simplified look at Instacart’s business model using the Business Model Canvas framework:

Also Read: How To Build an Online Grocery Marketplace Solution With 6amMart

How Does Instacart Make Money & Operate?

Now it’s time to answer the burning question. 

Instacart’s revenue model is built on many layers. Each part helps the company run operations, grow, and stay resilient. Below is how it works in practice:

Delivery Fees

When a customer places an order, Instacart charges a delivery fee. The fee depends on the retailer, how far the customer’s address is, the delivery window (standard vs express), and the size of the order.

Instacart+ members often get free delivery on eligible orders (above a certain amount). For non-members, delivery fees vary more.

Service Fees

On top of delivery, Instacart adds a service fee. This fee helps cover operating costs like insurance, customer support, and system operations. It’s not a tip and doesn’t go to the shopper. The amount depends on location, number of items, and order type.

Markup Prices

Some products on Instacart are sold at a higher price than in-store. This markup helps generate extra margin for the platform.

Not every retailer uses markup; some match in-store prices. 

According to community users, markups often range from 10–20% above in-store prices. 

Subscription (Instacart+)

Instacart offers a membership called Instacart+ (formerly Express). Instacart+ members get $0 delivery fees on orders over $10 for groceries, $35+ for Costco orders, and $25+ for eligible restaurant orders. The subscription costs around $99 per year or $9.99 per month.

Advertising

This is Instacart’s fastest-growing revenue stream. In 2024, advertising revenue hit $1.18 billion, marking a 25.5% increase from 2023 and surpassing $1 billion for the first time.

Brands pay to promote products in search results, category pages, and home screens. It works like Google Ads but for groceries. Ads give brands visibility in a high-intent shopping environment.

Partnerships with Retailers

Instacart charges retailers commission or platform fees for sales made via the app. Retailers also pay to use Instacart’s tools, data, and advertising inside their inventory. This creates a B2B revenue line in addition to consumer-side fees.

Pickup Fees

For orders picked up in-store instead of delivered, Instacart may charge a pickup fee. This fee is like a delivery fee. The amount depends on the retailer and location. 

Enterprise Software / Instacart Platform

Instacart has expanded into B2B by offering its platform technology to retailers. 

Retailers can build white-label apps powered by Instacart’s infrastructure. They own the customer relationship. They control the branding. But behind the scenes, Instacart provides the technology, shopper network, and logistics. In May 2025, Instacart acquired Wynshop to accelerate the expansion of its enterprise technology solutions. 

Surge Pricing

When demand spikes and shoppers are scarce, prices increase. Holiday weekends, snowstorms, major events – these trigger higher fees. It’s dynamic pricing designed to balance supply and demand. 

How Instacart Stays Profitable: Understanding LTV and CAC

Instacart’s long-term success doesn’t just depend on how much money it makes. It depends on how much it keeps. The two numbers that matter most here are LTV (Lifetime Value) and CAC (Customer Acquisition Cost).

LTV shows how much revenue Instacart earns from one customer over time. CAC is what it spends to bring that customer in. CAC can be ads, promotions, discounts, or free delivery offers.

The goal is simple: keep LTV higher than CAC.

Instacart manages this balance through a few smart moves:

• Strong retention: Subscriptions like Instacart+ turn one-time shoppers into loyal users who order more often.
• Ad revenue: Sponsored listings from brands add profit without increasing customer costs.
• Personalization: Data-driven suggestions using Caper AI increase basket size, pushing up customer value over time.

As Amazon, Walmart, and DoorDash expand grocery delivery, customer acquisition costs will keep rising. Instacart can’t out-spend Amazon. They can’t subsidize deliveries like Walmart. So they need to extend LTV to make customers order more frequently and stay longer.

Instacart+ members pay $99 upfront. That’s guaranteed revenue before they even order. But more importantly, subscription customers order more frequently.

They’ve already paid for “free” delivery, so the psychological barrier to ordering drops.

Another great move is advertising revenue. It’s almost pure profit. 

Let’s say a brand pays $1,000 to run ads. Instacart’s cost to display those ads is minimal, like server costs, maybe some support. The margin is 80-90%.

This high-margin revenue subsidizes lower-margin delivery. It’s how Instacart stays profitable even when delivery economics are challenging.

So to summarize: 

Who Are Instacart’s Competitors and How Do They Compare?

Instacart isn’t alone in the grocery delivery game. The space is crowded with players trying to make convenience faster, cheaper, and smarter.

Let’s look at how it compares to other major names in the market – 

Platform	Business Model	Coverage Area / Scale	Annual Revenue (2024)	Key Strength	Key Weakness
Instacart	Marketplace/gig-based	USA, Canada	US$3.38 billion	Retailer partnerships & enterprise-grade technology	High dependency on partner stores for pricing and inventory
Amazon Fresh	Inventory-owned, direct fulfillment	U.S., U.K., and selected global cities	US $638 billion ( entire Amazon)	Logistics, Prime integration	High operational costs
Walmart Grocery	Owned retail network + delivery and pickup	Nationwide (U.S.)	US $648.125 billion	Extensive store network, competitive pricing	Slower to scale outside core regions
Shipt (Target)	Membership-based grocery delivery	U.S. (5,000+ cities)	US $106,566 millions ( entire Target )	Reliable delivery through subscription model	Limited to select retailers; scale challenges
DoorDash	On-demand delivery app (food + groceries)	United States, Canada, Australia and New Zealand	US $10.722 billion	Established driver network & delivery infrastructure	Primarily known for restaurants, newer to grocery logistics
Uber Eats (Groceries)	Multi-category delivery platform	Global (45 countries)	US $13.7 billion	Existing delivery infrastructure, fast scaling	Grocery not core focus, still building partnerships
Kroger	Own stores + delivery service	2,800+ stores across 35 states	US $147.1 billion	Strong regional presence, loyalty program integration, pricing control	Thin margins; delivery is just a part of overall operations
FreshDirect	Own warehouses + delivery	New York, New Jersey, Connecticut, Pennsylvania etc	US $711 million	Quality control through owned inventory, premium fresh products	Extremely limited geography, higher prices, infrastructure-heavy
Gopuff	Micro-fulfillment centers + delivery	500+ U.S. cities and some international expansion	US ~$1-2 billion (estimated, private company)	Ultra-fast delivery (under 15 min), owns inventory locally	High infrastructure and storage cost; narrow product range

What Are Instacart’s Strengths and Weaknesses (SWOT Analysis)?

Understanding where Instacart stands requires looking at what works, what doesn’t, what opportunities exist, and what threats loom. Let’s take a look at the SWOT analysis of Instacart: 

Strengths: 

• Instacart is widely trusted and has become almost synonymous with grocery delivery in the U.S.
• Its gig-based shopper network allows it to scale quickly based on demand.
• It partners with thousands of retailers, offering users access to multiple stores in one place.
• Customers can get groceries delivered within hours, creating strong loyalty and repeat usage.
• Enterprise software (Instacart Platform) adds recurring revenue.
• Profitable ad business generating over $1.18B in 2024. 

Weaknesses:

• No control over product inventory or availability.
• High marketing and discount costs to retain customers.
• Heavy reliance on major retail partners.
• Service inconsistency due to the gig worker model.
• Limited operations outside North America.

Opportunities:

• Expand high-margin advertising business with CPG brands.
• Grow Instacart Platform for mid-sized and enterprise retailers.
• Build micro-fulfillment centers for faster delivery.
• Enter new international grocery markets.
• Monetize consumer data and retail insights.
• Integrate more fulfillment and automation technologies.

Threats:

• Strong competition from Amazon, Walmart, and DoorDash.
• Retail partners are developing their own delivery solutions.
• Consumers cut delivery spending during downturns.
• Labor laws are challenging the gig worker classification.
• Price wars with larger, well-funded competitors.
• Automation is potentially replacing human shopper models.
• Low customer loyalty and high churn rates.

What Can Startups Learn from Instacart’s Business Model?

Not all lessons need to come from your own mistakes. Sometimes, the smartest move is to study those who’ve already been through the fire. Instacart is one of those examples.

They’ve burned through capital, lost major partnerships, fought off billion-dollar competitors, and had to reinvent their entire business model mid-flight.

So instead of learning these lessons the expensive way by making the same mistakes in your own startup, you can learn them now. For free.

Build for a Market Gap, Not a Trend

Most investors or entrepreneurs didn’t see grocery delivery as an opportunity until Instacart launched. It fixed a gap that people truly felt.

When you’re building something you genuinely need, you understand the customer better.

So the lesson is don’t chase hyped markets. Find real problems that people will pay to solve. Personal frustration often signals a broader market need.

Build Partnerships Before Building Scale

Instacart didn’t try to own everything. Instead of building stores or running warehouses, they teamed up with existing retailers. This helped them reach more customers without spending huge money on infrastructure.

Create Multiple Revenue Streams Early

Instacart didn’t rely on just one source of income. At first, most of its money came from delivery fees, but that wasn’t enough to cover costs or compete with giants like Amazon. So, they added more ways to earn. They introduced Instacart+ subscriptions for loyal users, advertising options for CPG brands, and software tools for retailers.

This mix helped them stay profitable even when one part of the business slowed down.

Subscriptions Create Predictable Revenue

Instacart+ members pay upfront and order more frequently. They’re less price-sensitive because they’ve already committed.

Subscriptions smooth out revenue volatility. One-time transactions are unpredictable. Monthly or yearly subscriptions provide a baseline.

So if your business model allows it, add subscriptions. Recurring revenue improves unit economics and reduces churn.

Stay Flexible With Your Model

Instacart didn’t stick to its original plan forever. When they started, they were mainly a grocery delivery app connecting shoppers to customers. But soon, big players like Amazon and Walmart entered the space with their own delivery systems. Competing head-to-head wasn’t sustainable.

Instead of fighting a losing battle, Instacart pivoted. They turned from being just a delivery company into a technology partner for retailers.

For startups, the message is clear. Don’t get too attached to your first idea. Markets change, competitors rise, and customer habits evolve. The companies that survive are the ones that adapt fast, listen to signals, and aren’t afraid to change direction when the old model stops working.

Data Is an Asset, Not Just a Byproduct

Every order generates data. What people buy. When they buy. What they substitute. Basket sizes. Regional preferences. Instacart monetizes this through advertising and insights. If your business generates data, treat it as an asset. Find ways to monetize it ethically. Data businesses have better margins than service businesses.

Can You Build an App Like Instacart?

Building an app like Instacart is possible, but it requires careful planning and the right tools. You have two main options:

Build from scratch: 

The first option is building from scratch. You hire developers, designers, and project managers. You spend months (sometimes years) planning, coding, and testing every feature. This gives you complete control over every aspect of your app. But it’s expensive. And time-consuming. By the time you launch, the market might have already shifted.

Ready-made solution: 

The second option is using a readymade solution. A ready-made solution is a pre-built, customizable software package that already includes the core features you need to launch quickly, like user apps, admin panels, and payment gateways. Instead of building everything from scratch, you can just tailor it to your brand and start operating faster.

But as there are so many ready-made solutions available online, it gets harder to choose the right one for your business. Many entrepreneurs go for solutions like 6amMart in this case, as they have been in the business for so long and served 3k+ businesses worldwide till now. 

Now, if you’re serious about creating something similar to Instacart, you’ll want to understand the complete process. We’ve covered the step-by-step approach in detail in our guide on how to create an app like Instacart.

But here’s something you also need to give a thought to. 

Remember how Instacart started as a grocery delivery service and later expanded into different areas? That kind of flexibility is much needed in today’s fast-paced shifting market. 

If you go for a ready-made solution, for example, like 6amMart, you’re getting that advantage. It provides a comprehensive solution for managing various business modules like grocery, pharmacy, food delivery, e-commerce, and parcel services, all from a single admin panel. This flexibility allows you to adapt your business model as needed, similar to the Instacart business strategy.

Say you launch a grocery delivery service. Business is slow in the first few months. With a custom-built app, you’re stuck. You’d need to either push through or build an entirely new app for a different business model. That means hiring another dev team, spending more money, and starting from zero.

With 6amMart, you can add different business modules to one platform. If groceries aren’t working out, you can test pharmacy delivery or food services without rebuilding anything. 

That means you won’t have to build a separate software, invest in additional development costs, or wait months for a new launch. 

It’s practical risk management. You’re not betting everything on one business model. And if one module takes off while another struggles, you can shift your focus without losing your initial investment.

The platform handles the technical side. You focus on growing your business.

In summary, while building an app like Instacart is achievable, using a ready-made solution can expedite the process and provide the flexibility needed to navigate the evolving e-commerce landscape.

Final Words 

As this blog talks about the Instacart business model, we’ve broken down how it works, its revenue streams, key players, strengths and weaknesses, and lessons for startups. I hope this helps in understanding how Instacart built a scalable, multi-sided platform and what strategies entrepreneurs like you can apply when creating or growing their own business.

See you in the next one! 

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