Ryan Caldbeck CEO and cofounder @CircleUp Sep. 09, 2018 2 min read

1/ I’ve said a few times that I think @Instacart will win in grocery delivery. They will beat @Amazon. It isn’t a popular view, and there aren’t a lot of folks that bet against any part of the Amazon machine.

2/ I know, I know – insane to bet against a trillion $ business. Maybe. But a little insanity is what you need as a private investor. Or an entrepreneur.

Let me lay out the argument and see if there is a good response other than “yeah but Amazon has a lot of money.”

3/ First, Amazon already tried to vertically integrate. It didn’t work. Amazon Fresh failed. It failed when they already had ~100m prime members along with all of the other mothership benefits. Still didn’t matter.

Now their offering is called Amazon Prime Now.

4/ Second- Grocery stores don’t want to partner with Amazon. That’s the most important point. They don’t want to partner for several reasons, but mostly:

5/ they need a counterweight to Amazon. Grocery stores NEED @Instacart to win. If Amazon wins grocery delivery, the retailers are terrified. They worry Amazon will kill them- thus they don’t want to partner.

6/ oh and probably should be noted that almost every retailer that has ever partnered with Amazon hasn’t enjoyed it. See @Target and Toys R Us partnerships.

7/ Next- Amazon had to buy @WholeFoods to compete because grocery stores wouldn’t partner. Sounds like the solution right? Just buy WFM. Remember- WFM is still <2% of the US Grocery market. Instacart has thousands of stores they can pick from. ~450 stores isn't the answer.

8/ Third Amazon’s footprint for distribution items (i.e. their distribution centers) is great for some things but not good for perishable items.

9/ Fourth Instacart consumer experience (online product and the offline delivery) is just better.

10/ Yes Amazon can spend a lot to improve it. I get it. But the history of Silicon Valley is startups winning over incumbents that have a lot more money and should be able to build the same thing.

Amazon’s product/cust exp is meaningfully behind.

11/ Fifth: Trust- consumers trust the freshness of their local grocery stores right now. Their image of ordering from Amazon is for non-perishables. You get toothpaste from Amazon. You get salad from your grocery store. And Instacart has the grocery store you know and trust.

12/ Sixth: Instacart has reached escape velocity. Their numbers are real big. They are out of startup phase. The machine is cranking- and that crank is growing at an accelerating pace.

13/ So what happens? I think Instacart continues to widen their lead while Amazon fumbles up Whole Foods. And to be clear, AMZN is fumbling up WFM.

14/ Result for Instacart? Either IPO or it gets bought. Who buys it? I don't like that guessing game but I’ll play here for fun. My bet is Google (shopping) or Uber.

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