We have used Peapod a few times, a grocery delivery service here in the Northeast serviced by Stop and Shop. I couldn't figure out how they offered it so cheaply, as the prices are the same they are in stores. They charge delivery ($7) though you can often get offer codes.
Then I found out that apparently orders are serviced from a separate warehouse, where everything is categorized and optimized for online orders. It makes sense -- I couldn't picture guys walking through the store collecting 10 carts worth of orders.
Unfortunately even though it was only slightly more pricey, it still added to much to our household costs since groceries are such a huge part of a family's budget (avg family of 4 spends $770/mo). Not to mention delivery added on to the cost as well.
My boyfriend thinks it's a nearly universal 5% on safeway items. I shop at Trader Joe's a lot, and I notice varying margins on the items I always get (what is nearly universally $2.99 on milk in multiple locations I go to all over CA is $3.89 on instacart) but the minimum is generally 5-10%. Some items seem to be loss leaders: Instacart occasionally offers Oreos from Safeway for $2.xx which kill me because I love Oreos, especially since they're more like $4 in the market. Right now they're just over $4.
Having seen people around the nearby Safeway wearing Instacart shirts, I'm pretty sure they're walking through the store collecting multiple carts worth of orders. It would be fantastic if they had a warehouse as you mention, but I don't think that's happening as long as they have multiple supermarket options available.
I wish the general delivery pricing scheme were more transparent though - I've now discovered the "under $30" delivery fee and the "free delivery for $60+" seems to be standard, and I have to add enough items to figure out what 1 hour shopping costs.
We use Peapod too, and work it out so that we only get two orders a month to minimise delivery costs. Peapod's groceries are serviced from groceries that have arrived, but have yet to go onto the Stop & Shop floor, so they're fresher than you can get at the grocery store – the veggies and meat last a lot longer.
I ran the numbers a couple months ago. They added roughly (on average) 20% to in-store Safeway prices, in addition to charging for delivery.
I noticed at the time that they were scraping everything off Safeway.com's listings. Safeway.com prices themselves had a certain % markup on top of in-store prices, and Instacart had added its own markup to the Safeway.com prices.
Things may have changed since then. I expect prices to fall as they scale.
We have used Peapod a few times, a grocery delivery service here in the Northeast serviced by Stop and Shop. I couldn't figure out how they offered it so cheaply, as the prices are the same they are in stores. They charge delivery ($7) though you can often get offer codes.
Then I found out that apparently orders are serviced from a separate warehouse, where everything is categorized and optimized for online orders. It makes sense -- I couldn't picture guys walking through the store collecting 10 carts worth of orders.
Unfortunately even though it was only slightly more pricey, it still added to much to our household costs since groceries are such a huge part of a family's budget (avg family of 4 spends $770/mo). Not to mention delivery added on to the cost as well.