Instacart, a shopping service, exemplifies ‘share economy’

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ATLANTA — Mar­cus Ami­son pushes his gro­cery cart through a cav­ern­ous Costco aisle stocked with bulk clean­ing sup­plies and faces the typ­i­cal shop­per’s prob­lem — he can’t find what he’s look­ing for.

But Mr. Ami­son isn’t your typ­i­cal shop­per. He wears the green, branded T-shirt of In­sta­cart, a San Fran­cisco gro­cery ser­vice that prom­ises home de­liv­ery in as lit­tle as an hour.

In­sta­cart is part of a grow­ing “share econ­omy,” in which peo­ple pro­vide per­sonal ser­vices, un­used items or rooms in their homes for profit. Even as this emerg­ing mar­ket­place blos­soms into what For­bes pre­dicts will pass $3.5 bil­lion this year, econ­o­mists de­bate the ef­fec­tive­ness of an in­dus­try that cre­ates thou­sands of jobs that pay lit­tle and of­fer no ben­e­fits.

Like Uber with car rides and Washio with laun­dry, In­sta­cart uses mo­bile tech­nol­ogy to con­nects buy­ers with peo­ple who’ll do their shop­ping and de­liver the goods. Orders are made on­line or through smart­phones and re­layed to shop­pers. The cus­tom­ers save a trip to the store, shop­pers get flex­i­ble jobs, and In­sta­cart takes a cut for set­ting up the trans­ac­tion.

Mr. Ami­son picks up a shrink-wrapped pack of Kosher Chicken Thighs and scans the bar code with his smart­phone. He uses a com­pany-is­sued credit card to fin­ish the pur­chase that in­cludes 12 one-gal­lon jugs of milk, which he loads into the back of his 2000 Dodge In­trepid.

“Might as well make some ex­tra money when I can,” says Mr. Ami­son, who works as a full-time chef at the Mar­ri­ott Mar­quis, but makes $15-$20 an hour work­ing 20 hours per week for In­sta­cart.

The com­pany was founded in 2012 by Apoorva Me­hta, a for­mer Am­a­zon ex­ec­u­tive. It is now in 12 cit­ies and an­nounced in June that it had re­ceived $44 mil­lion in fi­nanc­ing from in­ves­tors.

It is go­ing to have to com­pete with a grow­ing field of gro­cery de­liv­ery busi­nesses, in­clud­ing Grab a Buggy and ColdLife Or­gan­ics. Also on the ho­ri­zon, Am­a­zon Fresh and Wal­mart-To-Go are pi­lot­ing sim­i­lar pro­grams on the West Coast. The com­pe­ti­tion is stiff for good rea­son: at stake is the $586 bil­lion of to­tal re­tail gro­cery sales last year, of which on­line or­ders rep­re­sented less than 1 per­cent.

In­sta­cart hopes to by­pass com­pet­i­tors with the flex­i­bil­ity of an in­de­pen­dent con­trac­tor fleet and speedy turn­around times.

The com­pany prof­its by charg­ing a small ship­ping fee ($3.99 for two-hour de­liv­ery) and by mark­ing up the prices on cer­tain goods by as much as 20 to 30 per­cent.

In­sta­cart doesn’t own any ware­houses or de­liv­ery cars, a stark con­trast to the pre­vi­ous face of gro­cery home-de­liv­ery, Web­van, which crashed in 2001 af­ter spend­ing $1 bil­lion on ware­houses and in­fra­struc­ture.

“There was the sup­ply chain, real-es­tate is­sue, spoil­age, and then add lo­gis­tics and de­liv­ery to that,” said Matt O’Con­nor, an In­sta­cart “city launcher” who set up the startup’s op­er­a­tions in At­lanta. “Hav­ing one com­pany do all of that is a lit­tle bit of a fool’s er­rand.”

Mr. O’Con­nor, a re­cent Notre Dame grad­u­ate, joined the staff in Jan­u­ary and has al­ready helped launch op­er­a­tions in Boston, Wash­ing­ton, New York and Austin, Texas, since Jan­u­ary.

As com­pa­nies like In­sta­cart rap­idly ex­pand, they cre­ate a new type of ser­vice em­ployee. The com­pa­nies re­quire work­ers, who are in­de­pen­dent con­trac­tors re­spon­si­ble for pay­ing their taxes from earn­ings and ob­tain­ing their own in­sur­ance, to own a smart­phone and a ve­hi­cle.

Jeff Faux, founder of the Eco­nomic Pol­icy In­sti­tute and au­thor of “The Ser­vant Econ­omy,” wor­ries that an in­crease in in­se­cure, rel­a­tively low-wage jobs per­pet­u­ates a grow­ing eco­nomic prob­lem in the United States.

“It’s an­other strong piece of ev­i­dence in the di­rec­tion that we are mov­ing to­ward the ser­vant econ­omy,” Mr. Faux said, “where the gap of the shrink­ing num­ber of haves and larger num­ber of have-nots is grow­ing.”

But while Uber, a tax­i­l­ike ser­vice, and AirBnB, which lets peo­ple rent out rooms or homes like a ho­tel, take busi­ness away from tra­di­tional com­pa­nies that may of­fer su­pe­rior pay and ben­e­fits, In­sta­cart seems to have tapped into an un­der­uti­lized mar­ket.

An­drew McA­fee, a mem­ber of the MIT Sloan School of Man­age­ment spe­cial­iz­ing in the dig­i­tal econ­omy, says new in­come av­e­nues should be en­cour­aged.

“This is put­ting la­bor dol­lars back into the mar­ket,” Mr. McA­fee said. “This seems like an un­am­big­u­ous win.”

United States - North America - Atlanta - Georgia

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