How would you measure success for Instacart?

 

Instacart is a leading online grocery delivery business and follows a mission to create a world where everyone has access to the food they love and more time to enjoy it together.

It works as a 4 sided marketplace for customer/shopper/brands/retailers.

Cust- can order food at home paying necessary fees and having to receive food at convenience.

Shopper- Getting an oppty to make some extra money by working either full time/part time and ensuring to accept orders by customers and delivering them the food requested.

Retailers- get more sales orders through online channel

Brands- marketing the products

 

Business Goal- Activation to have customers come and place order again and higher the sales orders higher the revenue

Customer Journey:

Customer selects the store-> Adds items to cart> Places Order–>Order request goes to Shopper? accepts the order> purchases at store> delivers the food> customer receives food> gives ratings to shopper.

 

Funnel:

1. Cust selects store and adds items to cart
2. Places the order
3. Shopper delivers
4. Good exp—> gives good ratings to shopper and places order again
5. Bad exp? gives bad rating and never comes back
6. No ratings–may/may not come

 

Success for Instacart-> 

 

Aha moment ? Customer places their first order

Habit moment? Customer places second order in same month

 

North Star Metric?

Number of sales orders per customer monthly;

Number of orders fulfilled per shopper on daily/weekly/monthly

 

Key Metrics

1. Funnel conversion from stage to stage.
2. Number of orders with good ratings to shopper and experience and places the order again–Frequency of order per customer
3. Avg number of items per order (basket Size)
4. Avg number of orders per customer weekly/monthly/yearly
5. Avg $value per sales order
6. Abandonment rate (where in the path to purchase drop rate is high?)
7. Average session duration
8. %orders delivered per hour/day

 

Business metrics:

1. Subscriber growth rate
2. Unsubscribers
3. Cost per Acquisition ( avg costs incurred on promotion/marketing+tech infrastructure+content development)
4. Email Open rate
5. Email CTR
6. Display Ads CTR
7. Pay per Click traffic volume
8. Blog traffic
9. %orders delivered by referrals–NPS

 

Retailer Metrics:

1. Top 10% retailers in terms of market share
2. Average basket size per retailer
3. #of retail stores signed up with Instacart
4. Avg $ sales order value per retailer

 

Shopper metrics:

1. Shopper Satisfaction CSAT
2. #orders fulfilled per shopper daily/weekly/monthly
3. Avg Order size/volume delivered per shopper
4. #bulk loads vs light loads delivered per shopper
5. Frequency of shopper weekly/monthly/annually
6. Idleness (shoppers > customer orders in specific regions
7. Lost deliveries (customer order > shopper supply in high demand regions)

 

Prioritize as per mission and business goal:

1. Frequency of order placed by customer–Activation
2. %of orders fulfilled in 1 hour/ day–Mission
3. Subs growth rate–Revenue
4. #orders fulfilled per shopper daily/weekly/monthly-Partners aligned to achieve mission
5. Top 10% retailers in terms of market share–Partner aligned to achieve mission

First, I want to briefly cover what Instacart actually does.

From my understanding, Instacart is a delivery service that focuses on online groceries.  Instacart customers log in through a mobile or web app, select and purchase their groceries, which are delivered to their homes.  On the back-end, Instacart finds gig workers who perform the shopping and delivery of the groceries.

So moving onto what success for Instacart might look like, let’s first clarify what success means, as it is a bit of a vague term.  In Instacart’s case as a platform, success could mean many things: growing market share, maximizing revenue or profits, growing the platform (i.e., more retailers), etc.  For the purpose of this analysis, I’m going to focus on maximizing monthly recurring revenue.  In Instacart’s case, MRR = # orders per month * avg order value.

Let’s walk through the customer journey and identify opportunities to measure and potentially influence MRR:

–       Customer logs into app / web application

–       Customer chooses which store to purchase from

–       Customer adds items to cart

–       Customer places an order

–       Order request goes to the shopper

–       Shopper accepts the order

–       Shopper purchases at the store

–       Shopper delivers the food

–       Customer receives the food

–       Customer rates the shopper

At a high level, this journey maps to:

–       User acquisition – More users likely means more orders!

o   # App downloads per day / week / month

o   # Sign Ups / Account Creations per day / week / month

o   Web / mobile site traffic per day / week / month

–       User activation — More active users likely means more orders!

o   % Users that place first order within 30 days

o   Avg # Order per Customer per day / week / month

o   Avg # Items per Order

o   Frequency of Orders placed by Customer (i.e., avg days btwn orders)

–       User retention – More retained users likely means more orders!

o   % Repeat Buyers per day / week / month

o   Churn Rate

o   Referral Rate

o   Avg Shopper Rating per Order

o   NPS

o   Avg # Items available per Retailer

o   % Orders fulfilled on time

–       User monetization – Fully monetized users means maximizing avg order value!

o   Avg Order Size per Customer (ARPU)

o   Average # Orders per day / week / month

o   Average customer acquisition cost

o   Average customer lifetime value

Given all of these ideas, I would focus on the following 5 metrics:

(1)   # sign-ups / account creations per week (acquisition)

(2)   Average number of orders per day / week / month (activation)

(3)   Average # items per order (activation)

(4)   Churn over days / weeks / months (retention)

(5)   Average CLV (monetization)

Instacart Mission: To create a world where everyone has access to the food they love and more time to enjoy it together. They accomplish it by delivering groceries from local stores with the tagline “Groceries delivered in as little as an hour”.

Instacart Vision: To be the world leader in online grocery.

Business goals: For grocery buyers, Instacart promises convenience at a (somewhat) reasonable price. For local retailers, Instacart promises more sales, higher margins and potentially the ability to cut costs (fewer store workers). Instacart management cares about revenue, profitability and market share (vs. competitors such as Postmates and Blue Apron) and Employees care about work satisfaction and career growth.

The list of possible metrics are:

Buyer metrics:

• Number of buyers (% growth – by week, month, quarter and year)
• % of return buyers within 30 days
• Number of retail stores
• Number of unique items
• Avg. number of orders per buyer
• Avg. order items per buyer
• Avg. order size ($) per buyer
• % of orders delivered within 1 hour
• % of orders delivered same day
• % of buyers that refer others
• % of new buyers due to referrals
• Net promoter score (NPS)

Retailer metrics:

• Number of orders from Instacart (% growth – by week, month, quarter and year)
• Avg. number of items per order
• Avg. order size ($) (compared to in-store purchase)
• Avg. cost ($) per order (compared to in-store cost)

Business/other metrics:

• Avg. cost ($) per buyer
• Avg. profit margin (%) per buyer
• Market share (%) compared to competitors
• Employee satisfaction scores
• Employee retention rate (%)

Prioritized success metrics:

• #1 – % of orders delivered within 1 hour (aligned with mission)
• #2 – % of orders delivered same day (aligned with mission)
• #3 – Number of retail stores (aligned with mission)
• #4 – Number of unique items (aligned with mission)
• #5 – Market share (%) by country (compared to competitors) (aligned with vision)

 

About Company, Goal and scoping: (not researching before the question) 

I believe Instacart has been founded in the last five years and has been a well-known name in Grocery delivery space. The goal of the company would be to deliver groceries to the end-user with convenience in mind to reduce the frictions involved in physical shopping experience. After inception there have been few competitors would in the space and therefore when considering success matrics I would like to define success from a user and product perspective. I believe that retention, activation and customer satisfaction should be top priorities while concentrating on monetization as the secondary goal.

Some of the overall matrics to consider would be,

Aquire: How many users downloaded InstaCart.
Activation: How many users registered in InstaCart.
Retention:
DAU, MAU
Daily/Monthly Orders created/completed
Monthly  Review creation
Monetization:
Daily/Monthly  Orders created
Daily/Monthly Orders delivered.
$$ value of average order.
Satisfaction:
Positive feedback rate
Orders delivered in time.
$$ Saved.

I would select the following two indicators to monitor as high-level indicators to measure the success of InstaCart.

Daily/Monthly Orders created/completed- This could be used to measure retention, engagement and also to gauge is the monetization. If the daily and monthly the number is increasing this means users are engaging and retaining. Also, if the number is increasing this means $$ would be increasing too.
Positive feedback rate – This indicates users are satisfied if the positive feedback rate is increasing.