Insider logo The word "Insider".
US Markets Loading... H M S

Instacart's latest multi-million dollar cash injection will help it scale its business post-pandemic

  • Instacart snagged $265 million in funding.
  • And it may put funding toward increasing corporate headcount and scaling its business, which may position it for post-pandemic growth. 
  • Insider Intelligence publishes hundreds of insights, charts, and forecasts on the Payments & Commerce industry. Learn more about becoming a client.

Online grocery delivery firm Instacart just raised $265 million in funding, bringing its valuation to $39 billion and more than doubling its valuation from its previous funding round in October.

grocery retail ecommerce sales
Online grocery delivery firm Instacart raised $265 million in funding.
Insider Intelligence

Instacart plans to use the funding to increase corporate headcount by 50% as well as for initiatives like Instacart Marketplace, which helps connect customers to retailers, and Instacart Enterprise, the company's end-to-end ecommerce solutions for grocers.

Demand for online grocery has skyrocketed during the pandemic, positioning Instacart well for growth along the way. US grocery retail ecommerce sales shot up 54% in 2020 to reach a value of $95.82 billion, per forecasts from Insider Intelligence.

Surging demand in 2020 likely stemmed in part from consumer wariness to shop indoors, with 60% of consumers reporting feeling a sense of panic or anxiety when grocery shopping, according to a March 2020 study by C+R Research.

These customer sentiments helped fuel Instacart's business immediately when the crisis began: Daily app downloads for Instacart rose 218% on March 15, 2020, compared with average daily downloads in February 2020, per Apptopia data cited by TechCrunch. Although Instacart has yet to report growth statistics for 2020, demand for its offerings likely remained elevated throughout the year, indicated by its three separate multi-million dollar funding rounds throughout the year.

Instacart might lean on its growing network of top-tier grocers as well as its endeavours into other sectors to maintain post-pandemic growth.

  • Instacart could expand its grocery retail network to maintain customer appeal. Even with pandemic conditions improving, making it safer to shop in-store again, customers may still turn to Instacart out of convenience—a quality that consumers value in retail. Since Instacart offers a variety of different grocer options, it's able to meet an array of customer shopping preferences, giving it an advantage over proprietary grocery delivery services like Walmart's or Kroger's. So, continuing to build out its network of nearly 600 retailers might make Instacart an appealing choice for consumers, helping it maintain growth.
  • And it may continue to extend its reach into nonfood categories to build a full-suite, on-demand delivery service. Although the majority of its current business revolves around grocery, Instacart has been expanding its service to deliver other types of products, such as prescription medications, beauty products, toys, and more. Building out nongrocery-related retail partnerships opens up an opportunity for Instacart to scale its business even further, enabling it to become the on-demand delivery app of choice for a variety of different customer needs. And although it'll be contending with competitors such as Postmates, its stronghold within the grocery industry can help it stand out.

Want to read more stories like this one? Here's how you can gain access:

  1. Join other Insider Intelligence clients who receive Payments & Commerce forecasts, briefings, charts, and research reports to their inboxes each day. >> Become a Client
  2. Explore related topics more in depth. >> Browse Our Coverage

Current subscribers can access the entire Insider Intelligence content archive here.

Close icon Two crossed lines that form an 'X'. It indicates a way to close an interaction, or dismiss a notification.