The Parallels of Instacart & Netflix

Despite its high margin ad business, I think of all the players in grocery, Instacart has a difficult road ahead of it - essentially a Netflix problem.

Stuck between the end of Blockbuster and the rise of digital, Netflix needed to do something difficult - maintain its advantage as its business model completely changed. It worked despite a few missteps along the way.

Instacart is faced with a similar challenge now. It's a grocery model is built for an older era. Despite the pandemic turbocharge, other more up-and-coming models are more suited to the next wave of the digital revolution.

Bloomberg reports that Instacart is investing in robotics and automation which may be independent locations (like dark stores/Ocado) or attached to stores (like what Walmart is testing) - essentially "Walmart for everyone else."

After trying a few other options, I expect Instacart to abandon its partner-based strategy and go direct. It will either go direct with its own brand, or because these mid-market legacy grocers don't have the capital to pick up, they could be forced to take investment positions in these firms.

Either way, success 5 years from now could involve moving on from its current model. Just like Netflix.