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Instacart, the personal grocery shopping service with operations in San Francisco, Chicago, Boston, and Washington, DC., said yesterday that it is expanding to Philadelphia, where it will be sending shoppers to local Whole Foods stores on customers' behalf.

In other markets, Instacart has served stores that include Safeway, Shaw's, Harris Teeter and Costco. The basic model has Instacart being paid by consumers to shop at these units; one-hour delivery is available at an extra charge.

In a related story in USA Today, Instacart founder Apoorva Mehta says that he believes that Instacart can be a formidable competitor to Amazon because it is a relatively low-cost model in terms of infrastructure. While it can take months or longer for Amazon Fresh to expand into a new market, it costs Instacart just $30,000 to launch in a new city, three weeks to get set up, and roughly six months to get profitable.

Mehta says that he has received calls from companies looking to acquire Instacart - the "usual suspects," he calls them - but that he's interested only in expanding, not in selling. And that doesn't just mean geographic expansion: Mehta says, ""We're starting with the ability to deliver groceries but we are a software company and have a lot of avenues to grow into other verticals."
KC's View:
I continue to believe that in the long run, Instacart is probably going to have to work as an arm of the retailers, rather than as a "personal shopper" for consumers … it just seems to me that the current process may be cheap and disruptive in the short term, but may not be sustainable … especially if the retailers it is accessing decide to aggressively push their own e-shopping programs.

I also tend to think that to some degree, Mehta is playing hard to get. This is not a long-term play for him … as he says, Instacart is a software company. When the time is right, he'll sell this puppy and move on.