Dive Brief:

• Instacart announced Thursday it’s launching an express service that delivers groceries in as fast as 30 minutes to shoppers. The service will kick off in 15 cities, including Chicago, Los Angeles, Miami, San Diego, San Francisco and Seattle, before expanding to more metros areas in the coming months.
• The service is part of a speed push Instacart calls "Priority Delivery," and also includes expanding 45-minute and 60-minute delivery for more customers in more cities nationwide. 
• Instacart is speeding up service as companies like Gopuff pressure the space and as its own research shows high demand for orders in under two hours.

Dive Insight:

Instacart has made its fortune on same-day delivery, but the company now acknowledges it needs to offer faster options as it confronts evolving consumer demand and a crop of speed demon competitors.

The company’s 30-minute service moves up its fastest available delivery time by 15 minutes, and matches the average fulfillment time offered by Gopuff, which is growing quickly and now operates in more than 650 cities. 

Instacart has been testing 30-minute service as part of its delivery partnership with 7-Eleven, which now encompasses nearly 6,000 stores, since last August, a company spokesperson said. This is the first time it’s offered 30-minute service from grocery stores, and the option will include grocers’ full assortment of goods.

The spokesperson said Instacart’s machine-learning algorithms determine delivery windows based on factors such as the distance from the store, basket size and personal shopper availability, meaning a 30-item stock-up order won’t be possible to deliver in 30 minutes.

The 30-minute service launches Thursday from more than 300 stores, including Ralphs, Safeway, Sprouts Farmers Market and Stater Bros. The 45- and 60-minute delivery windows, meanwhile, have been available in select locations and are now expanding to an unspecified number of additional markets.

When shoppers check out, they’ll see Priority Delivery slots indicated by a lightning bolt that appears next to the time and pricing.

Asked about any upcharge for the Priority Delivery services, the spokesperson declined to share specific numbers but said the company does expect to add a small, incremental fee for the service that will be dynamic and vary according to market conditions. 

By offering faster service, Instacart is flexing its biggest advantage in the grocery e-commerce wars — its massive gig-labor force and tie-ups with more than 600 retailers nationwide. As retailers continue to evaluate their relationship with the e-commerce company, Instacart is hoping speedy last-mile fulfillment makes it an indispensable partner. 

In 2020, according to Instacart, 95% of customer orders with 15 items or less were delivered within two hours, while 50% were delivered in under an hour.  A recent survey by NielsenIQ found consumers are prioritizing delivery speed over considerations like incorporating sustainable packaging and consolidating delivery trips. 

Retailers like FreshDirect and Walmart have rolled out express delivery, but they offer service within two hours. Kroger tested a 30-minute delivery service in 2019, but it never expanded beyond the company’s hometown market of Cincinnati. The nation’s largest supermarket operator has launched e-commerce service from its automated Ocado centers, which specialize in next-day fulfillment, and is among the crop of retailers offering Instacart’s 30-minute service, underscoring its focus on offering a range of fulfillment options.

Instacart’s speed push comes the same week Germany-based Gorillas announced plans to offer 10-minute grocery delivery in major cities, beginning in New York City. The company joins a few other companies offering ultrafast delivery within 15 minutes, but the long-term prospects of the model, which has spread across Europe, remain unproven.

As Instacart reportedly nears a public offering, it’s expanding, hiring top-shelf talent and rolling out new services to boost its value. Instacart also revealed this week it plans to expand globally and has named its first executive hire, former Facebook product director Nikila Srinivasan.