Maplebear Inc. (CART)

How it makes money

Transaction revenue comes from fees and commissions on each order: delivery fees, service fees and a cut of what retailers pay to be on the platform. Advertising revenue comes from brands bidding for placement in search results and featured spots, and it carries a much higher margin than moving groceries around, which is why it has become the faster-growing and more profitable half of the business.

Revenue by segment

Retailers that integrate Instacart's ordering and fulfillment technology into their own e-commerce build real switching costs, since replacing that plumbing is disruptive. But consumers face almost no cost to open a rival delivery app instead, and several of Instacart's own retail partners are simultaneously testing or building their own delivery capabilities, which caps how durable the advantage is.

Grocery spending itself is largely non-discretionary, but paying a premium to have it delivered is a convenience consumers can cut back on when budgets tighten, by shopping in person or choosing pickup instead. Order frequency and basket size are therefore more sensitive to the economy than grocery demand as a whole.

Key risks

• Retailer concentration — The top three retail partners generate roughly 43% of gross transaction value; the loss of one of them would be a large, immediate hit rather than a marginal one.
• Independent-contractor shoppers — The delivery model depends on classifying shoppers as independent contractors rather than employees; a regulatory or legal change forcing reclassification would raise costs and disrupt operations.
• Intense and shifting competition — Instacart competes against DoorDash, Uber and Amazon, and against retailers building their own delivery capabilities — some of whom are simultaneously Instacart's largest customers.
• Pandemic-era growth may not repeat — Much of Instacart's early scale came from a surge in online grocery adoption during the pandemic; the company acknowledges that pace of growth may not be representative of a maturing market.

Top customers account for 43% of revenue

Instacart's top three retail partners, including Kroger, together account for about 43% of gross transaction value, so losing or renegotiating with even one of them would be felt across the whole business.