PowerPoint Presentation

Economics of Competitive Strategy (STR421)Abel GarciaWarren PintoShankaranarayan (Sairam) RamasubramanianNishant Saboo

Up Up & Away!Executive SummaryIndustry OverviewIntroducing Instacart

Porters Five Forces AnalysisSupplier Power (Moderate)Suppliers can be categorized into large grocery retailers and personal shoppers. The threat from suppliers is moderateThe bargaining power of the retailers is high but it is in their interest to partner with InstacartThe personal shoppers command minimal bargaining power today due to lack of competition to InstacartBuyer Power (Moderate)Buyers can always switch to other delivery services or choose to shop themselvesInstacart has an advantage as they provide the convenience of shopping from multiple retailers in a couple of hours

Porters Five Forces AnalysisThreat of New Entrants (High)The model is easily replicable with very little capital expenditure

Threat of Substitutes (Moderate)Although there are similar services present in the market, Instacarts extremely lean operations and differentiated service gives them an edge over competitors

Degree of Rivalry (Low)Instacart has specialized in providing a very specific service to a very niche customer segment

SWOT AnalysisStrategy and RecommendationsInstacarts target market is urban professionals and busy moms (higher-end of market)They should try to maintain the high markups on the their productsSince model is easily replicable, price war could ensue due to new playersExploit first mover advantage by expanding in urban areasCreate large network of shoppers which will keep up quick delivery timesHence times-sensitive are likely to use Instacart instead of new servicesForge partnerships with new grocery chainsMaintain strong two-sided network externality

QUESTIONS