Instacart

Faire

Instacart

Instacart operates as a marketplace connecting consumers with personal shoppers and grocery retailers. Revenue comes from multiple streams: delivery fees and service fees charged to consumers (typically $3.99+ per delivery), tips to shoppers (passed through, not revenue), retailer partnerships (grocers pay Instacart for access to the platform and fulfillment services), and advertising.

Advertising has become the crown jewel. Instacart Ads lets consumer packaged goods (CPG) brands like Coca-Cola, Procter & Gamble, and Nestlé pay for sponsored product placements within the Instacart shopping experience.

When someone searches for "chips," Doritos can pay to appear first. This is incredibly valuable because it's advertising at the exact moment of purchase intent.

Ad revenue exceeded $900 million in 2023.

The retailer partnership model is key. Unlike DoorDash or Uber Eats (which listed restaurants without permission early on), Instacart works with grocers as partners.

Over 1,500 retail banners including Costco, Kroger, Albertsons, and Publix have formal partnerships. Instacart provides the technology and shoppers; grocers provide inventory and stores.

Faire

B2B wholesale marketplace — Faire connects brands (sellers) with independent retailers (buyers). Faire earns commission on every wholesale order, typically 15-25% from the brand side.

The platform also earns from Faire Direct (where existing brand-retailer relationships are processed through Faire for payments and logistics) and from financing products. The key financial innovation is that Faire takes the risk on net-60 payment terms — they pay brands quickly and extend credit to retailers, earning the spread.

Machine learning powers product recommendations, predicting which products will sell well in specific types of stores based on location, category, and purchase history.

Instacart

Apoorva Mehta was a 26-year-old Amazon engineer in Seattle who quit his job in 2012 to start a company. The only problem: he had no idea what to build.

Over the next year, he started and abandoned roughly 20 different projects. A social network for lawyers.

A way to track restaurant wait times. Nothing stuck.

Then one day he was too lazy to go grocery shopping. He looked for a service that would shop for him and deliver everything to his door.

Nothing good existed. The existing options were grocery store delivery services that only worked during specific windows, had limited selection, and required ordering days in advance.

Mehta wanted to order groceries the way he ordered everything else online — immediately, from whatever store he wanted.

He built a prototype in 2012 and applied to Y Combinator. The demo was rough — he ordered a six-pack of beer through the app and had it delivered to a YC partner's house during the application process.

It worked. He got in.

Instacart launched in the San Francisco Bay Area in 2013 with a simple promise: order from your favorite local grocery store and have someone shop for you and deliver within an hour.

Faire

Max Rhodes was at Square when he noticed that small retailers had been underserved by technology for decades. Walk into any independent boutique, gift shop, or bookstore and ask the owner how they find new products to sell.

The answer is almost always: trade shows twice a year, word of mouth, and salespeople who cold-call. The wholesale buying process was analog, inefficient, and biased toward brands big enough to afford trade show booths and sales teams.

Rhodes teamed up with three Square colleagues — Marcelo Cortes, Daniele Perito, and Jeff Kolovson — to build Faire in 2017. The initial insight was powerful: use data from point-of-sale systems to predict which products would sell well in which stores, then connect those stores directly with the right brands.

They launched with a bold offer: free returns on first orders, net-60 payment terms, and zero upfront risk for retailers. The pitch to retailers was "try products for free, only pay for what sells." Brands got access to thousands of stores they could never reach on their own.

Instacart

Instacart grew by solving a problem one city at a time. They launched in San Francisco, proved the model, then expanded to other major metros.

Each new market required recruiting shoppers, signing up retailers, and building enough consumer density to make the economics work.

The COVID-19 pandemic was the inflection point. Grocery delivery went from luxury to necessity overnight.

In March 2020, Instacart hired 300,000 new shoppers in a single month. Order volume increased 500%.

Years of planned growth happened in weeks. The pandemic proved that grocery delivery wasn't a niche — it was the future of how a significant chunk of the population would shop.

The enterprise play is the long-term moat. By providing white-label technology to grocers, Instacart becomes embedded in their operations.

Even if a grocery chain wanted to build its own delivery service, they'd need years and hundreds of millions to replicate what Instacart provides. The more deeply integrated Instacart becomes in grocery operations, the harder it is to rip out.

Faire

The risk-free first order (free returns + net-60 terms) was the unlock that got retailers to try the platform. Once a retailer placed a first order and it sold well, they kept coming back.

Brand acquisition scaled through direct outreach to emerging brands who couldn't afford trade show booths or sales teams — Faire offered them access to 700,000+ retailers. Geographic expansion from the US to the UK, Europe, and Australia brought the same model to international markets.

Faire Markets (virtual trade shows) replaced the expensive, twice-a-year physical trade show model with always-on digital discovery. Category expansion from gift and home goods into food, beauty, apparel, and pets increased the platform's relevance to more types of retailers.

Instacart

The post-COVID hangover was brutal. After pandemic demand normalized, growth slowed dramatically.

The company's valuation dropped from a peak of $39 billion in early 2021 to about $10 billion at IPO in September 2023. Investors who bought at the peak saw a 75% paper loss.

The narrative shifted from "essential infrastructure" to "nice-to-have luxury."

Unit economics are perpetually tight. Paying a person to walk through a grocery store, pick items, bag them, and drive them to someone's house is expensive.

Unlike meal delivery (one restaurant, one bag), grocery delivery involves dozens of items per order, refrigeration requirements, and substitution decisions. Every order that requires a shopper to call the customer about an out-of-stock item eats into efficiency.

Amazon is the existential threat. Amazon Fresh, Whole Foods delivery, and Amazon's own logistics network represent a competitor with nearly unlimited resources and a Prime membership base of 200+ million.

Amazon has been willing to lose billions on grocery delivery to build market share. Instacart's advantage is retailer partnerships — Kroger and Publix use Instacart specifically because they don't want to help Amazon dominate grocery.

Faire

The $12.4 billion valuation was set in 2022 and requires sustained hypergrowth to justify. Wholesale margins are thin and Faire's take rate compresses as brands grow and negotiate better terms.

The net-60 payment terms mean Faire is essentially running a lending business — credit risk increases during economic downturns when small retailers struggle. Competition from established wholesale platforms (Handshake by Shopify, Tundra, Abound) and from the trade show industry fighting back with digital offerings.

Small brand churn is high — many brands on Faire are small and fail, requiring constant supply-side replenishment. And the fundamental challenge of B2B marketplaces: once a retailer and brand establish a direct relationship through Faire, they have an incentive to cut out the middleman and transact directly.

Instacart

Instacart Marketplace — the core platform where consumers order groceries from 80,000+ stores for delivery or pickup, with personal shoppers fulfilling orders. Instacart+ — subscription service ($9.99/month) offering free delivery on orders over $35, reduced service fees, and credit back on pickup orders.

Instacart Ads — a retail media platform letting CPG brands run sponsored product listings, display ads, and coupons within the shopping experience. Instacart Platform (Enterprise) — white-label e-commerce technology that lets grocers build their own online ordering and fulfillment powered by Instacart's infrastructure.

Caper Cart — AI-powered smart shopping carts (from the 2021 Caper AI acquisition) with built-in screens, barcode scanners, and payment that let shoppers skip the checkout line.

Faire

Faire marketplace — browse thousands of wholesale brands across categories including home goods, beauty, food, apparel, jewelry, kids, and pets. Faire Direct — brands bring their existing retail relationships onto Faire for order management and payment processing.

Net-60 terms — retailers get 60 days to pay, reducing cash flow pressure on small businesses. Free returns on first orders — retailers can return unsold products from new brands, eliminating the risk of trying something new.

Machine learning recommendations — "brands you might like" based on store type, location, and purchase patterns. Faire Markets — virtual trade show events with special promotions and new brand launches.

Instacart

Sequoia Capital was an early and consistent backer. Andreessen Horowitz invested in growth rounds.

D1 Capital Partners led the 2021 round that valued Instacart at $39 billion. Existing investors including Valiant Capital, T.

Rowe Price, Fidelity, and Tiger Global participated across rounds. Y Combinator was the starting point (Summer 2012 batch).

The September 2023 IPO on NASDAQ priced at $30 per share, valuing the company at approximately $10 billion.

Faire

Investors include Sequoia Capital, Lightspeed Venture Partners, Founders Fund, Y Combinator, D1 Capital Partners, and Dragoneer Investment Group. Series G in 2022 valued Faire at $12.4 billion.