Instacart Ecosystem Strengthening and Growth Strategy

Instacart Strengthening the Ecosystem and Building Relations Presented to Instacart board Lund Consulting Group Dominykas Vid i nas, Sebastian van Dijkman, Lum Rexha, JakobPalerius

No man is an island, entire of itself; every man is a piece of the continent. John Donne

Agenda Situation Analysis Alternatives Recommendation Implementation Financials Contingencies Conclusion Situation Analysis Alternatives Recommendation Implementation Finance Contingencies Conclusion

Situation:Covid has provided a performance boost for Instacart that has to be capitalized on Year-on-year growth rate 700 600 Gig economy 500 400 300 Safety concerns 200 100 0 2020 January 2020 December Year-on-year growth Digitalization 5 years worth of growth in 5 weeks can it be sustained? Situation Analysis Alternatives Recommendation Implementation Finance Contingencies Conclusion

Situation: Instacart is a four-sided marketplace and it needs to get other parties satisfied Workers Consumer packaged goods brands Instabox Consumers Retailers Situation Analysis Alternatives Recommendation Implementation Finance Contingencies Conclusion

Situation: Gained advantage could prove to be temporary if issues are not addressed Competitors Retailers Consumers Workers Uber Door Dash Amazon Shipt Unsatisfied with the lack of data sharing Instabox earns more from interactions Safety is one of the main drivers that could disappear Increasing price sensitivity Change of habits Could be temporary employment Unionization Situation Analysis Alternatives Recommendation Implementation Finance Contingencies Conclusion

Situation: Our recommendation in short Tighten ties with key partners and adjust business model to favor ad-generated revenue Utilize digital advantage to create a superior customer experience journey Create a data-driven ecosystem Satisfy the ecosystem Situation Analysis Alternatives Recommendation Implementation Finance Contingencies Conclusion

Main challenge Sustaining the great growth rate post-Covid pandemic and well into the future Our recommendation Making the ecosystem collaboration profitable for all parties, utilizing data and strengthening platform to capitalize on ad income

Analysis: Current Instacart positioning in relation to its competitors Diversified Amazon Diversifying too much will directly compete with Amazon Transaction- driven Uber Ad-driven Instacart DoorDash Monolithic Situation Analysis Alternatives Recommendation Implementation Finance Contingencies Conclusion

Analysis: Instacart is a four-sided marketplace and it needs to get all four sides satisfied Workers Consumer packaged goods brands Instabox Consumers Amazon territory Retailers Situation Analysis Alternatives Recommendation Implementation Finance Contingencies Conclusion

Analysis: The data that you have collectedis your main strengthin an increasinglycompetativelandscape Enables predicting demands from customers Focused ads Knowing the customer A wide range of stores and areas Different socio-economic groups and demographics Focused on the grocery industry Greater utilization of your data is key to future success! Customer experience journey Allows creating the optimal customer experience journey Situation Analysis Alternatives Recommendation Implementation Finance Contingencies Conclusion

Analysis: Your dependencyon your ecosystem necessitatesgreatercollaborationand integration Want to have good collaborations Division of profits Trust Securing ecosystem partners are needed to reduce risks and enable growth Good Developing own platforms communication Situation Analysis Alternatives Recommendation Implementation Finance Contingencies Conclusion

Analysis: Your customerwant an easyand fun experiencewhen shopping Satisfying the customers pains when it comes to cooking and shopping is key Customer jobs Situation Analysis Alternatives Recommendation Implementation Finance Contingencies Conclusion

Alternatives (1/3): Vertical intigration of the whole value chain Building your own warehouses for delivery so you control a larger part of the value chain What it means Less dependent on your ecosystem Advantages Control of the whole value chain High investment costs High risks in case of market turndown Disadvantages Situation Analysis Alternatives Recommendation Implementation Finance Contingencies Conclusion

Alternatives (2/3): Increase product offerings with higher markup products Focus on other products such as make-up, electronics and/or furniture What it means High growth potential Greater markup on goods Advantages Saturated market with high competition Does not utilize data collected Disadvantages Situation Analysis Alternatives Recommendation Implementation Finance Contingencies Conclusion

Alternatives (3/3): Focusing on a tighter knit ecosystem, data driven business and ad platform Making ecosystem collaboration profitable for both parties, utilizing data and strengthening platform to capitalize on ad income What it means Utilizing data as a main strength Further diversifying income streams Advantages Disadvantages High investment costs and increased risk Situation Analysis Alternatives Recommendation Implementation Finance Contingencies Conclusion

Alternatives: A summary of the different alternatives moving forward Vertical integration Wider range of products Our recommendation Growth potential Risk Builds on strengths Situation Analysis Alternatives Recommendation Implementation Finance Contingencies Conclusion

Recommendation: Three building blocks to solve the challenge Utilize digital advantage to create a superior customer experience journey Tighten ties with key partners Create a data- driven ecosystem Increase retention and users to increase ad income Secures ecosystem for the long run Enables faster deliveries Situation Analysis Alternatives Recommendation Implementation Finance Contingencies Conclusion

Implementation(1/3): Instacarts value proposition will remain helping grocers win in e-commerce Tighten ties with key partners and adjust business model to favor ad-generated revenue Purpose Action People Cost Build trust and avoid conflict of interest Ensure sustaining partnerships with retailers and employees Offer retailers shares in the company (IPO) Extend ad-platform Subsidize markup with increased use of platform Automated fulfillment process Option program and job security for employees HR department IT department Finance department R&D $39M Situation Analysis Alternatives Recommendation Implementation Finance Contingencies Conclusion

Implementation (2/3): Data is the new oil Create a data-driven ecosystem Purpose Action People Cost Recruit data- scientists Develop data platform Create ethical guidelines for data- usage Supports ad-revenues Competitive advantage Streamlining operations Improved customer experience IT department Independent group of experts in ethics $3M/year $3.5M Investment Situation Analysis Alternatives Recommendation Implementation Finance Contingencies Conclusion

Implementation (3/3): Customer journey is key to staying relevant Utilize digital advantage to create a superior customer experience journey Purpose Action People Cost Video shopping Smart shopping lists/inventory Web 3.0 VR- shopping (Metaverse) Retain customers Increased spending per order Stay ahead of competitors IT-department R&D TV-chefs $18M Situation Analysis Alternatives Recommendation Implementation Finance Contingencies Conclusion

Implementation: Our recommendation will reposition Instacart as follows Diversified Amazon Transaction- driven Uber Ad-driven Instacart Instacart DoorDash Monolithic Situation Analysis Alternatives Recommendation Implementation Finance Contingencies Conclusion

Implementation: GANTT Timeline 2022 2023 2024 2025 2026 People Costs (USD) Tighten ties with key partners Employee option program Finance 5 million Extend ad-platform IT/sales 4 million Subsidize markup with increased use of platform Finance Next slide Offer retailers shares in the company (IPO) Finance - Automated fulfillment process R&D 30 million Create a data-driven ecosystem Recruit data-scientists HR 3 million/year Develop data platform IT/R&D 3 million Create ethical guidelines for data-usage Group of experts 500,000 Utilize digital advantage to create a superior customer experience journey Video shopping IT/R&D department 1 million/year Smart shopping lists/inventory IT/R&D department 1 million/year Web 3.0 VR-shopping (Metaverse) IT/R&D department 3 million/year Situation Analysis Alternatives Recommendation Implementation Finance Contingencies Conclusion

Finance: Development and expansion of new revenue streams over time Revenue breakdown without ads Overall revenue development allocated according to revenue streams ($Million) 6000 5000 4000 Retail Customer 3000 Revenue breakdown with ads 2000 1000 0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Revenue through Retailers Revenue through customers Revenue through ads Retail Customer Ads Situation Analysis Alternatives Recommendation Implementation Finance Contingencies Conclusion

Finance: Maintaining high growth through alternate revenue streams Forecast scenarios for Instacart revenue development ($Million) Scenario 1 6000 - Continue business model as it is 5000 - Online grocery business increase 10% - High competition 4000 3000 Scenario 2 2000 - Adjust business model through ads 1000 - Online grocery business increase 10% 0 - Increase revenue through ads 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 - Low competition Adjusting Business Model Existing Business Model Situation Analysis Alternatives Recommendation Implementation Finance Contingencies Conclusion

Contingencies: Risks & mitigation strategies for each step of the recommendation Risk Mitigation Added incentives (employee option program, career opportunities). Cooperate with union more. 1. Workers still see the job as temporary Tighten ties with key partners and adjust business model to favor ad-generated revenue 2. Retailers remain unhappy and see the division of profits as unfair still Offering new advantages to retailers to make the relationship more two- sided Severity 3 3. Data use is seen as too intrusive by consumers and thus is not accepted Focus on data in areas instead of individuals and highlight ethical policy 4 2 Create a data-driven ecosystem 1 Focus on increasing users by increase marketing efforts 4. Not able to increase customer retention in the app Utilize digital advantage to create a superior customer experience journey Likelihood Situation Analysis Alternatives Recommendation Implementation Finance Contingencies Conclusion

No man is an island, entire of itself; every man is a piece of the continent. John Donne

Conclusion: The challenge for Instacart is to keep the interested parties satisfied or the Covid-based boost will dissipate Workers Consumer packaged goods brands Instabox Consumers Amazon territory Retailers Situation Analysis Alternatives Recommendation Implementation Finance Contingencies Conclusion

Conclusion: Our recommendation will reposition Instacart as follows Diversified Amazon Transaction- driven Uber Ad-driven Instacart Instacart DoorDash Monolithic Situation Analysis Alternatives Recommendation Implementation Finance Contingencies Conclusion

Conclusion: Our recommendation is based on 3 building blocks Tighten ties with key partners and adjust business model to favor ad-generated revenue Utilize digital advantage to create a superior customer experience journey Create a data-driven ecosystem Satisfy all sides of the business platform Situation Analysis Alternatives Recommendation Implementation Finance Contingencies Conclusion

Appendix I: Revenue calculations per year Ad Option No Ads No Ads No Ads No Ads No Ads No Ads No Ads Ads Ads Ads Focus Ads Focus Ads Focus Ads Focus Ads Focus Ads Year 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Revenue through Retailers Revenue through customers Revenue through ads Overall revenue 4 6 0 0 0 0 0 0 0 10 75 120 185 300 525 735 1500 1800 2160 2592 3110 3732 4479 5375 30 48 74 120 210 294 450 540 648 648 778 933 1120 1344 45 72 111 180 315 441 750 900 1080 1166 1400 1680 2016 2419 300 360 432 778 933 1120 1344 1612 Situation Analysis Alternatives Recommendation Implementation Finance Contingencies Conclusion

Appendix II: Revenue allocations per revenue stream and year Percentage Split Revenue Stream 40% 60% Retail Customer 20% 30% 50% Ad Retail (10%) Customer ($9) 30% 25% 45% Ad Retail (lower than 10%) Customer (lower than $9) Situation Analysis Alternatives Recommendation Implementation Finance Contingencies Conclusion