Leveraging E-commerce Boom for Instacart's Long-term Success

Instacart Looking into a world without corona Kaiserslautern Consulting Lukas | Theresa | Rida | Leon Kaiserslautern C onsulting

Kaiserslautern C onsulting How can Instacart leverage the current e-commerce boom caused by the corona pandemic to guarantee longterm success? 2

Kaiserslautern C onsulting Data-driven company Focus on software and data intelligence Data Intelligence for supermarkets Put your data intelligence expertise by means of licenses at the service of supermarkets Customer experience Offer a unique entertaining online customer experience for all users 3

Kaiserslautern C onsulting Today s Agenda 1. Analysis 2. Alternatives & Recommendations 3. Implementation 4. Financials 5. Risk & Risk Mitigation 4

Kaiserslautern C onsulting Instacart changes the retail industry with its online grocery shopping app Value Proposition: Customer Relationship Key Activities Key Activities Customer Convenient way of grocery shopping Fast delivery Customer Segments Key Partner Key Partner Stores: Channels Increase number of customers and increase in sales Key Resources Revenue Stream Cost Structure Analysis | Alternatives | Implementation | Financials | Risk & Risk Mitigation 5

Kaiserslautern C onsulting Instacarts business success heavily relies on key partners Value Proposition: Customer Relationship Key Activities Customer Convenient way of grocery shopping Fast delivery Customer Segments Key Partner Stores: Channels Increase number of customers and increase in sales Key Resources Revenue Stream Cost Structure Analysis | Alternatives | Implementation | Financials | Risk & Risk Mitigation 6

Kaiserslautern C onsulting Shared economy model for the online grocery shopping app Instacart Instacart provides a unique platform for customers and supermarkets. Customers order groceries in Instacart s mobile app and pay through app. Supermarket s can provide their products in Instacarts App. By the connection of thousands of supermarkets and millions of customers, Instacart gains immense amount of data. Supermarket Customer Shoppers Shoppers select the order from the supermarket and deliver it to the customer. Analysis | Alternatives | Implementation | Financials | Risk & Risk Mitigation 7

Kaiserslautern C onsulting Instacart is the world largest online grocery service over 500 million products Instacart s service is available for to 85% of U.S an 70% of Canadian households Over 5,500 cities in U.S. and Canada 40,000 local grocery stores Strong growth since the Covid 19-pandemic Fast delivery 9.6 million users Also beauty products, alcohol, and much more in the catalogue Analysis | Alternatives | Implementation | Financials | Risk & Risk Mitigation 8

Kaiserslautern C onsulting Instacart's mobile app provides customers an easy way to shop grocery Value Proposition: Customer Customer Relationship Key Activities Convenient way of grocery shopping Fast delivery Customer Segments Key Partner Stores: Increase number of customers and increase in sales Channels Key Resources Revenue Stream Cost Structure Analysis | Alternatives | Implementation | Financials | Risk & Risk Mitigation 9

Kaiserslautern C onsulting Instacart creates an easy, fast and convenient way of purchasing groceries through app Typical customer journey New customer experience of grocery shopping Today Walmart +1 day Wegmans Easy and convenient way of purchasing +2 days +3 days Low time spent on website Select Select Select Total: $5 Low entertainment Select a store Select delivery date Select products Monitor delivery Analysis | Alternatives | Implementation | Financials | Risk & Risk Mitigation 10

Kaiserslautern C onsulting How makes Instacart profit? Value Proposition: Customer Relationship Key Activities Key Activities Customer Convenient way of grocery shopping Fast delivery Customer Segments Key Partner Key Partner Stores: Channels Increase number of customers and increase in sales Key Resources Revenue Stream Cost Structure Analysis | Alternatives | Implementation | Financials | Risk & Risk Mitigation 11

Kaiserslautern C onsulting Revenues streams from Instacart $1,500 million revenue and $50 million in profit (in 2020) Membership Fee Delivery Fee Premium $99/Year $0 Margins of 10% are vera high as the historically average is less than 2% Up to $9 per delivery Standard $0 Ads in the mobile app have higher margins and have high potential for future Margins for the supermarkets ~ 10 % per order Analysis | Alternatives | Implementation | Financials | Risk & Risk Mitigation 12

Kaiserslautern C onsulting To sum up the analysis Strengths Weeknesses Popular platform Strong partnerships Huge product catalogue High margins Concerns about data policy from other supermarkets Opportunities Threats Growing online shopping market Ads in mobile app with high margins High competiton (Amazon, Walmart) Supermarkets provide their own online shops How can Instacart grow sustainable in future? Analysis | Alternatives | Implementation | Financials | Risk & Risk Mitigation 13

Kaiserslautern C onsulting We have developed following alternatives to overcome your key issues Build own offline existence Establish own offline stores to cut out the position as a third party Focus on software & data intelligence As a Data-driven company with focus on ads and entertainment to leverage from your software expertise Internationalization Profit from the huge current growth due to pandemic to penetrate new markets Analysis | Alternatives | Implementation | Financials | Risk & Risk Mitigation 14

Kaiserslautern C onsulting Evaluation of the alternatives to overcome the key issues Build own offline existence Focus on Software & Data Intelligence Expand internationally Criteria Weight Revenue growth of 30% yearly 30% 7 6 8 Customer base increase yearly of 20% 25% 4 7 3 Positive impact on supermarket relationships 20% 6 9 7 Long term impact 15% 2 7 2 Low related risks 10% 4 6 1 Decision 100% 5.15 7.15 4.95 1 - 3 4 - 6 7 - 9 Analysis | Alternatives | Implementation | Financials | Risk & Risk Mitigation 15

Kaiserslautern C onsulting Evaluation of the alternatives to overcome the key issues Build own offline existence Focus on Software & Data Intelligence Expand internationally Criteria Weight Revenue growth of 30% yearly 30% 5 9 7 Customer base increase yearly of 20% 25% 7 8 5 Positive impact on supermarket relationships 20% 2 7 5 Long term impact 15% 6 7 4 Low related risks 10% 6 6 1 Decision 100% 5.15 7.75 4.4 1 - 3 4 - 6 7 - 9 Analysis | Alternatives | Implementation | Financials | Risk & Risk Mitigation 16

Kaiserslautern C onsulting As a solution to your issues, we recommend the following measurements Data-driven company Focus on software and data intelligence Data Intelligence for supermarkets Put your data intelligence expertise by means of licenses at the service of supermarkets Customer experience Offer a unique entertaining online customer experience for all users Analysis | Alternatives | Implementation | Financials | Risk & Risk Mitigation 17

Kaiserslautern C onsulting Establish a software & data intelligence company to offer data service, personalize ads for supermarkets and entertain your customers Software & data intelligence company Data Entertaining customer experience Personalized advertisement intelligence service for supermarkets Analysis | Alternatives | Implementation | Financials | Risk & Risk Mitigation 18

Kaiserslautern C onsulting Offer data intelligence service for supermarkets to create new value for relationship and establish new revenue streams WHAT Offer data intelligence service for supermarkets WHY Data intelligence service for customer HOW Analysis | Alternatives | Implementation | Financials | Risk & Risk Mitigation 19

Kaiserslautern C onsulting Offer data intelligence service for supermarkets to create new value for relationship and establish new revenue streams WHAT Offer data intelligence service for supermarkets Supermarkets are weak at software and data processing, and we have huge expertise and data bases to offer WHY Data intelligence service for customer HOW Analysis | Alternatives | Implementation | Financials | Risk & Risk Mitigation 20

Kaiserslautern C onsulting Offer data intelligence service for supermarkets to create new value for relationship and establish new revenue streams WHAT Offer data intelligence service for supermarkets Supermarkets are weak at software and data processing, and we have huge expertise and data bases to offer WHY Data intelligence service for customer Basic license: Expert license: Benefits: - Only company focused data Rough analysis Lower yearly fee - Detailed aggregated market data Deep analysis High yearly fee - New service value for relationship HOW - - - - - New revenue stream - Options increase acceptance rate Analysis | Alternatives | Implementation | Financials | Risk & Risk Mitigation 21

Kaiserslautern C onsulting Run personalized advertisements to increase revenues streams and create additional value for supermarkets by superior ad service Leverage growth due to increased revenue stream by ad s Collection of useful customer data along the customer journey Possibility to lower fees for supermarket and customer Process data to offer personalized ad s Increase shopping convenience due to useful ad s Supermarkets profit by higher sales and customer gets useful ad s Increased basket size Analysis | Alternatives | Implementation | Financials | Risk & Risk Mitigation 22

Kaiserslautern C onsulting Establish a new and entertaining customer experience to increase time spent on your app and create an ecosystem Creation of an ecosystem around groceries Entertainment Extend time spent on the app to increase ad s effect Professional chef prepares meal Meal is promoted based on customer data Direct purchase after watching the video Preferred shops will be listed Convenient Groceries are there for cooking meals Helps customer by searching meals Fun to watch Entertainment will bond customers and increase loyalty Purchase ingredients Cooking video Increased basket size due to inspiration by videos Analysis | Alternatives | Implementation | Financials | Risk & Risk Mitigation 23

Kaiserslautern C onsulting Timeline for implementation 2021 2022 2023 2024 H1 H2 H1 H2 H1 H2 H1 H2 Offer data intelligence service for supermarkets Start for license offer Hire additional personnel with software expertise Develop data intelligence tools Personalized advertisement Develop algorithm to personalize ad s Start personalized ad s Entertaining customer experience Enlarge server capacity to stream videos Cast videos with professional chefs Assessment of ecosystem success Analysis | Alternatives | Implementation | Financials | Risk & Risk Mitigation 24

Kaiserslautern C onsulting Strong revenue growth driven by corona pandemic over the last years Income statement(in mil. US $) 5000 4000 Revenue Growth: +380% 3000 2000 1000 0 -1000 2018 2019 2020 2021 2022 2023 Revenue Cost 525 1025 735 1035 1500 1450 1900 1700 2000 1850 1475 1390 Profit/Loss -500 -300 50 200 150 85 Revenue Cost Profit/Loss Analysis | Alternatives | Implementation | Financials | Risk & Risk Mitigation 25

Kaiserslautern C onsulting To much focus on grocery delivery will result in revenue decline once pandemic is over Income statement(in mil. US $) 5000 4000 Revenue decrease: 22% 3000 2000 1000 0 -1000 2018 2019 2020 2021 2022 2023 Revenue Cost 525 1025 735 1035 1500 1450 1900 1700 2000 1850 1475 1390 Profit/Loss -500 -300 50 200 150 85 Revenue Cost Profit/Loss Analysis | Alternatives | Implementation | Financials | Risk & Risk Mitigation 26

Kaiserslautern C onsulting Diversifying revenue streams to manage transition between corona and post-corona times Income statement(in mil. US $) 5000 Revenue increase: 94% 4000 3000 2000 1000 0 -1000 2018 2019 2020 2021 2022 2023 Revenue Cost 525 1025 735 1035 1500 1450 2100 1875 3100 2795 4075 3684 Profit/Loss -500 -300 50 225 305 391 Revenue Cost Profit/Loss Analysis | Alternatives | Implementation | Financials | Risk & Risk Mitigation 27

Kaiserslautern C onsulting Drop in prices provides additional customer which synergizes with revenue through ads Revenue in mil. US$ 2500 340 2100 2000 320 1200 1500 1500 180 -240 1000 500 300 0 Revenue App/Websides Price Cuts Organic Growth Revenue 2021 Revenue Ads Total Revenue 2020 New Customer (Price Add. Ad Revenue Analysis | Alternatives | Implementation | Financials | Risk & Risk Mitigation 28

Kaiserslautern C onsulting Significant increase in key performance indicator Current KPIs Target:2023 Customer Satisfaction 80/100 92/100 +15% Instacart users +138% 23 mil. 9.6 mil. Instacart partners +160% 600 1560 Instacart revenue +171% 4075 mil. US$ 1500 mil. US$ Analysis | Alternatives | Implementation | Financials | Risk & Risk Mitigation 29

Kaiserslautern C onsulting Risks 1. Increased competition high 1. 2. Declining e-commerce of grocers, once pandemic is over 3. Probability 2. 3. Government regulations regarding workforce Low minor major Impact Analysis | Alternatives | Implementation | Financials | Risk & Risk Mitigation 30

Kaiserslautern C onsulting Risk Mitigation 1. Leverage large data amount and software expertise as competitive advantage Increased competition high 1. 2. Declining e-commerce of grocers, once pandemic is over Diversifying Revenue Streams with advertisement 3. Probability 2. 1. 3. 2. 3. Government regulations regarding workforce Focus on software elements reduces reliance of current shopper model Low minor major Impact Analysis | Alternatives | Implementation | Financials | Risk & Risk Mitigation 31

Kaiserslautern C onsulting Data-driven company Focus on software and data intelligence Data Intelligence for supermarkets Put your data intelligence expertise by means of licenses at the service of supermarkets Customer experience Offer a unique entertaining online customer experience for all users 32