Toronto grocery delivery service InstaBuggy is expanding its coverage from the downtown core to the entire Greater Toronto Area.
The company has also increased its number of retail partners and plans to expand in Western Canada in the coming months, InstaBuggy co-founder Julian Gleizer told Canadian Grocer.
Aside from its relationship with Sobeys’ FreshCo, which has been in place since the delivery service launched in April, InstaBuggy has partnered with Toronto independent Summerhill Market.
Summerhill, which has two outlets, is known for its gourmet prepared fare. Its offerings will be added to InstaBuggy’s product lines in a few weeks, Gleizer says.
InstaBuggy has also partnered with several independent natural and organic food stores and can combine offerings from several retailers in one delivery.
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Gleizer says InstaBuggy is in the midst of raising a “significant” amount of capital and plans to expand soon in the coming months to Vancouver, Edmonton and Calgary. Talks are being held with major players in Western Canada, he said, without naming names.
Similar to what it did in Toronto, InstaBuggy plans to pilot with two or three stores in the downtown areas of the three cities before expanding outside their cores, he says.
Plans also call for InstaBuggy to expand to Ottawa and Montreal and to go national.
The company, which has in-store pickers and packers, is meeting its one-hour delivery promise, Gleizer says. Customers are informed if deliveries are running late due to circumstances such as traffic or snowy roads.
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Customers can choose a one-hour time frame for delivery. For example, people who ordered at 10:45 a.m. on a weekday can opt for delivery in any one-hour period between 1 p.m. and 10 p.m.
Gleizer, who founded the group deals company DealTicker, which he sold in 2014, says delivery fees and price markups on products will no longer make up the bulk of InstaBuggy’s revenues. Instead, InstaBuggy is moving to a model in which in-store prices will be offered online and the bulk of the company’s revenues will come from revenue sharing with retailers.
“That provides a huge incentive to the customer to purchase things and get the groceries delivered within the hour versus having to go to the store.”
The minimum order has been raised to $35, compared with $10 at launch, which Gleizer says “makes sense economically.”
InstaBuggy now charges customers a $9.99 delivery fee for orders of $35.00 to $60.00; and $5.99 fee for $60.01 to $80.00.
First-time orders and those above $80.00 are delivered free.
Most customers are not paying delivery fees as the average InstaBuggy order is worth more than $200, Gleizer said, compared to average in-store purchases of $50. Repeat purchase rates are “very high” with many customers buying once a week.
The company is close to making a profit, he added.