Now might not be the best time for Instacart to enter the public market. After years of preparation, the grocery aggregator announced Thursday, May 12, a confidential filing with the Securities and Exchange Commission (SEC) for an initial public offering (IPO).
Read more: Instacart launches long-awaited public offering
Reports of Instacart’s IPO readiness date back to late 2020.
See more : Instacart’s IPO could happen in early 2021 with a $30 billion valuation
In early 2021, news circulated that the company was considering going public through a direct listing instead.
Read more: Instacart Eyes Direct Listing to Maximize Stock Price
Now the aggregator faces a very different landscape than it would have had it gone public amid the initial delivery boom seen during the lockdown. Earlier this year, it was reported that the company was reducing its internal valuation by 38% from the $39 billion it was previously valued at.
See more : Market developments prompt Instacart to cut valuation from $39 billion to $24 billion
There is no doubt that the demand for food delivery is there. Consumers have become accustomed to the convenience of having their meals delivered directly to their homes, and they expect to be able to continue to do so. However, the delivery aggregator economy has never been healthy, even during times of the highest order volume, with most players continuing to operate at a loss while business was booming. Now, with the increasingly competitive job market, it’s especially hard to turn a profit delivering, say, an $11 burrito.
Read more: Growth of food delivery aggregators hits a snag as consumers return to everyday life
In recent quarters, aggregators have seen mixed results. A report earlier this month noted that Just Eat Takeaway.com saw its stock drop 70% in 2021 and another that Instacart in-store pickers are seeing less frequent orders, and orders coming in are smaller purchases.
Additionally, it was reported last month that instant delivery platform Gopuff has undertaken several rounds of job cuts this year and is lowering the minimum wage for drivers in California.
See more : Gopuff’s fast delivery model is tested in a changing environment
On the other hand, recent financial results for DoorDash and Uber show continued double-digit growth.
Read more: Growth of aggregators shows delivery habits are hampering grand reopening
Notably, with rising inflation, many consumers are turning to withdrawal channels to avoid delivery charges, a trend that threatens aggregator sales.
See more : From outdoor seating to contactless payments, dining habits are changing
PYMNTS April Study, “The Digital Divide: The Key Factors That Drive Restaurant Choice,” created in collaboration with Paytronixfound that 47% of consumers cite convenience of pickup as an important factor influencing their restaurant choice.
Read more: For restaurants, consumer inflation concerns prompt renewed focus on pick-up channels
“[Pickup is] always the most “cost effective” in quotes because there are no delivery charges and that sort of thing”, David Flower, director of development and operations for fast-casual sandwich chain Capriotti’s and its subsidiary Wing Zone, told PYMNTS in an interview. “So we’re making sure people understand that, and we’re highlighting that to give people a choice.”
A similar trend can be seen in the grocery space. Research from PYMNTS’ May study, “Satisfaction in the Age of eCommerce: How Trust Helps Online Merchants Build Customer Loyalty”, created in collaboration with Riskfound that 25% of online grocery customers cite the ability to pick up curbside orders as the most important feature a merchant can offer, while only 14% say the same about curbside delivery. same day.
See more : Merchants risk losing 40% of e-retail and grocery customers to trust