Online grocery delivery service InstaBuggy has overhauled its pricing structure, adopting what co-founder and CEO Julian Gleizer describes as a “store pricing” model that eliminates mark-ups on individual items.
Gleizer says Instabuggy’s mark-ups were typically in the 25% range, depending on the product. Prices are now similar to what customers will find in-store, with Instabuggy instead adding a flat “picking, packing and delivery” fee of $19.98 on every order. It has also eliminated a minimum purchase requirement of $35.
Gleizer says Instabuggy’s average order size has increased to nearly $200 from about $154 since the new pricing was introduced on Sept. 11. “It’s been an immediate impact,” he says.
The company is also building partnerships with CPG companies such as Unilever and ConAgra Foods, promoting their brands on its mobile and desktop ordering sites. A current promotion, for example, features ConAgra Foods’ VH sauces.
Gleizer says the company is also developing other revenue streams with its retail partners, though he declined to provide specifics.
Instabuggy debuted in Toronto in 2015, and has experienced what Gleizer describes as “significant” year-over-year revenue growth since then. On Monday it will soft-launch in Ottawa, where it has partnerships in place with retailers including Sobeys Urban Fresh, FreshCo and Costco. The company also plans to launch in Vancouver later this year.
Gleizer says Instabuggy’s user base is nearly evenly split between men and women, with its customers ranging in age from 25 to 60. “We get kids ordering for their elderly parents, parents ordering for their kids in college and university, and everybody in between,” he says.
Citing internal research, Gleizer says penetration rates for online grocery services have increased from about 0.5% to 1% when Instabuggy debuted, to between 2.5% to 3%. “There’s significant demand in the online grocery space,” he says.