How Instacart Uses Data Science to Tackle Complex Business Problems

Getting groceries was never so complicated


The company that half of American households use to get groceries from their favorite grocery stores like Costco, Wegman’s, Whole Foods, Petco, and more without even leaving the house.

Also the company whose unique business model makes it a fascinating case study on how data science can be used in the industry to tackle thorny business problems.

As a data scientist, you’ve learned the algorithms and the techniques, but how can you apply them in the corporate world, where they can bring or lose millions of dollars? In this article, we’ll take a look at how Instacart uses data science methods to address import business problems behind its extremely complex backend system.

Instacart’s Business Model

First, a primer on how Instacart works as a business. Instacart has done a lot of work to make sure the customer’s user experience is smooth. It’s quite simple.

  1. Download the Instacart App.

  2. Choose a store. There’s lots of stores — Whole Foods, Costco, Petco, Wegman’s, etc.

  3. From the store’s inventory, select which items you want to add to your cart.

  4. Select a one-hour time window during which you want your groceries to be delivered, which could be within the next hour.

Graphic created by Andre Ye.

Within one hour, your groceries are at your front door. The UX is incredibly simple and easy to navigate. The shopper’s experience is a little bit more complicated.

  1. In the Instacart app, the shopper is on their shift, and are given a chance to acknowledge an order when it comes in the system.

  2. They drive to the store of that order and are presented with a list of the items you would like to purchase.

  3. As they find items, they pick them up, and scan the barcode to make sure it is the exact version of the product that you want.

  4. They would check out and drive to your address to deliver your groceries.

Graphic created by Andre Ye.

There’s two obvious sides to this marketplace — the shopper and the client. However, Instacart is actually a four-sided marketplace (can you name the other two?).

Two sided marketplace? Graphic created by Andre Ye.

Instacart also operates with product advertisers and stores. Each of the four parties interacts with the other three in certain ways. Each one of the arrows is an opportunity for data science to strengthen it.