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a16z Podcast | People Marketplaces Take On One of the Last Great E-Commerce Opportunities: Groceries
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People Marketplaces are a lot like eBay -- connecting buyer and seller -- but for services, says a16z General Partner Jeff Jordan. These two-sided marketplaces are cropping up across the economy, from finding a ride to house cleaning and pet sitting. Now Instacart is bringing the People Marketplace model to the grocery business -- a massive market that has seen very little change even as the internet and mobile have upended most retail categories. Joined by a16z's Sam Gerstenzang, this segment outlines the elements of a People Marketplace; why the model is gathering momentum now; and if we all remember what happened with Webvan, why is this time is different?
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Introduction to People Marketplaces
In this segment, Jeff Jordan introduces the concept of People Marketplaces, likening them to eBay but for services. He discusses how these marketplaces empower individuals to earn a living through services, enabled by mobile technology, and provides examples like Lyft and Instacart.
"welcome to the a 16z podcast I'm Michael Copeland and we're here today with general partner Jeff Jordan Jeff welcome yeah thank you Michael good to be here we're also joined today by Sam Kirsten Zang ..."
The Role of Mobile Technology
Jeff explains how mobile technology has transformed service marketplaces, allowing for efficient logistics and scheduling. He highlights the importance of smartphones in enabling a distributed workforce, making services like ride-sharing and food delivery more efficient and profitable.
"in it with the advent of mobile phones it's now possible for those same armies of people to earn a living doing services and you know that's what I refer to as a people marketplace they're they're the..."
Logistics Behind Delivery Services
The discussion shifts to the logistics of restaurant delivery services like DoorDash and Caviar. Jeff and Sam explore how these platforms utilize mobile technology and algorithms to optimize delivery efficiency, comparing their operations to traditional logistics companies like FedEx.
"empower a distributed workforce to be really smart and really efficient I mean I get that in the case of lyft right so it's transportation it's people in and you know automobiles moving around how doe..."
Instacart: A New Grocery Model
Jeff introduces Instacart as a significant player in the grocery sector, explaining how it operates as a People Marketplace. He contrasts Instacart's model with the failed Webvan, emphasizing its virtual approach that leverages existing grocery stores instead of building new supply chains.
"for consumers and better economics for the company interesting so in some ways in Sam I want you to chime in here you could be caviar or - no - and essentially you're operating like FedEx but without ..."
Why Grocery Delivery is Different Now
The conversation delves into why grocery delivery is gaining traction now compared to the past. Jeff discusses the changing employment landscape and how Instacart capitalizes on underemployed individuals with smartphones, allowing for a more flexible and efficient grocery delivery service.
"so take Webvan back in the day they would build their own warehouse with their own materials handling technology they would feel they would buy the goods to go into that warehouse and then they'd fill..."
Advantages of Instacart's Model
Jeff outlines the advantages of Instacart's model over traditional grocery delivery services like Amazon Fresh. He highlights its capital efficiency, faster delivery times, and the ability to offer a wider selection from local supermarkets, making it a compelling option for consumers.
"and why then do the bricks and mortar supermarket chains and or supermarkets individual ones why do they want to play along with instacart um you know one is they really lack the the technology techno..."
The Future of People Marketplaces
In the final segment, Jeff discusses the potential for People Marketplaces to expand beyond groceries into other verticals. He emphasizes the significant market size of grocery retail and the untapped opportunities for digital disruption, concluding with a reflection on the evolving landscape of service marketplaces.
"there's all to get more business is more profitable Sam so we've tried this before with web then back in the day and I think web then finally shut down in 2001 but what's changed in those years to mak..."