#1D Making On-Demand Grocery Delivery Profitable at Instacart instacart#2Groceries + Our Value Proposition SHOP from stores you love + € delivered to your doorstep + in as little as an hour = || @jeremystan#3AT&T WI-FI Choose a store in 94618 COSTCO WHOLESALE Safeway 12:53 PM Target marsh Andronico's Smart Berkeley Bowl petconow Select a Store AT&T WI-FI Buy It Again $3.49 Market Pantry Mango Frut 63 Target- Customer Experience Available within 1 hour Prices are same as in-store 56.99 Organic Taylor Fa Spinach YE BON $1.69 2Lb Organic 23 G Shop for Groceries AT&T WI-F Target Newt Delivery Within 1 hour 1:00 PM Cart Market Pantry Mango Fruit Chunks Market Pantry Blueberries Whole Fruit Organic Taylor Farms Spinach 2 Lb Organic Bananas Checkout now FREE-53.99 156.47 $56.47 Checkout 19:5 X AT&T Wi-Fi T Select Delivery A shopper will arrive with your order Enjoy Instacart Express! 2 hours Express 1:00 PM 3pm-4pm-Express 4pm-5pm-Express Today Mar 17 16 80%- Save delivery time Tomorrow Mar 18 FREE FREE Select Delivery Time Insi Instacar.co Delivered to Doorstep @jeremystan#4ATAT Dashboard Jane Doe Full Service Unacknowledged Batch Whole Foods Market 1765 California St San Francisco, CA Jason Koerak Delivery 3:30 PM 12:00 PM-5:00 PM Acknowledge Order Schedule Shopper Help Center 80% Accept Order 0000 AT&T 12 To-Do Aisle 4 (Black) Personal Care Beverages Shopper Experience 2:59 PM Jason's Order O 2 Pending SimpleBites Ginger Snapz (7 oz) VAN 1x Pamela's Simple Bites Gluten Free Done 1x Alba Botanica Hawaiian Coconut Milk Hair Conditioner (12 oz) 1x Crystal Geyser Grapefruit Juice Squeeze Find the Groceries 0000 AT&T 3:10 PM Scan Item 1x Crystal Geyser Grapefruit Juice Squeeze $2.99-around 4 x 12 fl oz each 73360 37751 Can't Find Item Force Mark as Found Scan Barcode X BRIC ATAT 4:15 PM Assignments AN FRANCISCO Jason Kozemczak on Main St 123 Main St, 94110 Copy address Get directions Out for Delivery 69. k Avtca Quinoa Delivered to Doorstep @jeremystan#5Customers Four Sided Marketplace Inventory Loyalty Advertising Search Stores (Retailers) SHOP Delivery Customer Service Products (Advertisers) Shopping Picking 07 Shoppers @jeremystan#6Huge Market $600,000,000,000 for in Can we succeed? Customers Love Us Guardian Angel Gaguardian20 2 Follow @Instacart saved me this morning. Had my order in less time than anticipated, and everything was delivered. I love them. сс Occ riots Ⓒ2: Follow I just had my groceries delievered via @Instacart and it was literally the greatest thing to happen to me. Unit Economics $ or webvan @jeremystan#7+$ +$ +$ P&G Product Partnerships WHOLE +$ FOODS Retail Partnerships MARKET -$ -$ Our Unit Economics A A -$ Delivery Fees Tips (go to shoppers) Transaction & insurance costs Shopping Time Driving Time Key to bottom-line @jeremystan#8Instacart has achieved profitable unit economics Driven (in part) by huge decreases in fulfillment time: Minutes per Delivery (% of Max) 100%- 80%- 60%- 40% - 20%- Profitable Unit Economics 0%- Profitable Unit Economics Now Next Goal @jeremystan#9TechCrunch DISRUPT 2016 SAN FRANCISCO DISRUPT Tech Tec TechCrunch DISF Crunch DISRUPT DISRUPT Path to Profitability nch DISRUPT TechCru Cru T Cr PT hC "Since the beginning of last year, revenue has grown by 500%" "90% of our customers are repeat customers" "Instacart Express customers spent about $500 a month on Instacart on average" "In the next 12 months Instacart is going to be a profitable company ... cash flow positive" - Apoorva Mehta techcrunch.com/2016/09/14/how-apoorva-mehta-hopes-to-build-an-instacart-empire-with-a-promoted-ad-business/ @jeremystan#10Marketplace nh» n² SHOP O Data Science Challenges Variance 0000 μ Time 00:59:00 >> 23:59:00 da @jeremystan#11Measure Price P* Optimizing Minutes Balance Supply & Demand Forecast Schedule Demand Supply Equilibrium Q* Quantity Adapt Predict Optimize Fulfillment Plan Evaluate Dispatch @jeremystan#12Visitor Choose Delivery Times BUSY Popular delivery times contain an additional fee SALE Some delivery times cost less Whole Foods Market Tomorrow to 123 Main St Total Under $35-Add $11.05 and save $4 on delivery Today Tomorrow Saturday Sunday Mar 3 Mar 4 Mar 5 Mar 6 9am-10am 10am-11am 11am-Noon Noon-1pm 1pm-2pm 2pm-3pm SALE $6.99 $9.99 Monday Tuesday Mar 7 Mar 8 What Was Demand? Wednesday Mar 9 CHOOSE CHOOSE CHOOSE CHOOSE CHOOSE CHOOSE X 1. Checkout 2. Lost 3. No Intent Total Demand = availability) Σ pr (convert | 100% M @jeremystan#13ان ها را دارد Forecasting Demand? nimm ... in a region? ... at a retailer? ... on a day? ... at an hour? ... for delivery in 2 hours? Millions of forecasts @jeremystan#14Markets Many Sources of Outliers Holidays Date - 1 Regional Events Storms @jeremystan#15Testing Design II Model Date Backtesting In Modeling Sample No Yes Algorithm Performance over Time Feb date @jeremystan#16Delivery Options Safeway SF Cap? 1 hour 2 hours 7-8pm 9-10pm 10-11pm Mode Cap? 7 auto 16 auto 8-9pm[$-1] 85 auto- 44 auto 26 auto 8 auto 11-Midnight 5 auto Whole Foods Market SF Mode 1 hour 2 hours Demand Shock Absorbers 9-10pm 7 auto 26 auto 7-8pm 8-9pm[$-1] 89 auto- 49 auto- 26 auto- Costco SF Cap? 2 hours 7-8pm[$ 4] Mode 0 auto auto- Legend Has capacity No capacity Busy pricing Negative busy pricing Instacart Plus SF Bi-Rite Market SF Cap? Cap? 1 hour 1 hour 2 hours 9-10pm 10-11pm Mode 7 auto 16 7-8pm 8-9pm(S-1) 81 auto- auto 44 auto 26 auto 8 auto- 11-Midnight 5 auto- 2 hours 7-8pm Mode 7 auto- 16 auto- 44 auto- 8-9pm[$-1] 83 auto- @jeremystan#17Customer Happiness ● Early Predicting Fulfillment Times On-Time Late Delivery Window Delivering on-time (or early) is critical for customer happiness Actual Delivery Time ● Rº2-26.27 Google Maps Travel Time ******* R^2-50.15 Instacart Delivery Model Our predictions are better than using the Google Maps API @jeremystan#18Timeline Delivery 266724919 Picking Delivery 266725453 Delivery 266726627 Delivery 266727363 University of San Francisco FULTON ST PIME ST Mount Sutro OperSpace Reserve VALLEJO ST Ashbury POST ST TTH ST 18TH ST Picking 08:10 Acknowledge Picking POSTS 20 San Francisco www. Acknowledge Potrero Optimally Routing Shoppers :30 Picking :40 :50 Due Window Due Window 09:00 :10 20 :30 :40 :50 Due Window Due Window 10:00 :10 8 GBMs for complex time & space features :20 :30 Variance is as important as mean → quantile regression Scale to millions of predictions per minute in planning (shoppers x orders x sequence) @jeremystan#19Park Dr MIDTOWN CLINTON HELL'S KITCHEN W3 St LINCOL MOWERS LINCOLN AQUARK W 34th St Words Central Vi MURRAY-HILL Optimally Routing Shoppers. MANHATTAN Manhattan Island Kennely Onassis SIPPER WASHINGT HOUSES are st Roosevelt Island East Rid VRPTW Problem Vehicle Route Planning with Time Windows 300 orders 3 orders per trip x 100 shoppers = 445 million Maximize expected # of items found → Maximize probability of delivering on time → Minimize total time spent delivering Start with greedy heuristics Wait to last minute to dispatch Recompute every minute, in every market Remove constraints, unify objectives Solve subproblems optimally @jeremystan#20WE'RE HIRING! @jeremystan