Instacart Barely Makes Money on Your Groceries. It Makes It on the Brands.
Everyone thinks Instacart profits on delivery fees. It earns roughly $7 of gross profit on a $110 order. The real engine is advertising sold to CPG brands at ~80% margins — which carried the company from a 4.2% take rate in 2019 to nearly 10% in 2023.
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A shopper picks up your $110 cart of groceries, drives it across town, walks it to your door, and Instacart — the company that built the app, dispatched the shopper, and processed the payment — keeps about seven dollars of gross profit from the trip.1 Seven dollars. After the fees you paid, the cut the store paid, and the cost of moving food through space, what's left is roughly 6% of the order. That is not the margin of a company worth tens of billions of dollars. So either the business doesn't work, or the groceries were never the point.
The official story is that Instacart is a grocery-delivery company that makes its money on delivery and service fees. That story explains the app you use. It does not explain the income statement. The thin slice on each order isn't the engine — it's the cost of running an enormous, free panel of shopping data that Instacart sells, at far fatter margins, to the brands whose products fill your cart.
Three revenue lines, and only one of them is fat
Instacart's own S-1 breaks revenue into three buckets: transaction revenue — the retailer fees plus the delivery and service fees you see at checkout; advertising revenue; and technology and platform fees charged to the retailers who run their e-commerce on Instacart's software.1 These three lines do very different things. Transaction revenue is the big, visible one, and it's also the one weighed down by the cost of actually moving groceries — shoppers, support, payment processing. That's why the gross profit per order lands near $7.1 Advertising and technology carry almost none of that physical cost. The same data and the same screen that already exist get sold a second time, to a different customer.
| Delivering your groceries | Selling ads to brands | |
|---|---|---|
| Who pays | Shoppers and retailers (fees) | CPG brands (sponsored placements) |
| Carries the cost of | Couriers, support, fulfillment | Almost nothing incremental |
| Economics | ~$7 gross profit on a $110 order | Estimated ~80% gross margin |
| Growth 2019–2023 | Plateauing on order volume | ~90% compound annual growth |
Watch the advertising line and the whole company snaps into focus. Between 2019 and 2023, advertising revenue grew at roughly a 90% compound annual rate — among the fastest-growing retail media networks anywhere.6 By the fourth quarter of 2024, advertising and other revenue ran about $267 million, holding steady near 3% of gross transaction value.6 Three percent of GTV doesn't sound like much until you remember the entire gross profit on an order is about 6.4% of order value.1 The ad layer, sitting on top of every basket at near-software margins, is doing roughly half the real economic work — and costing almost nothing to deliver.
How a take rate climbs without the fee ever changing
Here is the cleanest proof that delivery fees aren't the engine. Instacart's net take rate — the share of all the dollars flowing through the platform that the company keeps — more than doubled from 4.2% of GTV in 2019 to 8.8% in 2022, and reached somewhere between 9.6% and 10.2% in the first half of 2023.5 If that came from charging you more to deliver, you'd have felt it. You didn't. The transaction component held around 7.5% of GTV; the lift came almost entirely from the advertising component climbing to roughly 2.8–3% of GTV, layered on top.5 Instacart got more valuable per dollar of groceries not by squeezing shoppers, but by selling the attention those shoppers were already paying.
This matters more once you see what happened to orders. The pandemic was a four-fold shock — GTV leapt from $5.1 billion in 2019 to $20.7 billion in 2020.1 But the order base didn't keep compounding once kitchens reopened. Revenue growth in 2023 was driven primarily by take-rate expansion rather than order or GTV volume growth.5 In plain terms: the funnel filled up during COVID and then mostly stopped filling. So Instacart's growth story had to become 'extract more value from the orders we have' — and the most valuable thing to extract turned out to be advertising, not another dollar of delivery fee.
Transaction take is heavy and slow-growing — it carries the cost of couriers and fulfillment, and order volume has plateaued. The advertising take, sold to CPG brands at an estimated ~80% gross margin, is light and fast: it nearly tripled the platform's take rate from 4.2% in 2019 to ~10% by H1 2023 without raising the price you pay to get groceries delivered.5 The cart is the cost of acquiring the data; the ad is where the margin lives.
The structure has a tell that's hard to miss. When Instacart filed to go public, PepsiCo bought $175 million of stock in a private placement alongside the IPO.8 A beverage and snack giant doesn't take a stake in a courier service. It takes a stake in the place where its products get found, ranked, and pushed in front of shoppers at the moment of purchase. The customer who matters most to Instacart's margin isn't the one paying the delivery fee — it's the one buying the ad.
But didn't Instacart already prove it could turn a profit?
The fair objection is that the thin-margin delivery business clearly works now — Instacart posted four-plus consecutive profitable quarters through mid-2023 on an operating basis, with $242 million of net income in the first half of 2023 versus a loss the year before.4 So why call delivery a loss-leader? Because the GAAP picture for full-year 2023 was a net loss of roughly $1.6 billion, swollen by one-time IPO-related charges, and genuine full-year GAAP profitability didn't arrive until 2024, with $457 million in net income and $885 million in adjusted EBITDA.3 The honest read is that delivery economics are real but slim; the profit that pushed the company decisively into the black rides on the ad business growing faster than the cost of moving food. Strip out advertising and you have a logistics company with a 6% gross margin and flat orders. That is a business — just not a $9 billion one.7
And the market priced exactly that distinction. The $39 billion valuation everyone remembers was a peak private round from March 2021.7 By the August 2023 S-1, the internal mark had reportedly fallen to around $12 billion, and the IPO priced near a $9.3 billion market cap — a drop of more than 75% from the peak.7 The crash wasn't a verdict on whether Instacart could deliver groceries. It was a repricing of how much of the COVID order surge was permanent. The answer, it turned out, was: not much. What was left to grow was the take rate — and the take rate grows on ads.
When a company's headline activity carries thin margins but generates a torrent of valuable data or attention, look for the second customer — the one paying for access to the audience the first activity creates. Google gives away search and sells the searchers. Amazon runs retail at razor-thin margins and sells the shelf back to brands as ads. Instacart delivers groceries near break-even and sells the cart back to PepsiCo. The trap is mistaking the visible transaction for the business model. Ask which line on the income statement is small, fast-growing, and barely costs anything to serve — that's usually where the real machine is humming. And notice the dependency: this only works while the loss-leader keeps producing the audience. If orders shrink, the ad inventory shrinks with them.
So when you ask how Instacart makes money, the honest answer is that it makes a little on your groceries and most of it on the brands trying to reach you while you shop for them. The delivery is the price of admission — the expensive, low-margin machinery that produces the one thing brands will pay handsomely for: your attention at the exact moment you're deciding what to buy. Instacart figured out that it wasn't really selling a delivery. It was building the aisle, and then renting out the endcap.
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Sources
Where this comes from — the filings, records, and reporting behind it.
- 1Maplebear Inc. (d/b/a Instacart) filed its S-1 registration statement with the SEC on August 25, 2023; the S-1 discloses three revenue streams: transaction revenue (retailer fees, customer delivery and service fees), advertising revenue, and technology/platform fees. GTV was $5.1B (2019), $20.7B (2020), $24.9B (2021), $28.8B (2022), and $14.9B through June 30, 2023. Average order value was $110 in 2022. Average gross profit per order was ~$7 (~6.4% of GTV).
- 2Instacart's 10-K for FY2023 (filed March 5, 2024) identifies ongoing growth of Instacart Ads as a material risk factor and revenue driver, listing 266,498,832 shares outstanding as of February 29, 2024. The document is the first full-year post-IPO annual report filed by Maplebear Inc.
- 3Instacart's Q4 and Full-Year 2024 earnings release (primary company IR): Full-year 2024 GTV grew 10% YoY to ~$33.5B; total revenue grew 11% to ~$3.38B; advertising and other revenue grew 10% YoY; Q4 2024 advertising and other revenue was $267M (3% of GTV); GAAP net income was $457M vs. a GAAP net loss of ~$1.6B in FY2023; adjusted EBITDA was $885M (up 38% YoY); orders were up 9% to 294M for the full year.
- 4Transaction revenue surged 44% in 2022 to $1.8B (vs. $1.23B in 2021); total 2022 revenue was $2.55B (up 39% YoY); in H1 2023, total revenues reached $1.48B (up ~30% YoY); net income in H1 2023 was $242M vs. a $74M loss in H1 2022 — marking the company's fourth and fifth consecutive profitable quarters as of Q1-Q2 2023 on an operating basis.
- 5Instacart's net take rate expanded from 4.2% of GTV in 2019 to 8.8% in 2022, and further to 9.6–10.2% in H1 2023, with the transaction component at ~7.5% and the advertising component at ~2.8–3% of GTV. Revenue growth in 2023 was driven primarily by take-rate expansion rather than order or GTV volume growth.
- 6Instacart's advertising revenue had a compound annual growth rate of approximately 90% between 2019 and 2023, making it one of the fastest-growing retail media networks. By Q3 2024, advertising and other revenue was $246M (3% of GTV, up 11% YoY); by Q4 2024 it was $267M (3% of GTV, up 10% YoY).
- 7Instacart raised $265M in March 2021 at a $39B valuation; by the time of the August 2023 S-1 the company was reportedly valued at ~$12B internally (per The Information), and the IPO priced at a ~$9.3B market cap — a decline of more than 75% from the 2021 peak. The company has raised $2.9B in total funding.
- 8Instacart's common stock began publicly trading on the Nasdaq Global Select Market under ticker 'CART' on September 19, 2023, following SEC effectiveness of the S-1 on September 18, 2023. Goldman Sachs and J.P. Morgan were lead book-running managers. PepsiCo purchased $175M of stock via private placement concurrent with the IPO.