If you are a guy then you are most probably into some video game in this day and age. There is no need to explain how big video games have become in today’s world. It’s not because they have not been good in the past it is just that they are easily accessible these days. Ever since the beginning of the video gaming industry video games has always been in demand. If there is a good game that was released then everyone would want to get their hands on the game. But as you know not everyone could afford to buy a console back then so one of the easiest ways for them to play games was through arcade games. If you were a gamer in the ‘90s and the early 2000s then you would know how big arcade games were. After that things started to change for the gaming industry.

Video games were going through a transition. The main difference was the quality of the graphics. The release of PlayStation 2 was the turning point in the history of video games. It changed the way video games looked and played. As technology changed the video games have become more advanced. They started using any new technology that could make their video games better. Not only that but the video gaming industry also found a way to become compatible with devices like cell phones, tablets, and laptops. People who could not buy consoles but loved video games have found a new way to satisfy their appetites. In the past five years, smartphones have gotten so much better that they can be used to play games that are almost on par with the games available on a console. One such game is Fortnite which can be played on PCs, consoles, and phones.

What is Fortnite?

If you are a millennial who is into gaming then there is no need to tell you about Fortnite. That’s how popular the game has become. Frankly, it is quite hard to believe how popular the game has become since it was released. Fortnite is an online video game that was developed by Epic Games and was released in the year 2017. Since the day of its release, the game has garnered a lot of attention from all kinds of people in the gaming world. It has managed to get a user base of more than 150 million people within the first year of its release. This shows how much people have enjoyed playing the game. 

There are three gaming modes for Fortnite, they are called save the world, battle royale, and creative. Among these game modes save the world and battle royale were released in the initial year. Creatives were released in the year 2018. All of these gaming modes have gotten a great response from the players. Today Fortnite has become a cultural phenomenon. People are spending their weekend nights playing Fortnite. It is one of the most popular and loved battle royale games in the world right now and it is not going to change anytime soon.

Before getting into the business model of Fortnite let’s know more about the game and how it is played as this will be helpful for you to know how it works and makes money.

Gameplay of Fortnite

As mentioned earlier there are three gaming modes of Fortnite. They are, save the world, battle royale, and creative. All of these gaming modes have different types of gameplay. Not only but these game modes use the same engine. That means they have similar graphics and mechanics. The number of people who play these game modes vary. This is important as it is directly proportional to the amount of money that the game makes so let’s go through each gaming mode. 

Fortnite: Save the world

This was the first gaming mode that was released by Fortnite. In this mode, a player can team up with other players. The maximum number of people who can team up is four. You can team up with other players and work together to accomplish various tasks. The context of this game mode is that 98% of the earth’s population is wiped out because of a storm. People who have survived this are now being attacked by husks which are quite similar to zombies. Now you are like one of the commanders of surviving shelters. You have to complete various tasks like saving survivors, collecting resources, and data that is related to storms or the one that prevents it. 

As you complete each mission you will receive rewards. You will get things like weapons, new characters, in-game items, and other things. A player also gains experience points which help them to improve their character’s attributes. 

Fortnite Battle Royale

A person who is into mobile gaming doesn’t need an introduction to battle royale. This is because the battle royale games have taken the video game world by storm in the past five years. The top mobile is battle royale games. For those who don’t know what battle royale games are, these are the games where you are pitted against other players in a vast area. These kinds of games require you to eliminate other players while collecting weapons and traveling to other locations as the area of gameplay becomes shorter and shorter. The player or the team that remains at the end are the winners. It is similar to movies like hunger games where you have to kill every other person to win. 

The battle royale of Fortnite is no different. In this game mode, there will be upto 100 players playing at the same time. You can play as a single-player, duo, or form a squad. The squad has a maximum of four players in it. At the beginning of the game, you will not have anything. You will have to airdrop in your desired location from a battle bus that flies across the map. After you drop from the sky you have to start searching for the weapons and other stuff that you need to survive in the game. You will also find vehicles that you can use to travel to other locations in the map. The gaming area starts to shrink as the game progresses forcing the players to get closer to each other. Anyone who is outside the play area will die. The last surviving members win.

Fortnite Creative

This is a gaming that is similar to Minecraft. In this game mode, the players are the complete freedom to build whatever they want on an island. You can build things like buildings, battle arenas, and racing courses as well as many other things. 

Business model of Fortnite

For those of you who don’t know Fortnite is completely free to play. It doesn’t even show advertisements to players who are playing the game. The most important component of their business model is the players who play the game. It is totally dependent on the players and it has done a great job of keeping them engaged.

Users

If you are an online video game then the number of people who are playing your game on a daily basis is very important. If you don’t have hundreds of thousands of people playing your game daily then you are not a success. But this is not a problem for Fortnite as there are millions of people who are playing this game every day. Most of the people who are playing Fortnite are playing Battle Royale. The main reason why this game has become popular among all kinds of people regardless of age and gender is because of its tone. Despite being a battle royale game you will not be witnessing any blood while eliminating other players. This gives a fun and pleasant experience to the people who are playing it. 

Apart from that the characters and their characteristics like the way the dance makes them feel light-hearted. The world of Fortnite is filled with bright colors which is another plus point for the game. Because of this, it has managed to become the favorite online game for millions of people around the world. Even many popular gamers started playing and streaming Fortnite which made it reach many people. Not only that but many famous celebrities have also admitted that they play Fortnite which helped it become more popular. The best thing about Fortnite is that they take suggestions from players and fix the problems in the game.

Competitions

Fortnite has partnered with eSports to organize Fortnite tournaments. If you are really into the gaming world then you know how big of a platform eSports is. You will find the best players of the world competing against each other. Fortnite organizes tournaments where players from all over the world participate in them to win the prize money. Even the prize money is in hundreds of thousands of dollars. So the competition is quite high. When the tip players compete against each other everyone wants to see it. In this way, it stays relevant and reaches out to more people in the world. 

How does Fortnite make money?

As mentioned earlier Fortnite is free for everyone to play. This means that everyone has access to the same type of graphics and mechanics to play the game. The way it makes money is through in-game purchases. There are a few things that people can purchase using money. They can purchase items in the games using a virtual currency called V-bucks. You have to pay real money to buy this virtual currency which in turn helps you to buy other items. Let’s look at the things people can buy using virtual currency.

Skins

Skins are basically costumes that you can buy. You will only have access to default skins if you play the game for free. But if you want skins that look really cool then you have to buy them. There are skins that are based on popular heroes, villains, and comic characters. So naturally, people would want to buy them. Not only costumes but you can also customize your tools, weapons, and other accessories using these skins. 

Battle passes

If you want to get the in-game rewards for free then you have to complete all the objectives that are given for the season. But if you don’t want to do all that but still get all the rewards then you can simply buy a battle pass. These premium battle passes allow players to unlock lots of in-game rewards throughout the season. 

Loot boxes

These are the boxes that contain multiple items. You can buy these loot boxes if you want. The amount of money you spend on these loot boxes determine the rarity of the items you can unlock. You can unlock skins, character traits, boosts, and other items through these loot boxes.

Conclusion

This is the business model of Fortnite. It is a freemium business model that has in-app purchases. Currently, more than 350 million around the world are playing Fortnite which makes it one of the most popular and profitable games in the world. Check out other business models like the business model of Credit Karma on Postling. 

Craving for your favorite pizza or a healthy snack? You are just an arm away with Uber Eats app though your go-to restaurant is five miles far away.

Thanks to evolving technology and food delivery apps, you can order your food from your phone as simple as booking a Uber taxi. There are a few amazing online food delivering apps that make people’s life easy and convenient. No more waiting in the queue at the takeaways or the table for orders! 

Of all food delivery apps in the world, Uber Eats is the fast-growing and largest platform that exists in more than 45 countries and over 6000 cities.

The company posted $1.2 billion in revenue as of Q2 2020. In fact, during the pandemic, in Q2 2020, it made more than its parent company Uber with over $6.96 billion gross bookings, double the bookings of Uber rides.

Wondering how Uber Eats makes such money with limited margin as it is dedicated only to deliver food orders? Well, let us discuss its business model and understand how it makes money in this article. So, are you ready? Okay, before that let us have a quick look at what is Uber Eats and when did it start.

What is UberEats?

Uber Eats is an American online food delivery platform owned by Uber Technologies Inc., the world’s largest ride-share company. It was launched in 2014 initially as UberFRESH in Santa Monica, California. UberFRESH was renamed to UberEATS in 2015 and is headquartered in San Francisco, California, U.S.

Within no time after its launch, UberEats has reached over 50% of the US population. The company is expanding to cover over 70% of the US population. Uber Eats competitors are DoorDash, Grubhub, Postmates, Zomato, Swiggy, Deliveroo, Slice etc.

Thus, with number of apps, food ordering and delivery to home or office from favorite restaurants have become as easy as booking a ride on Uber.

Read: Postmates Business Model – How Postmates Makes Money

It is a huge platform with top-rated restaurants listed virtually on it. Customers can scroll over different restaurants and their menus and order from any nearby restaurant. Then, the company’s delivery partners (individual delivery drivers) deliver food orders to customers’ doorsteps. Simple and crisp, right?

Okay, let us now discuss how it manages its expenses and makes profits for itself below.

UberEats Business Model

The easy food ordering and delivery platform have three revenue segments- B2B, B2P and B2C.

In another way, the platform connects three players in its business: delivery drivers, restaurant owners and customers.

Read: Instacart Business Model – How Instacart Makes Money

Now, let’s connect the above two statements.

B2B: Uber Eats (the business itself) to Restaurants (other businesses)

The company charges service fees from its restaurant partners plus a good percentage of the total from every food order.

The service fee is based on the restaurants and the percentage is around 30%. Additionally, the platform charges an extra amount for promotions and advertisements of restaurants.

B2P: UberEats connects with Delivery Partners who is none other than individual delivery drivers

UberEats pays its delivery partners a fixed price for each pickup, drop off, distance and time. Moreover, it offers incentives and bonuses during special occasions, milestones and peak hours.

Let us see the fee breakdown for delivery drivers here.

• Pick up fee – $1.50 per trip to a restaurant
• Drop off fee – $1.00 per order delivery
• Time – $0.30 per minute for waiting at a restaurant and traveling to deliver.
• Distance – $0.65 per mile

Thus a delivery driver can earn at least $5 per each delivery (the least possible).

B2C: UberEats connects with its customers and also it lets restaurants connect with their customers.

Customers pay three types of fees to the platform.

• Service fee – 15% of the total food order amount
• Delivery fee – based on the restaurant, location and availability of driver
• Surge fee – charged during busy hours, varies depending on demand
• Small order fee – a fee of around $2 if the order value is under $10

So, thus UberEats allows customers to place orders from their favorite restaurants and delivers them with the help of delivery drivers.

Read: Zomato Business Model

The best part is, the company makes money from all three players.

• It charges certain commissions between 15% – 40% from restaurants for each order.
• It charges customers the service fee, delivery fee and cancellation, surge fee sometimes.
• Finally, delivery drivers have to pay a certain service fee for utilizing the platform.

However, the service fee which the driver pays to UberEats is lesser than what it pays them. Drivers are paid based on the time and miles they travel to deliver orders. Also, the tips that customers pay completely go to the drivers.

The amount that drivers earn is not what customers pay as a delivery fee. In fact, the delivery drivers earn handsome money for each minute they invest. Thus the platform creates a win-win for itself and all its players.

How did Uber Eats become So Popular in No Time?

Of course, Uber Eats was launched after Uber had successfully established its mark. It was already a household name for booking taxis online, hence it didn’t take much time for people to recognize and remember Uber Eats. Moreover, the child company followed Uber’s business model to make money.

However, not just UberEats follows its parent company’s successful business model to bag profits, but it also shares some advantages with Uber. In fact, those advantages made Uber Eats expenses cost-effective, let us look into them.

UberEats Cost-Effective Model

Drivers and Riders

Uber Eats shares drivers and riders with Uber reducing the costs and efforts to build a network of delivery drivers from scratch. It would be definitely a time and money-taking process for companies that start from scratch.

Reduced Marketing Expenses

The advertising and marketing expenses are less for Uber Eats when compared with its competitors. Because it drives most of its users from cross-promotion on the Uber app.

Uber Eats makes most of its revenue from cross-promotion which is a very effective marketing strategy.

Logistics Costs

Being the largest food delivery platform with thousands of users, it has the opportunity to save logistics costs for multiple food orders. It can deliver orders to multiple users on the same route in a single van.

Read: Deliveroo Business Model

Enough said! Let us quickly jump into how Uber Eats makes money.

How does Uber Eats Make Money?

As you can see above, Uber Eats makes money from three segments: restaurants, delivery drivers and customers.

Restaurants Partners

The company receives a 30% commission from the restaurant partners on each order it delivers to its customers via Uber Eats. The company is both introducing its customers to different restaurants and customers of established restaurants to new restaurants. Thus, its customer base is growing. As more customers make more sales, it receives more commissions.

It also displays special promotions on its platform for popular food chains such as McDonald’s and receives special commissions.

Customers

The delivery fee is charged to customers based on their location and availability of couriers for each order they place. 15% of the total order value is charged as a service fee to customers. 

Some part of this service fee goes to delivery partners and the rest goes to the company.

Also, Uber Eats charges a flat $2 as a small order fee when the total order amount is less than $10. In addition, it also charges cancellation fees when they cancel the orders.

Surge Fee

The company raises prices during busy hours the same as its parent company. The fee can be at least 3X of the normal delivery fee based on the demand and delivery partner availability. Again, it shares the fee with its delivery drivers. However, when more delivery drivers are available the fee goes low.

Drivers

The company pays well to its delivery drivers. At the same time, it charges certain fees from them for using the platform and making money. However, the money it charges is just a small fare. 

Savings

As discussed above, Uber Eats operates in a cost-effective manner in all its functions. Right from building a network of drivers, logistics costs to marketing expenses, it shares them with its parent company. Thus, it saves a lot of money in both creating brand awareness and driving sales. Yes, it isn’t any less than its competitors in any matter.

Why is the Uber Eats Business Model Successful?

As the saying goes, “A penny saved is a penny earned”, Uber Eats is fortunate enough to have a parent like Uber, a well-established brand and huge food delivery platform in the world. As you see above, Uber Eats cuts major costs i.e., marketing and advertising on which most companies spend thousands of dollars. Uber Eats escapes the costs by using cross-promotions. 

Moreover, with the increasing demand for online shopping and online food ordering, the company is making good profits. As aforementioned, the company made double the revenue of Uber rides this year in Q2. Also, though the company has tough competition with DoorDash, Grubhub, Swiggy and other local apps, it is the third-best food delivery app in the world with a market cap of $ 1.2B.

Final Thoughts

So, that is how Uber Eats makes money for itself and for its parent company, Uber Technologies. Isn’t it a great thing to surpass its parent company this year in bookings? Yes, right? Of course, it is the necessity that is responsible for both innovation and success. Uber Eats has utilized the key necessities and upgraded user experience by innovating new features such as customized meals at the scheduled time, tailored food recommendations, tracking etc using technology. In fact, that is how a company should work in order to stand out from the crowd.

If you are an adult then you know how important it is to keep track of your credit score. This is because your credit score will play a crucial role in the future. It doesn’t matter how small or big the loan you want, the financial institutions you approach to borrow money will only look at one thing if they were to lend you money. That is your credit score. Because this is the score that will let them know how good you are at paying your credit on time. If you have a high credit score then the financial institutions will give you a loan more easily. This is because they will know that you are good at paying your debt. No one would want to lend money to someone who is unable to pay it back in time. Would you lend money to someone like that? Definitely not.

This is because banks like people who pay their credit in time and you can easily understand why. Even people who are just starting their care must understand the importance of their credit score. Some millennials are just spending as much as they want and putting most of it on their credit card. They don’t understand how much it is going to affect their lives in the future if they don’t pay that back in time. Even if you want to get a new credit card your credit score matters. So it is better to keep track of your credit score. Tracking your credit score will help you control your expenses and limit the amount you spend on your credit card. The best way to do this is by installing an application that allows you to track your credit score for free. That application is Credit Karma.

What is credit karma?

Credit Karma is an American financial tech business that was founded in the year 2007 by Kenneth Lin. It was founded so that it can help people to keep track of their credit score more efficiently. It provides users with their free credit reports and scores. All of these reports and scores are collected from the national credit bureaus such as Equifax and TransUnion. If you use Credit Karma then you will be able to see all the minor changes in your credit score. Not only that you can even inquire if you feel that your credit report or score has any errors. The best thing about this platform is that it not only allows you to track your credit score but also provides you with the tools to improve it. It does things like offering financial recommendations to an individual based on their credit score.

Since the day if it’s founding Credit Karma has come up with various tools to help its users monitor and improve their credit score. One such tool is My Spending Tool which allows users to monitor their expenditure. Credit Karma allows you to check your transaction history, loans, and credit card balances. To help the users understand their tools better Credit Karma has blogs and forums where you can learn about the experiences of other users who used those tools. In 2016 the company also created a Credit Karma tax which is an online tax preparation service. This service allows people to file federal and state taxes through their platform without any cost. Till now Credit Karma has acquired many companies. It has also worked with startups like Upromise that intended to help students to pay their student loans. Currently, Credit Karma has more than 100 million users.

How does Credit Karma work?

If you are an adult then by now you must have understood that your credit score is not just a number but an indicator of how financially secure your future is. It plays a vital role when you require a new credit card, housing loan, and many other things. It is very important that you review your credit score regularly. By doing this you will have an idea of how to be financially independent given your current position. The best thing about using Credit Karma is that it provides you with your credit scores and reports for free. Everyone should have free access to their credit reports and Credit Karma believes this. Not only that but it also makes the process very easy. If you want to use it all you have to do is sign up to their website using your basic information and nothing else.

You don’t even have to give your credit card details to sign up for their platform. A person can look up their credit score any number of times they wish without paying a single penny. If you do not understand how credit scores work then no problem Credit Karma also helps you in understanding what it is. Apart from this Credit Karma also provides a lot of free services that help its users. As a user, you will receive personalized suggestions on how to improve your credit score.

Business model of Credit Karma

If you look at the business model of Credit Karma is quite simple as it does not involve too many types of people. The only people that Credit Karma serves is the financial institutions and their users. So let’s see how this business model is supported by two groups of people.

Users

Without users, any kind of platform is just an idea. An idea can be wonderful but it will not be a success unless people accept it. By looking at the track record of Credit Karma one can easily say that it definitely is loved by the users. And why won’t they love it? It has given them all the reasons to use their platform. Credit Karma gives them access to their credit scores and reports in an instant. They can look up their credit any number of times they want to. Additionally, it also provides them with lots of other services and tools. The best thing about this is it does all of this for free. Why would anyone not like such a wonderful thing if it is for free? Not only that but they can also search for loans that suit their credit score. 

Financial Institutions

Financial institutions are the ones that pay to use the reach of Credit Karma. With over 100 million users in the US, the UK and Canada Credit Karma have a user base that is very useful for all of the financial institutions present in these countries. If you observe that financial institutions are more than happy to offer you a credit card if you don’t have one. This is because they want you to spend more. So if they give you a credit card you will be able to spend more when you don’t have money. While paying back the money you will be returning it with added interest. This is one way in which a financial institution makes money. 

There are many such ways as giving loans through which the financial institutions make money. But they have to put in a lot of effort to reach out to those people and witness success. But here is a platform that has millions of users that belong in all credit ranges. So it has customers for these financial institutions that have all kinds of products for these people. This means that they will easily be able to reach out to the customers with a product that suits their credit score. Credit Karma provides these financial institutions with a platform where they can promote their products and services. 

How does Credit Karma make money?

Since the platform is completely free there are only two ways in which the platform makes money. That is by advertising the products of financial institutions and by referrals.

Advertisements

This is the most basic way in which an application or a website earns money. Credit Karma is very smart as it only advertises the products and services of financial institutions. This is great because the platform itself is about helping people understand their financial situation. This allows it to advertise all kinds of products and services from financial institutions. But the great thing about this is that it does not show ads randomly. Credit Karma believes in targeted advertising. This means that you will only see ads about the products that you may like or get depending upon your credit score. This also helps the financial institutions as their advertisement will be shown to potential customers.

Referrals

As mentioned earlier financial institutions advertise their products on Credit Karma. These advertisements are specifically targeted towards individuals. Some people may get loans or other things through these advertisements. If someone signs up for a service then the financial institutions to which they signed up pays a referral fee to Credit Karma. There are many services such as credit cards, travel cards, personal loans, home loans, car loans, etc. Whenever a person signs up for these services Credit Karma receives a referral fee.

Conclusion

This is the business model of Credit Karma. The great thing about this application is that it does not sell the information of its users to any company. Use Credit Karma if you want to keep track of your credit score for free. Check out other interesting business models such as the business model of Oyo rooms on Postling.

Tesla, Inc., the world’s largest all-electric car company, is also a clean energy company that acquired SolarCity, a well-established company in the solar industry. Tesla is popularly known for its luxury electric cars and of course, its CEO and co-founder, Elon Musk. However, do you know that Tesla is not founded by Musk initially? Musk is the fourth member to join Tesla Motors, which is now known as Tesla. Well, this can lead to a question – who owns Tesla, right? Okay, this article briefs you on the answer!

Let us see who owns Tesla quickly. Before that let’s have a look at its history.

History of Tesla

Tesla is an American all-electric car and clean energy company that sells electric cars, trucks, batteries, solar products, etc, and offers related services. Elon Musk, Martin Eberhard, Marc Tarpenning, Ian Wright and J.B. Straubel are named as co-founders of Tesla.

The company was initially named Tesla Motors (named after Nikola Tesla). It was founded by Martin Eberhard and Marc Tarpenning in July 2003. They both financed the company and played active roles in developing the company. In February 2004, a few months after Ian Wright had joined the company, they took it to the public and raised US$7.5 million in Series A funding.

Want to know how Tesla makes money? Read Tesla business model here.

Elon Musk contributed $6.5 million in the funding and became chairman of the board of directors. Eberhard became CEO and in May 2004, J.B Straubel joined the company. In 2009, a lawsuit settlement was agreed to by Eberhard and the company allowing all five members to call themselves co-founders.

Tesla’s Roadster has become tremendously popular. Musk was actively involved in product design, electronics module and other styling activities more than daily business operations. He received Global Green 2006 product design and 2007 Index Design awards for designing Tesla Roadster.

Tesla was in the game with the mission to produce mass-market electric vehicles. The charismatic entrepreneur, businessman and co-founder of many successful companies including Tesla always made sure that the company’s long-term goals are never compromised. However, they started with a premium sports car targeting early adopters, green planet lovers and then they moved to create sedans and affordable compacts.

The company plays well majorly in the US, Europe and China and it reported rapid growth in China in recent years.

Musk was responsible for adding Valor Equity Partner, Technology partners, dominant entrepreneurs such as Larry Page, Sergey Brin, Jeff Skoll, and many others who are co-founders and president of Google, eBay and other companies.

Thus, Tesla raised $13 million in February 2006, Series B funding $40 million in May 2006 in the third round of funding and more than $100 million in May 2008, fourth-round through private financing.

Okay, enough said! Now let’s get into the actual topic of this article – who owns Tesla. Shall we?

Who Owns Tesla?

Tesla, which is ranked as the world’s best-selling plugin and battery electric passenger vehicle manufacturer in 2019 is owned by Elon Musk. 

The company’s market share is 17% of the plug-in segment and 23% of the battery-electric segment.

As mentioned above, there are many successful investors for Tesla. Yet, the majority of shares are owned by Elon Musk, the co-founder and CEO of the company.

Elon Musk, who is known for co-founding innovative companies such as X.Com, SpaceX, Neuralink, The Boring Company, PayPal etc., is also known for controversies. He didn’t stop innovating though. He had to step down to CEO of the company from the board of directors position after he was sued by U.S. Securities and Exchange Commission for the false tweet stating he had secured funding for a private takeover of Tesla at $420 a share.

Read: Business Model of SpaceX – How does SpaceX Make Money

Also Read: Business Model of PayPal

Despite this, he holds the major shares of the company. He owns over 20% of Tesla’s shares that are worth over $60 billion.

His income is growing along with the company’s revenue as Tesla posted a net income of $331 million for the fifth time in the row.

Thus Elon Musk’s net worth is soaring higher than ever before making him the 31st richest person with around $25 billion net worth.

In fact, Musk owns shares almost equal to combined shares of the next big four investors which is around 23%. Therefore, he is the largest shareholder of Tesla among both individuals and investment institutions.

The Other Largest Shareholders of Tesla

Susquehanna Securities: This is a part of Susquehanna International Group, a global quantitative trading company. It holds around 12.1 million shares that is almost 6.6% of outstanding shares of Tesla. It is the second-largest shareholder of Tesla.

Baillie Gifford & Co.: The company that belongs to Scottish investment management company owns 12.1 million shares of Tesla, 6.5% of all outstanding shares.

Capital World Investors: An investment management branch of Capital Group stands fourth among the largest investors of Tesla. It holds over 10.7 million shares of the company, nearly 5.8% of outstanding shares.

Citadel Securities LLC: The fifth-largest shareholder that owns nearly 7.9 million shares accounting for 4.3% of all outstanding shares.

The combined shares of these four shareholders result in 23% which is almost nearer to Musk’s shares (about 20%).

Bottom Line

So, thus by holding the majority of shares, about 20% of all outstanding shares of the company, Elon Musk has become the largest shareholder of Tesla. Besides, he is the CEO and product design architect of the company leading the design and styling departments.

Are you an online shopper? Who isn’t right? Especially since the world has been forced to quarantine within their home. The one thing that has saved the day in the lockdown is online shopping. People were forced to shop online and frankly, it is quite a blessing in this situation as people can’t go out to get basic necessities amidst pandemic.

Even before the pandemic, online shopping has been a fav for many. With busy workdays and tight schedules, people really dont have time to spend with themselves or their family. So whenever they have a free day rather than spending it on shopping they want to spend it with their coach.

For such people, online shopping is truly a blessing. They can order anything they want at the swipe of their finger and don’t have to worry about getting the goods as they directly receive the goods to their doorstep. People should surely thank the evolving technology for making life easier.

The business model that you will be understanding is also related to online shopping. Yup, you heard it right. You can shop for the products that you usually get from your regular stores. And the best part is that they will be delivered to your doorstep within a day. There are possibilities that you may receive your goods in just an hour. If you haven’t guessed yet then the platform that is being discussed is Instacart. It claims itself to be a platform on which you can shop your products. 

Instacart has removed the inventory out of the equation and has made collaboration with its stores to deliver products to customers on time. You see they don’t store the inventory or have to worry about it. They just act as hosts, the products are still sold by the stores only. Insta cart only takes the orders from the customers and then purchases those products from the store and delivers them to the customers.

This strategy is really brilliant. Don’t you agree? It is truly an amazing business model. Instacart doesn’t have to spend too much money on storing the inventory as they can directly get the goods from the stores and deliver them to the clients.

And the reason why this works just fine is that the stores also don’t have to go out of their way to get new customers. They can reach more people and improve their sales and the customers can also save time and effort as they don’t have to go grocery shopping. Before anything first, you must know the when and who started Instacart. The beginning. If you’re ready then let’s move forward. 

Instacart

Instacart was founded by Apoorva Mehta and Max Mullen back in 2012. This platform is available in two countries currently. Currently, this business has made around $2 Billion in revenue and they have over 5,00,000 customers. Also if you come to the performance, on average customer orders at least twice from this platform with a total value of $95/order. If the customers take the subscription under Instacart Express then they order around 4 times or more a month. 

Now coming to the business model of Instacart, it is a fusion of different business models. Yup, you heard it right. It is right to say that it is an amalgamation of on-demand, subscription, e-Commerce, aggregator and sharing business models. The way in which Instacart works makes it clear. The customer’s order from the stores of their liking from the Instacart app and then Instacart sends the notification to the shopper and they will shop for the order and deliver it to the customers. In turn, they receive money or commission from the company. Sometimes they also receive tips from the customers. 

One of the main reasons behind the success of this platform is that they don’t have inventory. It saves them time and money as they dont have to focus on inventory management. Another advantage of this platform is that they have a partnership with the stores. So they dont have to worry about not sending the order on time.

So they can just focus on delivering products on time to their customers. You see the responsibility of the quality is one of the stores, so they rely on stores for good quality and make sure that the delivery is on time to make sure that the customers are satisfied. 

Key Partners

This platform has the same operating model as Uber. But that doesn’t mean that it is the same too, it has combined it and created its own model. If you want to understand their business model then you must understand the key people involved in it. 

Customers

First and foremost the customers. They are the most important people for Instacart. These are the end-users that order the groceries using the app and receive them. So it is important that you always satisfy them and understand their needs. They usually choose a store they want to shop from in the app and then order groceries from that particular store and when they receive the order they will pay for the delivery and also tip the shoppers.

Shoppers

Shoppers are the partners that shop for the order and delivery it to the customers. The company employees them on a contract basis. They can also work part-time or full time. Whenever a customer places an order they immediately receive notification and they shop and delivery the goods to the customers within the said time. Instacart pays them a commission and they can receive a tip from customers too. Usually, there are two types of shoppers they are 

Full-time shopper

These are the shoppers who are independent contractors. They shop and deliver the goods to the customers. Since they work full time they must have a smartphone and vehicle as they will be immediately notified once a customer orders. 

In-store shopper 

These are the part-time employees of the company. Their responsibility is that they must take off the order in-store. simply put, they pick the products in the order and bag it up. They need access to a smartphone, but they don’t need a vehicle as they don’t need to deliver products to the customers. 

Stores

Stores are the most important partners for Instacart. Because this is where the customers can order the products from. With this platform, they can attract more people and improve their sales. The stores are listed under their own name. Instacart is relying on their goodwill to sell, whereas they are relying on Instacart to attract more customers.

How does it make money?

So that now you have understood about the business model and the key partners involved in its working. Aren’t you curious to know how this platform has become successful? You’re right? Then what are you waiting for? Let’s jump right to how it makes money. Yup, you are about to know about the income sources of this platform.

Without any further ado, let’s jump straight to the point.

One of the most fascinating thing about this platform is that they dont charge any commission from their partner stores for the orders placed through these stores. Yup, you heard it right. But that doesn’t mean that the company don’t have other sources of revenue. The other sources of income will be discussed in this section.

Delivery fees

This one seems pretty obvious right. It is one of the ways that Instacart makes money. As you see they delivery essentials to their customers in a short time they charge a delivery fee for their services. As you already know the order value should be more than or $10. However, the delivery prices are based on how fast you are expecting your delivery. They usually charge around $5.99 for two-hour delivery. If you are in urgency and you need your delivery within an hour then customers must pay a delivery fee of $7.99

Mark up price

There are some items in the Instacart from certain stores that have marked up prices. The markup prices are up to 20%. All the revenue earned from the markup prices will go to the company, not to the stores. So you can see that this is an excellent source of income for Instacart. As they will not have to share this revenue with the stores.

Service Fee

As you already know that Instcart does not take any commission from the stores but they charge the customers with service fee. Earlier they used to charge 10% of service fee on each and every order. Not only that the customers can tip the shoppers with any amount they please. However, things have changed now. The recently changed checkout process has reduced the service fee to 5%. Another significant change is that the customers must pay the shopper 5% tip. It is mandatory. 

Surge Pricing

This is highly similar to other on-demand startups such as Postmates. Adding a dynamic pricing algorithm to their platform will allow the companies to increase their delivery charge whenever the demand for deliveries increases. Yup, it is similar to paying double the price to catch an Uber on weekends. Whenever the demand for delivery increases and there are fewer shoppers to get things done, the company increases the delivery price.

So that people who are in urgency will pay the extra price to get things done. Cool, right? This is also an excellent source of income for Instacart. Customers usually experience surge pricing in case of rush, Sunday nights or during holidays as they have more orders to delivery. This surge pricing only applies to popular delivery timings.

You will separately find the delivery times with surge pricing at the checkout. The surge pricing starts with $1 in addition to your delivery charges. Surge pricing is determined based on shopper availability.

Partner Stores 

Yup, you guessed it right. Instacart earns revenue from the partner stores too. As you already know many of the small and large businesses have partnered with Instacart over the years. They have partnered with this company to integrate this service on their platform or website.

The revenue comes in the form of commissions and pre-order profits. But one thing you must remember is that the commission is only paid if it is part of their contract. It is usually taken per order fulfilled by the company for each platform. Till date around 165 businesses have integrated Instacart services on their platform or website. See it brings a major chunk of income into the company.

Membership fee

Did you know that Instacart also has a subscription service? Yup, Instacart also offers a subscription plan. It is an annual subscription plan known as Instacart Express. The main point of this subscription is that the customers will get free delivery on orders above or $35. Not only that they can also save themselves from the surge pricing too. They dont have to pay extra in busy hours by taking this subscription plan.

If the customers wanna try the plan before committing, Instacart is offering a 14-day free trial. So the customers can try and decide. The price for this annual subscription plan is $149. Membership fee can be a major source of income to the company as you see if there are people who regularly order from Instacart, it is economically to get the annual subscription rather than spending good money on delivery services. 

Funding

How important do you think are investors for a company? Highly important right. It is not an exaggeration to say that they are the heart of the company. They bring in the financial support that gives the company to explore their ideas and make them a reality. Especially for start-ups, they are even more important. Startup’s are just at the beginning; they have huge financial constraints and heavy responsibilities.

So they need funding to get the financial back up from the investors. In this case, Instacart is no different. If it wants to survive this heavy competition and emerge victoriously they need investors. It has raised funding from Kleiner Perkins Caufield & Byers, Khosla Ventures, Sequoia Capital, YCombinator, etc. It has a total of 34 investors and till date has raised around 2.4 Billion dollars. Shocking, right?

Wrapping up 

This startup has become highly sought after by many users because of its amazing idea. One idea can change the course of life. This statement is true for this company. They have made purchasing home essentials and groceries simple and easy. People don’t even have to step out of their door to shop at their favourite stores. The shopping can be done on the Instacart platform and ordered to be delivered directly to your doorstep by the shoppers.

Once the order is received and checked the customers can pay shoppers tips. Sounds cool, right. It saves time and effort. What more could people ask for. No more standing in line or forgetting grocery shopping. This could be one of the reasons why people are loving this platform. Hope you have understood about the business model and how Instacart makes money. If you’re interested in knowing more about other business models then check out other Postling articles.