Instacart, the same-day grocery-delivery service, is showing a very high revenue-growth rate as compared to its other main competitors. But don’t assume all’s well.

Instacart is a cloud-sourced service that uses couriers who receive orders from customers on their mobiles, then go to a customer-designated supermarket to pick product and make the delivery. It operates in 17 major cities. The model is similar to that of Uber and LaserShip. Instacart’s greatest advantage, as compared to other grocery-delivery services, is that orders are filled within one or two hours as compared to a day or so for other delivery services.

According to Slice Intelligence, the consumer-savvy online survey group, Instacart’s revenue grew 13 percent during the final quarter of 2015 on a year-over-year basis.

That substantially outstrips the growth rate of other grocery home-delivery services. The oldest business in this category is Peapod, which grew at a 1.1 percent rate during the same period. Fresh Direct grew by 1.2 percent and Google Express grew at a 3.3 percent rate.

These numbers are interesting, but they don’t illuminate which of these companies is on a sustainable path, nor do these metrics reveal the different operating styles used by companies in the grocery-delivery universe.

Instacart, despite its growth trajectory, has the steepest hill to climb. Why? Because Instacart is a four-year-old startup that has risen on the wings of sustained invested capital. Using that method to finance ongoing operations is an increasingly dubious proposition because most investors are becoming reticent to hurl new money at a startup. Investors themselves are getting squeezed as they gain less revenue from the volatile stock market and the IPO market is cooling.

So, in an effort to point Instacart in the direction of profitability, changes are being made at the company. Ironically, many of those changes will present their own barriers to future growth.

For example, not long ago, Instacart made several increases in customer-facing fees. The delivery fee for a one-time order went to $5.99 from $3.99. The annual fee for unlimited deliveries went to $149 from $99. Instacart also augments its income by marking up the retail prices of items delivered, or seeks commissions from cooperating supermarkets.

Meanwhile, the fees paid to couriers went down. They now get $1.50 per order drop off, previously, they got $4. (Drivers got the entire delivery fee prior to the compensation reduction.) Their commission for each product picked at a supermarket went to 25 cents from 50 cents. Drivers keep all tips that come their way, as has always been the case.

Additionally, drivers in several cities are being shifted from contract workers to part-time workers in a bid to ward off litigation concerning labor classification. This too will reduce drivers’ compensation. In short, it will be increasingly difficult for drivers to make enough money to keep them interested in working, especially in light of that fact that drivers use their own vehicles to make deliveries and bear all expenses such as insurance, fuel, tolls, parking tickets and so on.

Whole Foods Steps In

Another curious development involves Whole Foods. That retailer recently became an investor in Instacart, and is also contributing a commission to Instacart for each item its couriers select at Whole Foods. That means Instacart customers actually receive product without any markup on Whole Foods’ in-store prices.

I wonder how this arrangement will sit with other supermarkets that use Instacart, since it will put them at a price disadvantage. Beyond that, some consumers may be shrewd enough to notice that when they shop in a Whole Foods store they’re subsidizing the prices paid by Instacart users.  I predict that the upshot of all this is that Instacart will slow or halt its rollout rate into additional cities. That’s probably why it laid off 12 in-house recruiters a few weeks ago.

Instacart will also continue to seek additional revenue sources, perhaps by attempting to get delivery commissions from product manufacturers. As Instacart’s growth rate stagnates, its revenue growth will fall more in line more with those of its competitors.

Concerning its competitors, Peapod and Fresh Direct both use a far-more capital- intensive model than does Instacart. Both use their own distribution centers to source products for delivery, and use their own fleet of delivery vehicles driven by full-time employees. Both have been in business for many years so their startup and infrastructure costs are a thing of the past. Both also offer consumers product prices noticeably below those of Instacart’s, which helps blunt Instacart’s advantage of same-day delivery.

Peepod and Fresh Direct give every indication that they’re on a sustainable track. Google Express is a recent startup that operates in the populous centers of California using a model similar to that of Instacart.

The lesson here is that the era of dependence on invested capital for long-term operational costs may be slipping away. The new model will be starting a company that before too long produces some returns. How novel!