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Instacart to end partnership with Whole Foods

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Instacart to end partnership with Whole Foods

Grocery delivery service Instacart is ending its partnership with Amazon.com Inc.'s Whole Foods Market Inc., the service said Dec. 13.

Instacart will draw down its relationship with the grocer over several months, founder and CEO Apoorva Mehta wrote in a blog post Dec. 13. The first stage, to be completed in February 2019, will remove 243 of the 1,415 personal shoppers that Instacart employs to fill orders at Whole Foods. Affected employees will be given the opportunity to leave with severance pay or be transferred to another grocer for a bonus, the company said.

"In the months that follow, we expect to ramp down all remaining Whole Foods in-store shopping operations in preparation for Whole Foods to fully exit our marketplace in the coming months," Mehta wrote.

Whole Foods did not immediately respond to a request for comment from S&P Global Market Intelligence.

Instacart's announcement ends one of its earliest partnerships with a grocer. The delivery service inked a five-year contract with Whole Foods in 2016.

The following year, Amazon purchased Whole Foods for nearly $14 billion. Since then, Amazon has been expanding its own delivery options to include Whole Foods stores, including two-hour delivery for Amazon Prime members in certain U.S. cities.

Whole Foods was also an investor in Instacart, with a stake equivalent to less than 1% of the delivery service. Instacart declined to comment on whether Whole Foods would remain an investor in its business.

At the same time, Instacart expanded its business in the months following Amazon's purchase of Whole Foods, signing new delivery agreements with Costco Wholesale Corp., Aldi (Süd) GmbH & Co. and other U.S. grocers eager to offer their own delivery services. The service grew the number of U.S. cities and towns that it served by 56% between June and October 2017, according to an analysis by S&P Global Market Intelligence.

As of Dec. 13, Instacart said it is able to reach about 70% of all U.S. households and about half of all Canadian ones. The company also continues to raise money from private sources and has a valuation of $7.87 billion, it said.