Inc. put a supermarket chain in its cart, U.S. grocery delivery services were racing to grab hold of new regions, spending millions to gain a larger share of the fast-growing market. Now, with the e-commerce giant planning to buy Whole Foods Market Inc. for $13.7 billion, giving it a large foothold in the food retail industry, the stakes are all the higher for companies such as Instacart Inc., Peapod LLC, Shipt Inc. and FreshDirect LLC to deliver not only fresh food but continued growth. Midwestern grocery chain Schnuck Markets Inc. announced Thursday that its partnership with Instacart for online delivery will extend to most of its 100 stores by next month. Ahold Delhaize's Peapod is expanding its push into New York City, a key market, after spending more than $94 million on a warehouse in Jersey City, N.J., in 2014. Shipt, which delivers food orders for retailers including Costco Wholesale Corp., Meijer Inc. and Whole Foods, intends to almost double its markets by next year, from 51 to 100.
Walmart and Instacart are partnering to offer same-day delivery in four markets, a move that strengthens both companies as competitors against Amazon and Whole Foods, CNBC and CNN both reported. The pilot program is now offered at Walmart stores in Los Angeles, San Francisco and San Diego, as well as Tulsa, Oklahoma. Three years ago Instacart's future was uncertain when Whole Foods was acquired by Amazon. Previously, Whole Foods had been one of Instacart's biggest partners, CNN Business reported. Amazon offers grocery delivery through Amazon Fresh and Amazon Prime Now, delivering from its warehouses or Whole Foods.
News broke last week of Amazon's plans to acquire supermarket chain Whole Foods for a reported $13.7 billion. The purchase of the Austin-based grocer's more than 450 stores marks Amazon's most ambitious step into the brick and mortar retail space, giving them immediate access to a large network of physical locations. While Amazon's Prime Now offering has already begun shaking the U.S. retail industry, their physical presence has been largely limited, having only recently experimented with bookstores and a small grocery location. For Amazon to make significant inroads into the grocery industry, they've always needed to diversify their online approach and increase their footprint in traditional retail locations. So what does Amazon's swift invasion of brick and mortar mean for retail?
Grocery-delivery service Instacart Inc. once seemed like the perfect partner for supermarkets looking to break into e-commerce. After several years together, though, some grocers are starting to question the relationship. Instacart's technology provided a ready-made solution for grocery chains that hadn't yet created options for customers to shop online. And it became even more attractive when delivery demand ballooned with the pandemic, providing armies of on-demand shoppers to fulfill orders in-store and deliver groceries to people's homes. But many supermarkets say they aren't making money through Instacart, largely because the delivery company typically charges them a commission of more than 10% of each order.