How Instacart is powering US ecommerce growth

Date : 09 April 2018

We look at how the on-demand shopping platform has crafted a range of new deals this year, enabling several retailers to enter, or extend their presence, in the grocery ecommerce channel.

Spurred on by Amazon Whole Foods Market deal

Founded in 2012, Instacart has become the leading on-demand delivery platform for grocery ecommerce in North America. Having partnered with Whole Foods Market to enable its entry into the channel, there were concerns that Amazon’s acquisition of the retailer would limit its growth. However, the opposite has been the case, with Instacart forging ahead with a range of new retailer partnerships. Last year, new deals were signed with Publix, Wegmans and Costco, while its partnership with Loblaw marked its entry into the Canadian market.

Source: Instacart

Significant period of new business development

Since the start of the year, a constant stream of additional partnerships have been signed. These include BJ’s Wholesale Club and Sam’s Club, which along with its programs with Costco, makes it the main ecommerce platform for the club channel. It has also started working with Fresh Thyme Farmers Market and expanded its partnerships with Aldi and Food Lion. At Albertsons and Kroger, new initiatives have seen it start to work alongside existing store pickup and delivery options, while at Sprouts Farmers Market, Instacart is a delivery option alongside Amazon Prime.

Spurred on by Amazon Whole Foods Market deal

Rather than restricting its growth, Amazon’s acquisition of Whole Foods Market is likely to have been a catalyst for the new business which Instacart has generated. For many retailers, the deal condensed the timelines for their channel entry/expansion plans, concerned by how the Whole Foods Market acquisition could accelerate Amazon’s plans to grab a bigger share of the grocery ecommerce channel.

Channel gaining momentum in 2018

Instacart’s progress is likely to continue gaining traction through 2018 as the channel gains momentum. Walmart is set to add around 1,000 grocery pickup locations this year, in addition to expanding its delivery service to more than 100 metro areas across the US. It is working with a range of delivery partners, including Uber and Deliv. Target’s acquisition of Shipt last year is enabling it to launch same-day grocery delivery, as it also expands its Drive Up and Restock programs, while Amazon is piloting free two-hour delivery at Whole Foods Market for Prime Now customers.

New funding to support growth and development

This year Instacart has raised $350m in funding which will support the growth of the team and the development of new products and services. This values the company at around $4.4bn. In January it acquired Toronto-based Unata, which provides grocery retailers with a white-label digital grocery platform. The long-term vision is to combine this with the Instcart platform to provide retailers with a “single powerhouse platform.”

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Stewart Samuel, Program Director, IGD Canada: based in Canada, Stewart heads up all of IGD's research and coverage on the US market. Contact Stewart at [email protected] for further insight on the region's markets, channels and retailers. Follow Stewart on Twitter: @Stewart_IGD