According to tech news site Re/code, Whole Foods and Instacart have signed a new partnership agreement that solidifies the courier service as the exclusive delivery affiliate for Whole Foods’ perishable business. The terms of the deal, a five-year agreement, have not been made public, but Instacart’s commercial arrangements generally include a provision for revenue sharing. Whole Foods executives have a favorable outlook of the new deal with Instacart with co-CEO Walter Robb stating earlier this year that “many” of its stores are “seeing [Instacart] sales as a percentage of total store in the mid-to-high single digits.”
Interestingly, Whole Foods had previously partnered with Google’s delivery business, Google Express in San Francisco, but the pact involves only one store location and is a recent development. With the news of the expanded Whole Foods-Instacart relationship, it would seem that Google will have trouble expanding the perishable-delivery partnership with the grocer beyond San Francisco. At the same time, Instacart and Whole Foods have been working in tandem since 2014 and across 16 US cities.
In addition to the delivery agreement, multiple sources have reported that Whole Foods is making a sizeable investment into the delivery startup, which has seen $275 million raised from investors and was recently reported to be valued at around $2 billion. The size of the investment deal has not been learned yet, but sources say the deal is “essentially done.” Instacart has seen some amazing growth in that past four years, garnering more and more partnerships including those with national chains such as Target and Costco. Adding Whole Foods to its list of partners gives Instacart increased credibility in the marketplace and some stability for the future as they look to continue their growth.
As grocery delivery continues to become more mainstream, it will be interesting to see if Instacart is able to continue adding partners and whether Whole Foods is able to use delivery to help with a declining market share.