Back in 2014, the organic grocery store Whole Foods partnered with Instacart to offer customers grocery delivery.
When the grocery chain was acquired about a year ago by the tech and logistics giant Amazon, it was only a matter of time until the grocery chain was going to exit the partnership.
Whole Food deliveries will no longer be available on the Instacart app starting February 10.
According to a recent “Tech Crunch” report, Amazon, which has its own grocery service Amazon Fresh, has negotiated to end the partnership with Instacart earlier than the company expected.
“A person familiar with the matter told TechCrunch that significant developments over the last 18 months forced Instacart to wind down its relationship earlier than planned. Whole Foods didn’t immediately respond to a request for comment,” writes “Tech Crunch.”
Instacart currently employs 70,000 people to shop and delivery grocery items for its customers. The service has grown wildly popular and has over 300 retailers on its marketplace including big-box retailers like Walmart and Kroger.
Its success has made it especially attractive to investors.
“The company raised $600 million at a $7.6 billion valuation in October, just six months after it brought in a $150 million round and roughly eight months after a $200 million financing that valued the business at $4.2 billion,” writes “Tech Crunch.”
However, this announcement means there will be layoffs. Instacart has said that 75 percent of 1,415 workers impacted have been given new roles. But there are 350 or so expected layoffs.
In a blog post, Apoorva Mehta, Instacart’s co-founder and CEO said that company is offering transfer bonuses to their Whole Foods shopping couriers and those that are being layoff will be given a separation package.
“We’re committed to taking care of all impacted in-store Whole Foods shoppers who choose not to, or cannot, be placed in a new role. For those shoppers, we’ll be providing a minimum of 3-months separation package based on your maximum monthly pay in 2018, as well as additional tenure-based compensation,” writes Mehta.
Do you think this is a fatal blow to Instacart? Will Amazon Fresh ultimately conquer the grocery delivery market? Or will consumers be more interested in using a service with many retail partners to choose from?
Read more about Instacart and Whole Foods parting ways at “Tech Crunch” now.
Amazon’s announcement to acquire Whole Foods rocked the food industry. Besides getting into the organic grocery market, Amazon has started to roll out Amazon Go stores. These convenience stores cater to the on-the-go consumer and are cashier-less. Many of which offer grab-and-go food options. These stores have become the most popular during the workweek, especially at lunchtime.
On this recent episode of The Barron Report, Host Paul Barron discusses how these stores are a threat to restaurants, especially fast casual.