Amazon’s announcement last June of its plan to buy Whole Foods served as a wake-up call to grocers that the threat of e-commerce could no longer be ignored. And grocery-delivery startup Instacart, known for its same-day delivery from big-box supermarkets, was ready to help.
In February, the company closed a $200 million funding round, which it will use to beef up its digital logistics tools, double the size of its corporate team, and help bring more grocers–both big and small–onto its platform.
“This industry has been waiting for a catalyst and a change moment for a long time,” says Instacart’s chief business officer, Nilam Ganenthiran. “We’re very thankful to the folks up in Seattle for helping drive [our growth].”
Since Amazon’s big buy, Instacart has signed on large grocers such as Kroger and Albertsons, while expanding its existing partnership with Costco. Instacart has long pitched itself as a “best friend” to retailers. Now, that angle is even more appealing to grocers eager to embrace mobile ordering and delivery while Instacart figures out the nitty-gritty logistics.
The company now partners with six out of seven of the largest grocery stores in the U.S. and is in more than 210 North American markets. And its member base tripled last year, Ganenthiran says. Instacart is drawing on the breadth of its local partnerships to better compete with Amazon, which recently began testing same-day delivery of Whole Foods groceries to Prime members.
“The connections that retailers have made in their communities are so important if you’re trying to get customers to buy groceries online,” Ganenthiran says. “We’re finding we can be a great complement to what these retailers already have.”
Milestones: This spring, Instacart acquired Toronto delivery startup Unata to help develop its voice-ordering and coupon-circulation technology, as well as help it delve deeper into international markets.
Challenges: Because of its scale, Amazon has the ability to offer reduced prices on produce and its two-hour delivery, which is free for Prime members.