Instacart Will Deliver For Yet Another Grocery Chain

Jun 14, 2017

Delivery startup Instacart will now handle orders for Wegmans grocery story, marking an important new addition to Instacart's lineup of retail partners.

Deliveries will initially be available in suburbs near Washington, D.C., and will expand to a few dozen stores in coming months, according to tech news site Recode,

Wegmans, which has 92 stores in six northeastern states, is generally well liked for its customer experience, large selection, and fresh food offerings like baked goods and sushi. The chain was named America’s favorite grocery store in a 2016 survey, beating out both Trader Joe’s and Publix.

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Instacart, which charges $5.99 per delivery plus marks ups on certain delivered items has, until recently focused on delivering groceries for higher-end retailers like Whole Foods. Generally, those customers more willing to pay extra for the convenience.

Instacart's partnership with Wegmans comes as it pushes to expand to new areas, using money, in part, that it raised from a $400 million investment round in March. The company hopes to add deliveries in more than 100 new cities by the end of this year, up from just 35 in March. Next year, Instacart says it hopes to serve 80% of U.S. households. Recently added retail partners include Texas-based HEB and Food Lion, which largely operates in mid-Atlantic and Southeastern states.

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The push comes after claims by Instacart that it has figured out how to operate profitably in what is fundamentally a labor-intensive and low-margin business. As Fortune reported early last year, that formula involves using algorithms to help shoppers work efficiently. But it has also included cuts to driver and shopper pay and a controversial decision to implement a “service fee” that shifted some worker tips into company revenue.

As Instacart expands, restaurant-delivery startup GrubHub has also seen steady expansion and revenue growth. But several other food-delivery startups have folded or restructured recently, suggesting that while there’s plenty of demand, it's difficult to make money.

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