Grocery delivery company Instacart announced today that its partnership with Amazon-owned Whole Foods is coming to an end. Instacart was in the midst of a five-year deal signed in 2016 that established the company as Whole Foods’ exclusive delivery carrier, but the deal became complicated when Amazon acquired Whole Foods in 2017. The details of how the contract was ended are unclear, but it makes sense that Amazon would now want to deliver its own groceries through its own Prime Now and AmazonFresh services.
The tension between Instacart and Amazon has been brewing since the acquisition. Last month, it was reported by Business Insider that it was cheaper to order Whole Foods delivery through Instacart than Amazon, after Instacart quietly lowered its annual fee to $99 to compete with Amazon Prime’s $119 annual membership. Instacart has also since sought out other sources of revenue besides Amazon, by partnering with other retailers like Kroger, Costco, and Sam’s Club, in addition to receiving VC funding.
The end of the Whole Foods partnership won’t be a catastrophic loss for Instacart — Recode reports that it’s expected to reduce Instacart’s revenue by less than 5 percent. About 75 percent of the company’s 1,415 in-store shoppers across 76 Whole Foods locations will be transferred to other retailers in their area. For the other 25 percent employees who won’t be able to be placed in new roles, they’ll receive three-month separation packages in addition to tenure-based compensation. The first group of Whole Foods couriers will be pulled from stores February 10th, 2019.
It’ll take a couple months for the partnership to fully wind down, but if you’re a customer who’s been getting Whole Foods deliveries through Instacart, it might be time to start looking for other options now.