Instacart, a company which specialises in delivering retail items to their customer’s homes has decided to end their contract with Amazon’s Whole Foods and to go its own way one year after Amazon acquired Whole Foods. The partnership which was initially forged with Whole Foods had a few reasons behind its downfall which emerges to be more of a pattern for Instacart.
Before Whole Foods was acquired by Amazon, Instacart made a five-year contract with the company to deliver groceries bought from Whole Foods to the homes of their customers. Upon acquiring Whole Foods, however, Amazon quickly switched to their own delivery services to fulfil the requirements of their clients, leaving Instacart out of the loop.
In a similar instance, Instacart also parted ways with Target when they started their own home delivery startup named Shipt earlier this year. While it could have been a reason for Amazon ending their partnership, but it’s not the reason. The ecommerce giant also runs a service called Amazon Fresh to deliver groceries and with the acquisition of Whole Foods, they’ve decided to use their own service for product delivery.
Amazon acquired Whole Foods for a total sum of $13.7 billion roughly a year ago and ever since, has been relying on their own retail delivery service, Amazon Fresh to deliver groceries from their newly owned stores to their customers. While this means greater revenues for the e-commerce giant, this also means bad news for Instacart, which stands to suffer greater losses out of this acquisition.
With the way these companies with interlinked, it would take a few months to formally separate them. In the meantime, Instacart promises to relocate 75% of their staff who are willing to do so. The rest of the 25% would, unfortunately, have to be let go. They are also offering severance pay for workers for three months based on their highest income in 2018. Workers with more than three years of experience get an additional two weeks salary per year of work they’ve put in.
The $7.6 billion company has further decided to stop enabling their customers to order groceries from Whole Foods from their mobile applications. They are going to be extending their retail delivery services to other partnered stores of theirs such as Costco, Sam’s Club, Walmart, Kroger, and more. While the move may have caused the company a few losses, it sure did prevent it from suffering more in the future.
With more companies shifting to their own retail delivery services such as Amazon’s Amazon Fresh and Target Shipt, things are looking down for Instacart’s future. While they have created a new option for pickup for the clients who don’t wish for or need delivery services, they need to come up with something quick in a market that is slowly inclining more towards self-dependence than co-operation.