Following a four-year partnership, Instacart and Whole Foods Market will be winding down their relationship and will immediately start the first phase of a transition that will affect hundreds of jobs, after Instacart cut the cost of grocery delivery by a third in late November, making its service a more cost-effective and competitive option than Amazon.
The move came as Amazon opened two of its low-price Whole Foods 365 stores in the Atlanta suburbs of Decatur and Buckhead during December that will provide competition to major supermarkets Kroger, Trader Joes and Publix in the city, when questions were being asked whether Amazon was slowing rollouts of the larger Whole Foods and the 365 formats.
In a blog entry, Apoorva Mehta, CEO of the San Francisco-based grocery technology company, announced in December, that his company will begin scaling back its in-store shopper operations at Whole Foods stores, totaling 1,415 associates across 76 locations.
From February 10, 2019, some 243 store operations will be impacted and Instacart expects to ramp down all remaining Whole Foods in-store shopping operations in the following months to prepare for the Austin, Texas-based Whole Foods exit from the Instacart marketplace.
The vast majority of Instacart shoppers work across multiple retail partners rather than a single grocer, and these shoppers who also shop at Whole Foods will not be impacted. For Whole Foods specifically, the multi-store Instacart shoppers will still be able to pick, pack and deliver from Whole Foods stores nationwide until the exit, Instacart said.
But for consumers who shop at Whole Foods stores exclusively, Instacart plans to place more than three-quarters of these impacted shoppers at new in-store shopper jobs with other local retailers, also offering a transfer bonus to support their transition. The company notes that it is "committed to doing everything" it can to support those remaining affected shoppers.
The move came after news broke that Instacart was offering a better deal for low-cost home delivery of Whole Foods Market groceries through Amazon Prime after cutting the cost of grocery delivery by a third in late November.
Instacart’s recent fee structure changes give it an edge over Amazon Prime membership for grocery deliveries, according to Business Insider and Digital Trends (USA) on November 30.
"But now the pricing advantage between the two companies has shifted. Instacart dropped its Express membership fee from $149 to $99 per year. Instacart also removed an unpopular five-percent service fee it formerly added to all Express delivery orders," Business Insider said.
"Amazon Prime members pay $119 annually or $13 a month for a multitude of services including no-cost two-day shipping for online purchases for many items, Amazon Prime Video, Music, Audio Books, and more."