Whole Foods Market and Instacart – the start of a beautiful friendship

The rumors are true – Whole Foods Market and Instacart are taking their relationship to a new level.



The organic grocer and online delivery service officially announced a deepening of their partnership, which had been reported in the media for the past few weeks.



The two companies will launch in several new markets in the coming year, building on the 17 existing metros where consumers can use Instacart to order deliveries from Whole Foods stores. Interestingly, the companies also said they are looking ahead to create new e-commerce and delivery solutions, with the first pilots launching in 2016. No other details on the development of new technology were provided.



In addition, the strengthened partnership will increase the number of Whole Foods Market stores with embedded Instacart shoppers by up to 50% nationwide by the end of 2016.



The new partnership means Instacart will be Whole Foods Market’s largest partner for online ordering and delivery.



“We’ve seen how much our customers love this fast and convenient way to receive Whole Foods Market groceries right to their door, so we are excited to extend our relationship with Instacart,” said Walter Robb, co-CEO of Whole Foods Market. “Working together, we will continue to find even more ways to create outstanding shopping experiences – whether they’re happening in the digital space or within the four walls of our stores.”



Whole Foods has previously reported that Instacart sales comprise a mid-to-high-single-digit percentage of sales in the cities where it currently partners with the delivery provider. These cities include Atlanta; Austin; Boulder; Boston; Chicago; Denver; Houston; Los Angeles; New York City; Philadelphia; Portland, Oregon; San Francisco; San Jose; Seattle and Washington, D.C.



Whole Foods would presumably obtain tighter control over what is becoming an increasingly large in-store sales driver with this partnership, while Instacart obtains financing and long-term stability with a major client.



It is possible other Instacart retail partners may have issues with a competitor financially benefiting from their online deliveries. Also there could be concerns about Whole Foods having access to competitive information.



However, as with UPS’ recent investment into online delivery provider Deliv, this agreement shows that online delivery is becoming a more established omnichannel retail niche with growing profit potential. Look for other partnerships between online delivery providers and various retail, logistics and technology partners in the months ahead.



“Instacart has always prided itself on being a retailer’s best friend, and our extended partnership with Whole Foods Market is a testament to how brick and mortar retailers can successfully adapt to the growing demand for ecommerce and on-demand delivery services,” said Apoorva Mehta, CEO of Instacart. “Instacart and Whole Foods Market share a mutual commitment to providing our customers with the easiest and most seamless grocery shopping experience possible. We look forward to continuing to innovate with Whole Foods Market in the services that we can bring to users.”