Instacart growing faster than expected despite Amazon’s deal to swallow up Whole Foods

Instacart is recovering from its Whole Foods breakup quickly. (Instacart Photo)

When Amazon announced its intention to buy Whole Foods for $13.7 billion in June, it sent shockwaves through the grocery and delivery industries. Shares of grocery chains plummeted and speculation swirled over how everyone from Kroger to Blue Apron would fair in the long run.

Amid that uncertainty, one company seemed sure to suffer in the wake of the acquisition: Instacart.

The company is Whole Foods’ exclusive delivery partner, an arrangement that will undoubtedly perish under Amazon’s ownership. But forecast of doom no longer seems like a certainty. Instacart is now in more than 100 markets, after adding more than 80 in 2017. That’s significantly more than the 30 new markets Instacart CEO Apoorva Mehta told Axios the company had planned in an interview back in March.

Axios first noted the accelerated growth and Instacart confirmed to GeekWire that it is now offering same-day grocery delivery in 105 markets from a variety of grocery partners.

The San Francisco-based company reportedly has four years remaining in an exclusive grocery delivery partnership with Whole Foods, which means the business it derives from the grocery chain hasn’t been immediately impacted by the Amazon deal. Still, analysts probably wouldn’t have predicted expansion at two times the expected rate the year one of Instacart’s high-profile partners joined forces with (arguably) the most powerful delivery and logistics operation in the country.

Instacart CEO Apoorva Mehta. (Instacart Photo)

Instacart’s growth may actually be driven by the Amazon deal, which undoubtedly lit a fire under big grocery chains, motivating them to embrace new technology. Instacart has announced expanded partnerships with major grocery chains, including Publix, Ahold-Delhaize and Wegmans, CVS, and others. Yesterday, the company announced a new partnership with Aldi and is continuing to bring on more retailers. Whole Foods represents less than 10 percent of Instacart’s revenue, and that percentage has been declining.

Instacart is also using new technology to expand to additional markets remotely, which could account for the growth, according to Axios.

“In April, we set a goal to serve 80 percent of U.S. households by 2018,” an Instacart spokesperson said in an email to GeekWire. “Instacart’s rapid expansion this year is right in line with that goal. We noticed there was great demand for grocery delivery, not only in major metropolitan areas, but also in smaller cities across America’s heartland.”

In addition to the partnership, Whole Foods has also invested in Instacart. The two companies have historically enjoyed an amiable relationship but there is no love lost between Amazon and Instacart. Mehta used to work in fulfillment and delivery operations at Amazon and his company issued the following statement when the Whole Foods deal was announced:

From the beginning, we’ve been committed to helping grocers compete online. That’s more important than ever given Amazon just declared war on every supermarket and corner store in America. We already work with over 160 retailers across the country and look forward to partnering with many more.

Instacart has raised about $675 million in venture financing from the Kleiner Perkins Caufied & Byers, Andreessen Horowitz, Comcast Ventures and others, according to Crunchbase.

Mehta, Instacart’s CEO, will be speaking at the GeekWire Summit, Oct. 10-11.