Instacart and Whole Foods expand partnership to tackle online grocery market

The companies officially announced plans to expand their partnership and increase the number of Whole Foods Market stores with dedicated Instacart shoppers by up to 50 percent.

For reasons both technical and logistical, very few consumers today can go online, load up a cart full of grocery items and have those items delivered to their door that very same day.

As someone who's not particularly fond of grocery shopping, yet lives outside of a major metropolitan area, I often feel the pain of this service gap. But for a handful of players, the service gap represents a major untapped market.

Hence the bourgeoning partnership between Whole Foods Market and Instacart. The upscale grocery chain and the unicorn delivery startup have been working together since 2014 to create a network of store locations enabling online ordering and same-day delivery.

Today, the companies officially announced plans to expand their partnership and increase the number of Whole Foods Market stores with dedicated Instacart shoppers by up to 50 percent nationwide by the end of 2016.

According to a representative for the companies, the expansion plans means that Whole Foods and Instacart will "deliver more fresh groceries to households in the U.S. than anyone else." The first two markets coming this year are Orange County, California, and Baltimore, Maryland.

The expanded partnership also has the $10 billion natural food chain backing Instacart in the form of funding, although no details were given on the investment.

"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, in a statement. "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."

As for Instacart, the four-year-old, venture backed startup is living proof that interest in same-day delivery is rapidly increasing. The company has managed to position itself at the nexus of same-day delivery and online grocery, two red-hot market segments poised for continued growth over the next few years.

Instacart is valued at $2 billion, with backers that include Kleiner Perkins Caufield and Byers, Sequoia Capital and Andreessen Horowitz, to name a few.

As for Whole Foods, the company can be seen as an early pioneer in the online grocery space, but it's certainly not the only one.

Amazon has been testing its subscription-based AmazonFresh grocery delivery service in urban markets including Seattle, Brooklyn, Philadelphia and multiple regions in California. It's also expanded its delivery options through its one-hour delivery service PrimeNow.

Target, meanwhile, has turned to both Curbside and Instacart to roll out local pickup and delivery services in select markets around Minneapolis, San Francisco, New York and New Jersey.

And then there's Walmart.

The world's largest retailer has dipped its toes in both the pick and the delivery waters. Unsurprisingly, Walmart figured out that it can leverage its massive brick-and-mortar footprint -- where 75 percent of the US population lives within five miles of a Walmart store -- to bring down costs and expand online grocery services more rapidly than the rest.

The company said in October it was significantly expanding its online grocery services and would offer curbside pickup for groceries ordered online in eight additional markets.

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