Whole Foods, Instacart Breakup Begins

Instacart said it has begun withdrawing its personal shoppers from Whole Foods Markets stores, unwinding a relationship with what once was its largest retail partner and has since become one of its largest rivals.

Some resolution to the relationship had been expected since Whole Foods was sold to Amazon in 2017. Although Instacart and Whole Foods reportedly have a contract through 2021, Amazon this year established its own on-demand delivery at Whole Foods through Prime Now, with shoppers for both services currently embedded in many of its stores. An Instacart representative declined to answer a question about the status of the contract or Whole Foods’ one-time investment in Instacart, citing confidentiality agreements.

The breakup will allow Amazon to own the customer data and relationship that comes with all of Whole Foods’ online grocery orders while presumably growing its delivery volume significantly. But it should also be a test of loyalty for devotees of Instacart, which has been providing delivery from Whole Foods stores for five years and had continued to promote the relationship even as Prime Now shoppers moved in. In 2015, when their relationship was still new, Instacart said it was averaging $1.5 million in sales per week across the 15 Whole Foods stores where it then provided delivery, making it one of the service’s biggest early success stories.

Related:Whole Foods Adding Delivery Through Prime Now

In a message to Instacart’s shoppers, CEO Apoorva Mehta said the company currently has 1,415 in-store shoppers who work in 76 Whole Foods locations.

“Out of this community of in-store shoppers at Whole Foods, 243 will be impacted beginning Feb. 10,” Mehta said. “In the months that follow, we expect to ramp down all remaining Whole Foods in-store shopping operations in preparation for Whole Foods to fully exit our marketplace in the coming months.”

Mehta said the move will affect only those workers who shop Whole Foods stores exclusively. While the majority of Instacart shoppers work in more than one location, embedded shoppers indicate the service was providing significant sales volume. The companies had been working together since 2014.

Ironically, the Amazon acquisition leading to the breakup also sparked demand for additional retail partnerships that should soften the blow for Instacart. Since the 2007 pairing, Instacart has signed on thousands of new stores, including major chains such as Kroger, Albertsons, Aldi and Sam’s Club, creating what Mehta called “the largest retail marketplace in the online grocery space,” packing, picking and delivering from 15,000 stores in the U.S. and Canada.

Related:Whole Foods, Instacart Partner to Offer One-hour Delivery in 15 Major Cities

Mehta said Instacart expects to be able to place more than 75% of affected in-store Whole Foods shoppers in new in-store shopper jobs at another retailer in their area. All in-store Whole Foods shoppers placed in a new role will be offered a transfer bonus, he said. Shoppers who cannot be placed in new roles with Instacart will be offered a three-month severance package.