Instacart, Fabric partner on online grocery micro-fulfillment

Same-day delivery giant Instacart has teamed up with automation specialist Fabric to offer micro-fulfillment solutions to U.S. and Canadian grocery retailers.

Under the multiyear deal, Fabric software and robotics will be paired with Instacart front-end e-commerce technology and personal shoppers to provide faster, more efficient fulfillment at dedicated warehouses and existing retailer spaces, San Francisco-based Instacart said Wednesday. Plans call for Instacart to initiate “early-stage concept” pilots with Fabric and grocery retail partners this year.

The micro-fulfillment centers (MFCs) would be used to fill retailers’ online grocery orders placed via the Instacart Marketplace or through a grocer’s branded Instacart e-commerce site, according to Instacart. Besides speedier fulfillment, the MFCs would enable retailers to handle more online order volume and accommodate customers’ full grocery shop, ranging from packaged groceries, household staples and fresh produce to deli items, frozen food and alcohol, the company said.

A combination of Instacart, Fabric and retail employees would manage the MFCs, depending on the location and the retailer, Instacart reported. Once orders are packed, however, Instacart personal shoppers will deliver orders to customers or bring them to staging areas for curbside pickup.

Related:With MFCs, retailers look to fill a growing need

Mark Schaaf, chief technology officer for Instacart, noted that the micro-fulfillment solution with Fabric comes at a time of “accelerated adoption” of e-commerce in North America.

“Our next-gen fulfillment initiative combines our robust technology suite and dedicated community of shoppers with robotics solutions to give retailers even more innovative ways to compete and serve their customers online,” Schaaf said in a statement. “Our next-gen fulfillment work will also help reduce some of the things that make in-store shopping cumbersome for Instacart shoppers, like crowded store aisles, out-of-stock items and long checkout lines.”

Fabric noted that its modular, automated system allows grocers to scale the micro-fulfillment solution to their business needs.

Grocery and other retailers have been seeking faster, more efficient ways to process the boom in online orders triggered by the COVID-19 pandemic, which industry executives say advanced their expected e-commerce growth by three to five years.

Earlier this year, NielsenIQ estimated that turning more food shoppers into online customers represents a $58 billion growth opportunity for grocery retailers and consumer packaged goods (CPG) companies. The market researcher projected U.S. online CPG food and beverage sales to reach between $94 billion and $109 billion, up from $66 billion in 2020 and $31 billion in 2019. Also, NielsenIQ estimated that more than 20 million new CPG customers entered the online arena in 2020, raising the share of households buying online to 32% for food (from 19% in 2019), 60% for nonfood (from 45% in 2019) and 40% for CPG overall from 27% in 2019. 

“Everything about our micro-fulfillment solution has been built for speed, efficiency and elasticity to meet today’s on-demand requirements. This partnership with Instacart is another validation that Fabric’s tech and operations are best-fit to serve retailers' next-gen fulfillment needs,” Fabric CEO and co-founder Elram Goren stated. “Our software-led robotics and modular solution gives grocery retailers the flexibility to build the fulfillment solution that best fits the needs of their business. With Instacart as a partner, we see an enormous opportunity to integrate our product and services into Instacart's e-commerce solutions to provide a compelling service offering for grocers.”

Tel Aviv-based Fabric has U.S. offices in New York City and Atlanta. In the United States, its micro-fulfillment retail partners include Walmart and FreshDirect (part of Ahold Delhaize USA).  

“We’re excited to partner with Instacart as we continue to scale across North America and focus on unlocking more value for retailers and their customers,” Goren added.

Once orders are picked and packed at the micro-fulfillment facility, Instacart personal shoppers will deliver them to customers' homes or bring the orders to staging areas for curbside pickup.

According to Instacart, the ability to offer micro-fulfillment services bolsters its positioning as a partner to retailers. Its roster of retail offerings also includes Instacart Enterprise, a white-label, front-end e-commerce solution for retailer-branded shopping sites, and Instacart Ads, which connects thousands of CPG brands directly to customers via online shopping destinations.

North America’s largest third-party online grocery platform, Instacart partners with more than 600 national, regional and local retailers and delivers from nearly 55,000 stores — about 20,000 added in the past year — across more than 5,500 cities. Its delivery service reaches 85% of U.S. households and 70% of Canadian households.

“Over the long-term, we believe partnering with retailers to bring next-gen fulfillment technologies together with the personal touch and care of Instacart's shopper community will create an even more seamless online grocery experience that’s faster and more affordable for customers and delivers even more value and growth to retailers,” Schaaf commented.

Instacart previously reported that, in 2020, it added more than 200 new retailers and over 15,000 new store locations to the Instacart Marketplace. The company also expanded its same-day delivery and pickup services to new retail segments, including prescriptions and over-the-counter medicines, office supplies, electronics, health and beauty care, home decor and sporting goods.

Instacart's next-gen fulfillment initiative adds robotics solutions to the company's existing grocery e-commerce offerings. Those offerings include the Instacart marketplace, which features more than 600 beloved national, regional and local retailers, including unique brand names; Instacart Enterprise, the company's white-label enterprise-grade technology solution; and Instacart Ads, which connects thousands of Consumer Packaged Goods (CPG) brands directly to customers online.