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  • Instacart Gets Ready to Take on Amazon, Grocery Delivery Service Raises $200M

    Instacart Gets Ready to Take on Amazon, Grocery Delivery Service Raises $200M

    A new player may soon challenge Amazon’s hold on the grocery delivery business. San Francisco-based Instacart has recently beefed up its war chest with another infusion of funds from its latest round of financing activity.

    Instacart reportedly raised $200 million in a fundraising campaign led by investment firms Coatue Management and Glade Brook Capital Partners. The company, which is known for its grocery delivery service, is now valued at $4.2 billion, a sharp rise from its March 2017 valuation of $3.4 billion.

    With the recent capital infusion, Instacart has now received a total of almost $900 million in funding from investors which include big names in the financial market such as Andreessen Horowitz and Sequoia Capital. However, one big investor that failed to participate in the company’s latest financing round is Whole Foods.

    Whole Foods is one of Instacart’s big shareholders and major partners. However, since it was acquired by Amazon in June of 2017, its relationship with Instacart can only be described as complex as they will now essentially be competitors in the same market.

    Just last week, Amazon commenced testing on a two-hour delivery service of groceries purchased from Whole Foods. The service will be available to Amazon Prime members and will initially be available in the Austin, Cincinnati, Dallas and Virginia Beach areas. However, the company plans to expand the service coverage for the entire continental U.S. before the end of 2018.

    Despite its relatively small size, Instacart is confident that it will be able to compete with Amazon by forming alliances with more grocery stores. In fact, co-founder and CEO Apoorva Mehta announced big plans for the raised capital, which includes expansion outside the U.S. and Canadian markets as well as the addition of new businesses beyond delivery.

    [Featured Image via Instacart]

  • Amazon’s Whole Foods Purchase Raises Demand for Same-Day Grocery Delivery Services

    Amazon’s Whole Foods Purchase Raises Demand for Same-Day Grocery Delivery Services

    Amazon’s acquisition of Whole Foods was met with wariness and a not-so-unexpected round of hostility from rival supermarket chains. There was little doubt that the company’s foray into grocery retail would have made a big impact on the industry. What’s surprising, is how the buyout is also opening doors for suppliers and grocery-delivery startups like Instacart and Shipt.

    It didn’t take long for Amazon’s $13.7 billion deal with Whole Foods to disrupt the grocery retail industry. The first and most obvious impact was the pressure that supermarkets like Kroger felt when Amazon began lowering prices at Whole Foods. However, after having its shares rattled by Amazon, Kroger was able to regain investor confidence by partnering with Instacart and several other grocery delivery services, allowing it to outpace Amazon over the past three months.

    Corporations like Target and Walmart also hurried to hammer out deals of their own. In fact, Target announced on Wednesday, that it would acquire Shipt for $550 million. The delivery startup already saw a 60% upsurge in orders since Amazon’s Whole Foods takeover in June. It’s now expanding its reach from 30 U.S. markets since 2016 to 70 before year’s end.

    Instacart, a company that had described itself as the American grocer’s ally against Amazon, admittedly had a challenging time pushing its service before Whole Foods was purchased. But according to Instacart CEO Apoorva Mehta, that all changed after Amazon’s acquisition, as retailers started calling them insisting that they launch in as many stores as possible. Now they have 165 retailers, a far cry from last year’s 30.

    Independent retailers are also seeing an upside to the Whole Foods deal. The rising interest in local food and the fears local producers have over losing their market to Amazon could force small and independent retailers to develop systems that allow for a mix of different products.

    The Good Food Merchants Collaborative, a group of around 22 independent groceries, is planning to roll out a cooperative buying system that will offer competitive prices for consumers and help expand the buying power of small retailers. To that end, these small grocers are hoping to tap into local food producers, since they have stronger ties to the community and consumers. It’s an interesting gamble, and one that could have a big payoff. Research has shown that consumers are also looking to independent grocers for local food.  

    [Featured image via Whole Foods Market]