Instacart scores expanded Whole Foods deal

Instacart and Whole Foods — apparently it’s a match made in grocery heaven.

The two companies announced a deal today that will expand their existing partnership to several new cities, making Instacart the grocery chain’s largest partner for online ordering and delivery. Instacart raised equity funding from Whole Foods as part of the deal, Fortune’s Dan Primack reported, though the amount has not been disclosed.

Using Instacart, a San Francisco-based grocery delivery startup, shoppers can order items online and have them delivered to their door in as little as an hour. Under the terms of the new deal, “the two companies will deliver more fresh groceries to households in the U.S. than anyone else,” according to a press release.

The two companies first joined forces in September 2014, and now operate together in 17 metro areas. They plan to expand to additional markets this year, including Orange County and Baltimore, Md. Under the new deal, they will increase the number of Whole Foods stores with embedded Instacart shoppers by up to 50 percent nationwide, according to the release. The companies also are planning to pilot new technology solutions.

“Instacart has always prided itself on being a retailer’s best friend, and our extended partnership with Whole Foods Market is a testament to how brick and mortar retailers can successfully adapt to the growing demand for e-commerce and on-demand delivery services,” wrote Apoorva Mehta, CEO of Instacart.

Recode reported the deal was in the works last month.

The partnership with Instacart is growing at a time when Whole Foods has been struggling. Recode reported the grocery chain’s stock has dropped more than 45 percent over the past year, and Business Insider reported the chain has been forced to slash prices due to increased competition in the organic foods market.

In his first-quarter earnings report earlier last month, Whole Foods co-CEO Walter Robb said in many Whole Foods stores, Instacart sales make up a percentage of total sales that falls “in the mid-to-high single digits,” Recode reported.

Instacart has raised about $275 million at a valuation of about $2 billion, Recode reported. Investors include Sequoia Capital, Khosla Ventures, Andreesen Horowitz, SV Angel, and Y Combinator, according to the company’s LinkedIn page.

Photo: Instacart founder and CEO Apoorva Mehta at the company’s San Francisco office in 2013. (Laura A. Oda/Bay Area News Group)

 

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