Instacart has announced this morning it will no longer be doing business with Whole Foods, a U.S. organic grocery chain the company launched a partnership with in 2014. This comes roughly one year after Amazon closed its $13.7 billion acquisition of Whole Foods; Amazon, of course, has its own grocery delivery service, AmazonFresh.
Currently, Instacart has 1,415 in-store shoppers, or paid Instacart couriers, at 76 Whole Foods locations; 243 of those couriers, who exclusively deliver groceries from Whole Foods, will no longer be able to make Instacart deliveries beginning February 10, when the company officially winds down its partnership. Instacart says they have already placed 75 percent of those workers in new roles, though 25 percent, or about 60 workers, have been laid off.
Instacart added that 75 percent of the 1,415 total shoppers, or 1,016 people, are also expected to be placed in new stores, meaning layoffs could surpass 350.
A person familiar with the matter told TechCrunch that significant developments over the last 18 months forced Instacart to wind down its relationship earlier than planned. Whole Foods didn’t immediately respond to a request for comment.
Whole Foods will fully exit the Instacart marketplace, which allows shoppers to order from more than 300 retailers, including Kroger, Costco, Walmart and Sam’s Club, in 2019.
In a blog post this morning, Instacart founder and chief executive officer Apoorva Mehta (pictured above) said the company will be offering transfer bonuses to all current Whole Foods couriers being transitioned to new stores. As for those being laid off as part of the dissolution of the partnership, Instacart will provide a separation package based on a minimum of three months of maximum monthly pay in 2018.
Instacart pays 70,000 people to shop for its customers. The 1,415 affected by the news may seem like a small fraction, but it’s bad news for the business, which has likely been bracing for this since Amazon CEO Jeff Bezos signed the Whole Foods check in 2017.
VCs, however, seem to be confident in Instacart’s ability to compete with Amazon. The company raised $600 million at a $7.6 billion valuation in October, just six months after it brought in a $150 million round and roughly eight months after a $200 million financing that valued the business at $4.2 billion.