In the last two weeks alone, Walmart has announced grocery partnerships with rival delivery startups Postmates and DoorDash, to complement existing relationships with Uber and the delivery startup Deliv.
Why Walmart is partnering with everyone except Instacart for its grocery delivery service
Uber, Postmates, DoorDash and Deliv — but not the most popular grocery delivery startup in the U.S.
Instacart
Jason Del Rey has been a business journalist for 15 years and has covered Amazon, Walmart, and the e-commerce industry for the last decade. He was a senior correspondent at Vox.
Together, the four companies are expected to help Walmart expand its grocery-delivery service to more than 100 U.S. metro areas by the end of this year, as it battles Amazon and Target in what has become one of the most competitive areas of e-commerce.
But one obvious grocery delivery partner hasn’t yet been named by Walmart, and won’t be anytime soon if things don’t change, according to a source familiar with the situation: Instacart.
Instacart is the grocery delivery company with a $4 billion paper valuation that counts Costco, Kroger and even Walmart-owned Sam’s Club among its partner grocers. But discussions on a partnership between Instacart and Walmart stores have hit an impasse, according to a source.
The sticking point? Instacart wants Walmart to list its grocery items for sale on Instacart’s app, while Walmart simply wants to use Instacart delivery people to fulfill orders that flow exclusively through Walmart’s own digital properties.
The arrangement preferred by Walmart would likely limit the financial upside for Instacart, which typically brings in revenue through commissions from grocers in exchange for generating new customer demand, in addition to delivery and service fees it charges customers who place orders through the Instacart app. If Instacart were to simply act as a delivery network for Walmart orders, it would have limited ways to make money.
Such a relationship would also go against all the work Instacart has done to make its own app synonymous with grocery delivery by making sure all popular grocers list their grocery catalogues within the Instacart app. Walmart is the largest grocer in the U.S.
But Walmart has been investing in training its own workforce to pick groceries off its store shelves, to support both the delivery business and a growing grocery pickup option that will be live in 2,200 Walmart stores by the end of 2018. So in its view, it only needs help on delivery.
An Instacart spokesperson did not immediately respond to a request for comment. A Walmart spokesperson declined to comment on negotiations with Instacart, but hinted at the company’s rationale for taking the approach it has to date:
“[W]e have a great team of personal shoppers who attend a three-week training session to learn to pick the freshest produce and best cuts of meat for our Online Grocery customers,” the spokesperson wrote in an email to Recode. “What’s great about our delivery program is that we’re building on existing infrastructure to be able to take online grocery to this level — a great app, website, team of personal shoppers, stores, etc.”
This article originally appeared on Recode.net.
