Grocery-delivery service Instacart Inc. once seemed like the perfect partner for supermarkets looking to break into e-commerce. After several years together, though, some grocers are starting to question the relationship.
Instacarts technology provided a ready-made solution for grocery chains that hadnt yet created options for customers to shop online. And it became even more attractive when delivery demand ballooned with the pandemic, providing armies of on-demand shoppers to fulfill orders in-store and deliver groceries to peoples homes.
But many supermarkets say they arent making money through Instacart, largely because the delivery company typically charges them a commission of more than 10% of each order. Some of Instacarts retailer partners say the service holds too much control over customer interactions and expect it to take an increasing share of money that food makers spend on marketing. All that has put grocers in a bind, as delivery continues to boom and becomes a necessity.
We dont think we make money from an Instacart order, said Mark Skogen, CEO of Skogens Foodliner Inc., which operates more than 30 stores under its Festival Foods brand and began offering Instacart about a year ago.
Delivery remains costly because his company pays Instacart a percentage of its online sales, Mr. Skogen said. The grocer still works with Instacart because it allows for higher revenue even if there is no profit.
