A number of supermarkets are questioning the value of their relationship with Instacart due to the commission charged that may exceed 10 percent on each order. In the case of many small grocery chains, Instacart orders do not generate a positive margin. Despite establishing partnerships with many national chains, supermarkets have most cases excluded Instacart from curbside pickup in order to maintain profitability. Many of the larger chains have initiated their own home delivery and are offering discounts through loyalty programs.
Instacart experienced a boom in demand following the emergence of COVID-19. Their workforce now stands at 500,000 and the Company has raised $525 million from thirty investors since 2012. It is understood that Instacart lost $300 million in 2019 but claims to have broken even in November. To increase revenue, Instacart is now delivering pharmacy prescriptions and adult beverages and is leveraging its expertise in IT.
Instacart recently established a program with manufacturers to offer discount products on their platforms. This latest initiative is regarded by chains as representing competition, creating further dissatisfaction.