Amazon buying Whole Foods didn’t kill grocery delivery company Instacart, but it has ended the company’s partnership years before its contract was supposed to end. As a result, more than 350 Instacart shoppers who do the shopping and picking at Whole Foods stores will lose their jobs, the company announced on Thursday. More than 1,000 shoppers will be offered the opportunity to relocate to other stores in the Instacart grocery delivery network.
“Whole Foods Market has been a partner of ours since 2014, but our relationship is now beginning to wind down,” Instacart CEO Apoorva Mehta said in a blog post.
The partnership between the two had been on shaky ground since Amazon acquired the grocer in June 2017. Whole Foods was once the crown jewel in Instacart’s delivery portfolio as one of its earliest and highest-profile partners. In 2016 the two announced a five-year delivery partnership in which Instacart reportedly had an exclusive deal on delivering perishables.
But Amazon buying Whole Foods a year into the deal complicated the relationship as the e-commerce giant had its own delivery ambitions. Instacart branding has been slowly disappearing from stores. In one San Francisco Whole Foods location, Instacart shoppers had reportedly been moved from their normal workspace into another corner of the building. Meanwhile Amazon has been expanding its own Prime Now services so customers can order delivery from Whole Foods or pick up from a store.
Now Instacart will be slowly winding down its delivery operations entirely from Whole Foods. In February the first wave of 243 shoppers will be impacted: around 75% will be offered to transition to other roles delivering at other grocers, and the remaining 25%, around 60 people, will lose their jobs entirely. Instacart is offering a three-month separation package for those who can’t be placed elsewhere.
The rest of the shutdowns will continue to roll out in 2019. Of the 1,415 shoppers affected, the company expects that around 25%, or 350 people, will face job cuts as a result. The other 1,000 will be offered in-store shopper roles at other partners, including Safeway, Publix, Ralph’s and Sprouts. The only jobs affected are the Instacart shoppers who are part-time employees of Instacart. Shoppers who shop at multiple stores and work as independent contractors will be able to continue shopping at Whole Foods until “they exit our marketplace entirely,” the announcement says. Instacart declined to say the exact date that Whole Foods delivery will no longer be available.
The news of shopper job cuts and transition packages comes at a time when some shoppers have complained of “mistreatment” following changes to its pay model. It’s not because of a shortage of cash though: Instacart announced it had raised an additional $271 million in November on top of the $600 million bringing the total Series F to $871 million and valuation to $7.87 billion.
The Whole Foods partnership once accounted for a reported 10% of Instacart’s revenue, but that percentage has been decreasing as Instacart has made a push to diversify its grocery partners. The San Francisco-based startup counts retailers from Kroger to Aldi’s to Costco as partners and is now available in all 50 states.
“The reality is grocery is at a tipping point,” Mehta said in October. “Back a couple years ago it was a question of if people will buy groceries online. Now it’s not an if, it’s a when.”