15 ms·

Instacart and Amazon-owned Whole Foods are parting ways

150 points by acdanger 8y ago

ohithereyou 8y ago
There is a discussion about the Medium post announcing this here: https://news.ycombinator.com/item?id=18674404 https://news.ycombinator.com/item?id=18674404
- bhhaskin 8y ago
  There are no comments on that post.
fbelzile 8y ago
It sounds like they've got a plan up their sleeves for their own grocery delivery system.
- tptacek 8y ago
  At least in Chicago, you can already order from Whole Foods on Prime Now.
  - reaperducer 8y ago
    Yeah, lots of other cities, too. I think Amazon was just waiting for its contract with Instacart to run out before it gave it the formal heave-ho.
    - turdnagel 8y ago
      The article states that their contract was not up, and Amazon most likely paid Instacart to end the contract early.
- r00fus 8y ago
  Prime Fresh relies heavily on Whole Foods where I live.
  - fbelzile 8y ago
    Ah, as a Canadian not living in a major city, I didn't know this existed.
  - belltaco 8y ago
    There are 3 services in my area. Amazon Fresh: This was their pre-acquisition play and has a lot of items not sourced from Whole Foods, and some items that are, but you won't find items like Whole Foods store made sandwiches. Prime Now - Amazon: This is more like extremely fast(1 to 2 hours) shipping for a very limited set of Amazon.com items. Has a few fresh grocery items but the range is quite limited. Prime Now - Whole Foods: You can only order items that are present at a central Whole Foods location. Directly competes with Instacart
- abalone 8y ago
  There is absolutely nothing in the article suggesting that Instacart is developing their own supply chain. They are focused on partnering with retailers to provide this soon-to-be-standard delivery amenity. They are differentiating themselves from Postmates in this respect. Instacart's positioning is as a trusted partner who won't try to compete with a grocer and eat away at their most profitable categories.
  - hn_throwaway_99 8y ago
    I think the parent comment was sarcastically implying that of course Whole Foods is going to deliver their own groceries now that they are part of Amazon.
  - empath75 8y ago
    Pretty much every grocery chain is going to end up building this service themselves eventually.
AJ007 8y ago
I’m not sure that the low quality of Whole Foods is a good fit for Instacarts’s brand anymore.
- steve_adams_86 8y ago
  Where I live, Whole Foods tends to offer mid to high grade foods (for the middle class person at least). What makes you think it's low quality? I can get live mussels and clams, relatively ethical and fresh beef, good cheeses, decent produce... There are much worse options. Is Whole Foods not always like this? I went to one in California (just North of Monterey as I recall) and it seemed nice enough too. I live in Canada though, so maybe in the rest of the US it's not so great.
  - nathancahill 8y ago
    They're trolling.
    - fumar 8y ago
      I have seen Whole Foods change from a welcoming, organized, on-trend, curated grocery store to something different. I frequent Whole Foods in the midwest and west coast. There is more homogenization, empty aisles, different employees, and different food stuffs. I can't [quantitatively] say the food quality is down per se, but the feeling of visiting and purchasing at the store is less positive than before. The only section that I didn't see massive change was in the meat department. I still see the same employees and what looks like the same meats. I now avoid Whole Foods and go towards more speciality stores or direct competitors like Erewhon.
      - yahyaheee 8y ago
        Felt this as well, the employees of Whole Foods will never buy into Bezos worldview
  - fullshark 8y ago
    Whole Foods' quality has definitely taken a massive hit post Amazon acquisition. The most obvious place I've noticed it is the Bakery, the produce has less diversity as well. I've also noticed more empty shelves in the processed food aisles.
atonse 8y ago
Do you have to be a Prime member to get the delivery? That's crappy, as we're looking to retire our Prime membership after this year.
- tptacek 8y ago
  Why? It's not as amazing as it was a few years ago, but it's still a good enough deal to fit Matt Yglesias's description of it as "a charity run by Wall Street for the benefit of the American consumer".
  - ceejayoz 8y ago
    I'm finding Prime less and less competitive price-wise than places like Target. When items are directly comparable, the cost of "free" shipping appears to have been figured into the Amazon price. They're also devaluing it with "this item is Prime, but may take 3-5 days to arrive" and their new in-house delivery, which has resulted in late packages (previously a very rare experience) for me three times in the last month. I've been an Amazon customer since 1999, Prime since its debut, and this is the first year I've been questioning whether to renew or not.
    - danpalmer 8y ago
      The Prime branding on products that don’t deliver next day is a killer for me. (Note I’m in the U.K. where next day delivery is common and Prime started out with that as it’s pitch) Amazons point of view seems to be that the products aren’t in stock, so when they do come in stock will be delivered next day, but as a customer I don’t care about stock levels or when it ships, it’s only the delivery date that matters. I only really care about Prime over Christmas, when I could just shop in stores anyway, some will price match Amazon if necessary, and Amazon is no longer cheap anyway. I do care about Prime at work, but we have Amazon for Businesses for that. I suspect I’ll let me Prime subscription lapse.
    - fmajid 8y ago
      Not too mention the "Add-on" products, and the fact they are too dumb to just bundle them up with the next Prime delivery.
timcederman 8y ago
How bizarre that the article mentions Amazon Fresh but completely fails to mention that you can get free delivery from Whole Foods via Prime Now. I routinely order stuff from Whole Foods through Prime Now and get it just a few hours later, it's pretty awesome. I used to occasionally order Whole Foods via Instacart but haven't once since the acquisition.
- abalone 8y ago
  Exactly. Prime Now is the Instacart killer with respect to Whole Foods, not Amazon Fresh. In the SF store where they first rolled it out you could literally see them just set up shelves and fridges upstairs and duplicate Instacart's model. Except for two advantages: (a) Free 2 hour delivery to Prime members / absolutely no fees apart from tip. (b) Better inventory data. This is huge. It's directly integrated with WF's logistics backend. It radically lowers the missing item / substitution problem that is the source of the worst outcomes with Instacart. Having said that, all the other grocers are freaking out about this so there may still be a growth opportunity for Instacart.
  - fmajid 8y ago
    Not to mention the biggest problem with Instacart—the prices they charge you are completely made up and not the grocery's price. I understand paying a flat fee for delivery, but certainly not random and opaque markups.
    - imroot 8y ago
      Instacart and Shipt (who was recently acquired by Target) make money from the price slew between what they're paying (which, might not even be the cost that's on the grocery shelf -- it may be lower), and the price that they're charging you. Yes, they have to pay the Shoppers a per-item fee, but, for the most part, the price that Insta is paying isn't the price that's listed on the shelf.
    - abalone 8y ago
      Well that's true sometimes but it depends on the store. Instacart actually matches in-store prices in certain stores. In the app these stores are noted as having "everyday store prices." If there's a markup it will say "view pricing policy" instead. Their Whole Foods deal delivered everyday store prices so that's why I didn't list this as a difference. In SF Costco and Safeway have markups but for example Bi-Rite, Rainbow, Smart & Final and Mollie Stone's do not. I know Instacart used to mark up everything and people hated it. So they've taken to hiding the cost somehow.. Maybe they're asking the smaller stores to take it out of their margins, and they just can't get Safeway & Costco to do it. Maybe they're tricking customers into paying a 10% markup with their "service fee". That fee reportedly does not get passed on to the workers and is optional but most customers probably don't realize this. Amazon doesn't have as much of a cost problem here because they have the Prime membership fee, plus economies of scale.
bwb 8y ago
How soon until Instacart is out of business or firesales to a grocery store chain wanting to hook in their tech if they have any?
- benatkin 8y ago
  I can't think of a grocery store chain that would want them. Albertsons/Safeway and Kroger both use Instacart and I don't think they would want to make the customers of the other chain mad, especially when many of them shop at both chains (they'd have so scale back or shut it down for their competitors - it wouldn't be sensible for one chain to act neutral and continue delivering at full steam for the other chains).
  - bwb 8y ago
    well i mean if they are running out of money and they can pick them up for cheap versus build their own might be a great buy. IE, Instacart is going to go out of business in 6 months and they pick it up for 150 million and get a great brand + tech to tie into their stores.
    - benatkin 8y ago
      Yeah I think it will need to be clear that Instacart is shopping for a buyer and is going to die regardless, otherwise the customers and instacart drivers will be pissed off.
    - mulmen 8y ago
      Safeway has had their own grocery delivery for years. Why would they need Instacart?
- joshl325 8y ago
  Is Whole Foods the primary groceries partner for Instacart? Don't they have other partnerships as well?
- the_reformation 8y ago
  They've raised over 800 million dollars over just the last two months. Flawed unit economics or not, they'll be around for a bit.
resters 8y ago
Sadly, this will reduce my use of instacart significantly. While PrimeNow has offered Whole Foods delivery, it is only for a small subset of items. And while PrimeNow has been steadily catching up to Instacart, Instacart is still significantly better in many ways.
jimkri 8y ago
The only time I used Instacart was to order from Costco. That was until I found jet.com. I will go to jet before amazon now, it is super easy ordering groceries from them, probably my biggest pain living in Manhattan. Haven't had any problems and they always drop the bags off outside my door (In a walk up apartment in Manhattan).
bradknowles 8y ago
Speaking as a customer, the things I like about InstaCart are: 1. Reliable delivery time schedules available — usually today — or worst case tomorrow. 2. Service of multiple stores, so that we can get things from them we couldn’t get from Whole Foods. One thing I dislike about InstaCart is when we order things like a half-gallon of refrigerated almond milk, and they instead give us the tetrapack quart of unrefrigerated almond milk. I specifically ordered the particular product and size I wanted, and I know the store has it in stock. So, why the fuck do you seem to think it’s okay to make random stupid substitutions like this?!? I do appreciate the Whole Foods has a delivery service, and I trust that their pickers will do a better job of actually giving me what I ordered. But if I order it today, then I want it delivered today or tomorrow, and in a reasonable time window on that day. And don’t just leave the stuff on my front porch, like you do with packages.

150 points by acdanger 8y ago

There is a discussion about the Medium post announcing this here: https://news.ycombinator.com/item?id=18674404 https://news.ycombinator.com/item?id=18674404

bhhaskin 8y ago
There are no comments on that post.

fbelzile 8y ago

It sounds like they've got a plan up their sleeves for their own grocery delivery system.

tptacek 8y ago
At least in Chicago, you can already order from Whole Foods on Prime Now.
- reaperducer 8y ago
  Yeah, lots of other cities, too. I think Amazon was just waiting for its contract with Instacart to run out before it gave it the formal heave-ho.
  - turdnagel 8y ago
    The article states that their contract was not up, and Amazon most likely paid Instacart to end the contract early.
r00fus 8y ago
Prime Fresh relies heavily on Whole Foods where I live.
- fbelzile 8y ago
  Ah, as a Canadian not living in a major city, I didn't know this existed.
- belltaco 8y ago
  There are 3 services in my area. Amazon Fresh: This was their pre-acquisition play and has a lot of items not sourced from Whole Foods, and some items that are, but you won't find items like Whole Foods store made sandwiches. Prime Now - Amazon: This is more like extremely fast(1 to 2 hours) shipping for a very limited set of Amazon.com items. Has a few fresh grocery items but the range is quite limited. Prime Now - Whole Foods: You can only order items that are present at a central Whole Foods location. Directly competes with Instacart
abalone 8y ago
There is absolutely nothing in the article suggesting that Instacart is developing their own supply chain. They are focused on partnering with retailers to provide this soon-to-be-standard delivery amenity. They are differentiating themselves from Postmates in this respect. Instacart's positioning is as a trusted partner who won't try to compete with a grocer and eat away at their most profitable categories.
- hn_throwaway_99 8y ago
  I think the parent comment was sarcastically implying that of course Whole Foods is going to deliver their own groceries now that they are part of Amazon.
- empath75 8y ago
  Pretty much every grocery chain is going to end up building this service themselves eventually.

AJ007 8y ago

I’m not sure that the low quality of Whole Foods is a good fit for Instacarts’s brand anymore.

steve_adams_86 8y ago
Where I live, Whole Foods tends to offer mid to high grade foods (for the middle class person at least). What makes you think it's low quality? I can get live mussels and clams, relatively ethical and fresh beef, good cheeses, decent produce... There are much worse options. Is Whole Foods not always like this? I went to one in California (just North of Monterey as I recall) and it seemed nice enough too. I live in Canada though, so maybe in the rest of the US it's not so great.
- nathancahill 8y ago
  They're trolling.
  - fumar 8y ago
    I have seen Whole Foods change from a welcoming, organized, on-trend, curated grocery store to something different. I frequent Whole Foods in the midwest and west coast. There is more homogenization, empty aisles, different employees, and different food stuffs. I can't [quantitatively] say the food quality is down per se, but the feeling of visiting and purchasing at the store is less positive than before. The only section that I didn't see massive change was in the meat department. I still see the same employees and what looks like the same meats. I now avoid Whole Foods and go towards more speciality stores or direct competitors like Erewhon.
    - yahyaheee 8y ago
      Felt this as well, the employees of Whole Foods will never buy into Bezos worldview
- fullshark 8y ago
  Whole Foods' quality has definitely taken a massive hit post Amazon acquisition. The most obvious place I've noticed it is the Bakery, the produce has less diversity as well. I've also noticed more empty shelves in the processed food aisles.

atonse 8y ago

Do you have to be a Prime member to get the delivery? That's crappy, as we're looking to retire our Prime membership after this year.

tptacek 8y ago
Why? It's not as amazing as it was a few years ago, but it's still a good enough deal to fit Matt Yglesias's description of it as "a charity run by Wall Street for the benefit of the American consumer".
- ceejayoz 8y ago
  I'm finding Prime less and less competitive price-wise than places like Target. When items are directly comparable, the cost of "free" shipping appears to have been figured into the Amazon price. They're also devaluing it with "this item is Prime, but may take 3-5 days to arrive" and their new in-house delivery, which has resulted in late packages (previously a very rare experience) for me three times in the last month. I've been an Amazon customer since 1999, Prime since its debut, and this is the first year I've been questioning whether to renew or not.
  - danpalmer 8y ago
    The Prime branding on products that don’t deliver next day is a killer for me. (Note I’m in the U.K. where next day delivery is common and Prime started out with that as it’s pitch) Amazons point of view seems to be that the products aren’t in stock, so when they do come in stock will be delivered next day, but as a customer I don’t care about stock levels or when it ships, it’s only the delivery date that matters. I only really care about Prime over Christmas, when I could just shop in stores anyway, some will price match Amazon if necessary, and Amazon is no longer cheap anyway. I do care about Prime at work, but we have Amazon for Businesses for that. I suspect I’ll let me Prime subscription lapse.
  - fmajid 8y ago
    Not too mention the "Add-on" products, and the fact they are too dumb to just bundle them up with the next Prime delivery.

timcederman 8y ago

How bizarre that the article mentions Amazon Fresh but completely fails to mention that you can get free delivery from Whole Foods via Prime Now. I routinely order stuff from Whole Foods through Prime Now and get it just a few hours later, it's pretty awesome. I used to occasionally order Whole Foods via Instacart but haven't once since the acquisition.

abalone 8y ago
Exactly. Prime Now is the Instacart killer with respect to Whole Foods, not Amazon Fresh. In the SF store where they first rolled it out you could literally see them just set up shelves and fridges upstairs and duplicate Instacart's model. Except for two advantages: (a) Free 2 hour delivery to Prime members / absolutely no fees apart from tip. (b) Better inventory data. This is huge. It's directly integrated with WF's logistics backend. It radically lowers the missing item / substitution problem that is the source of the worst outcomes with Instacart. Having said that, all the other grocers are freaking out about this so there may still be a growth opportunity for Instacart.
- fmajid 8y ago
  Not to mention the biggest problem with Instacart—the prices they charge you are completely made up and not the grocery's price. I understand paying a flat fee for delivery, but certainly not random and opaque markups.
  - imroot 8y ago
    Instacart and Shipt (who was recently acquired by Target) make money from the price slew between what they're paying (which, might not even be the cost that's on the grocery shelf -- it may be lower), and the price that they're charging you. Yes, they have to pay the Shoppers a per-item fee, but, for the most part, the price that Insta is paying isn't the price that's listed on the shelf.
  - abalone 8y ago
    Well that's true sometimes but it depends on the store. Instacart actually matches in-store prices in certain stores. In the app these stores are noted as having "everyday store prices." If there's a markup it will say "view pricing policy" instead. Their Whole Foods deal delivered everyday store prices so that's why I didn't list this as a difference. In SF Costco and Safeway have markups but for example Bi-Rite, Rainbow, Smart & Final and Mollie Stone's do not. I know Instacart used to mark up everything and people hated it. So they've taken to hiding the cost somehow.. Maybe they're asking the smaller stores to take it out of their margins, and they just can't get Safeway & Costco to do it. Maybe they're tricking customers into paying a 10% markup with their "service fee". That fee reportedly does not get passed on to the workers and is optional but most customers probably don't realize this. Amazon doesn't have as much of a cost problem here because they have the Prime membership fee, plus economies of scale.

bwb 8y ago

How soon until Instacart is out of business or firesales to a grocery store chain wanting to hook in their tech if they have any?

benatkin 8y ago
I can't think of a grocery store chain that would want them. Albertsons/Safeway and Kroger both use Instacart and I don't think they would want to make the customers of the other chain mad, especially when many of them shop at both chains (they'd have so scale back or shut it down for their competitors - it wouldn't be sensible for one chain to act neutral and continue delivering at full steam for the other chains).
- bwb 8y ago
  well i mean if they are running out of money and they can pick them up for cheap versus build their own might be a great buy. IE, Instacart is going to go out of business in 6 months and they pick it up for 150 million and get a great brand + tech to tie into their stores.
  - benatkin 8y ago
    Yeah I think it will need to be clear that Instacart is shopping for a buyer and is going to die regardless, otherwise the customers and instacart drivers will be pissed off.
  - mulmen 8y ago
    Safeway has had their own grocery delivery for years. Why would they need Instacart?
joshl325 8y ago
Is Whole Foods the primary groceries partner for Instacart? Don't they have other partnerships as well?
the_reformation 8y ago
They've raised over 800 million dollars over just the last two months. Flawed unit economics or not, they'll be around for a bit.

resters 8y ago

Sadly, this will reduce my use of instacart significantly. While PrimeNow has offered Whole Foods delivery, it is only for a small subset of items. And while PrimeNow has been steadily catching up to Instacart, Instacart is still significantly better in many ways.

jimkri 8y ago

The only time I used Instacart was to order from Costco. That was until I found jet.com. I will go to jet before amazon now, it is super easy ordering groceries from them, probably my biggest pain living in Manhattan. Haven't had any problems and they always drop the bags off outside my door (In a walk up apartment in Manhattan).

bradknowles 8y ago

Speaking as a customer, the things I like about InstaCart are: 1. Reliable delivery time schedules available — usually today — or worst case tomorrow. 2. Service of multiple stores, so that we can get things from them we couldn’t get from Whole Foods. One thing I dislike about InstaCart is when we order things like a half-gallon of refrigerated almond milk, and they instead give us the tetrapack quart of unrefrigerated almond milk. I specifically ordered the particular product and size I wanted, and I know the store has it in stock. So, why the fuck do you seem to think it’s okay to make random stupid substitutions like this?!? I do appreciate the Whole Foods has a delivery service, and I trust that their pickers will do a better job of actually giving me what I ordered. But if I order it today, then I want it delivered today or tomorrow, and in a reasonable time window on that day. And don’t just leave the stuff on my front porch, like you do with packages.