Whole Foods launches national grocery delivery, pickup service

Whole Foods Market announced Monday it is launching a new, national grocery delivery and pickup service, part of a major initiative as the Austin-based organic foods giant looks to expand its footprint against a growing list of fierce competitors.

Whole Foods said it is partnering with San Francisco-based Instacart, the fast growing, online grocery delivery service that works with various retailers, to launch the new, formalized partnership in 15 major U.S. cities.

With the move, Whole Foods becomes the first national Instacart partner to offer both delivery and in-store pickup, which lets customers place orders through the Instacart website or mobile app offering a menu of grocery options.

The two companies will pilot the in-store pickup service allowing customers to pick up orders at select Austin and Boston locations in the coming month, executives said.

Although Instacart already began delivery service from Whole Foods Markets in recent months, the game changer with today’s announcement is that the San Francisco company will now have an embedded shopper in the organic food stores to speed up orders. Previously, Instacart shoppers would make the various rounds to different retailers after orders were placed.

“Instacart makes it extremely easy for our customers to buy Whole Foods Market products from 15 cities and have them quickly delivered — whether buying fresh ingredients for dinner tonight or sending healthy foods to loved ones in another city,” Walter Robb, co-CEO of Whole Foods Market, said in a statement. “We are thrilled to add this additional convenience for our customers.”

The retailers plan to demo the new service in a mock “living room” set up at the flagship Whole Foods store on North Lamar Boulevard Monday, with free manicures and drinks to entice shoppers to try out the new program.

The effort comes a little more than a month after Whole Foods said it was launching a five-part strategic initiative to continue its growth plans in the organic grocery business despite increasing competition ranging from brick and mortar outlets to online grocers.

The delivery and pickup service is a direct hit at efforts by Amazon and others offering online grocery shopping.

Instacart, which launched locally this summer, offers delivery in one hour or more from a mix of grocers in 15 markets, including H-E-B and Costco in Austin, and lets users purchase products from different retailers in one order. It began delivering from the Austin Whole Foods stores in June.

Instacart has added a string of new cities just this month, including Boulder, Portland, Oregon and Houston. It already delivers from Whole Foods and other retailers in Atlanta, Boston, Chicago, Denver, Los Angeles, New York City, Philadelphia, San Francisco, San Jose, Seattle and Washington, DC.

Whole Foods and Instacart said they plan to expand the in-store Whole Foods pickup service to all 15 cities in the coming months.

In June, two-year old Instacart raised $44 million in venture capital thanks in part to interest surrounding its service structure relying on personal shoppers rather than warehouses, trucks or other costly infrastructure, the New York Times said. The company makes its money through the delivery fees, the Times reported.

“Instacart and Whole Foods Market are two companies that share a common vision to create great grocery shopping experiences,” said Apoorva Mehta, CEO and founder of Instacart. “Whole Foods Market is our most requested shopping destination, and we’re happy to be working together to create a seamless, quick option for customers with busy lifestyles.”

The new partnership triggered this clever web ad from Whole Foods.

There’s plenty at stake for Whole Foods, which is one of Austin’s highest-profile companies with 2,800 employees in Central Texas and 85,000 workers worldwide. It’s faced a series of recent, disappointing earnings reports and a lower stock price.

Despite the setbacks, company leaders say they are committed to an aggressive growth plan to grow from an existing 393 stores to the 500-store mark by 2017. Eventually, the retailer sees a need for 1,200 stores.

In July, Robb said it was launching several initiatives to boost the company’s momentum, including an effort to expand the retailer’s reach to customers outside its stores by offering home delivery and customer pickup, among other efforts.

“While the current environment is very dynamic and competitive, we are managing and growing our business for the long term with five primary strategic initiatives now underway to build momentum,” Robb said in a July 30 earnings call. Among those initiatives, “we are also moving forward with our digital road map to offer customers more choices and new ways to engage with us.”

Through the new service, customers will enter their zip code on Instacart website or app, shop with a virtual cart and choose a delivery window of anywhere from one hour to two hours or another scheduled time.

Then, Instacart’s personal shoppers embedded in Whole Foods stores will accept and confirm incoming orders through their smart phones, shop for the items and deliver the order.

For pickup service, customers will use the same website or app to order, but can select in-store pick up service instead.

Also, users can save grocery lists to speed up future orders. There will also be an option to order from auto-generated grocery lists tied to particular dishes from a Whole Foods recipe database.

After a first, free delivery for new customers, service charges can range from $5.99 for one-hour delivery to $3.99 for two hours. Instacart will also offer a $99 annual membership for free deliveries for purchases of more than $35.

On Monday, Whole Foods and Instacart will demo the new service on iPads and other devices in a pop-up living room at their flagship Lamar Boulevard store from 11 a.m. to 7 p.m.

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