Apoorva Mehta, founder and CEO of Instacart
Delivery start-up Instacart and Whole Foods officially part ways today.
While the split has been anticipated since Amazon swooped in and acquired Whole Foods in 2017, it represents a new chapter for the grocery delivery startup.
Instacart co-founder and CEO Apoorva Mehta says the company is ready for it.
“Whole Foods was one of our first partners,” he told CNBC in an exclusive interview. “But over the last few years, pretty much every major grocer in North America has chosen Instacart as their partner.”
Whole Foods was also once Instacart’s largest partner, but a person close to the company tells CNBC that today it accounts for less than five percent of total revenue.
As Amazon’s acquisition of Whole Foods threatened to disrupt the entire grocery industry, American grocers increasingly looked for ways to boost their e-commerce offerings. Many turned to Instacart.
Instacart says it now delivers groceries from more than 20,000 stores across the US and Canada and expanded its offerings to include alcohol delivery and advertising.
Mehta says that as the company scales, it becomes more efficient. “Last year our grocery sales grew by triple digits on a percentage basis. We are now profitable on every single delivery.”
That doesn’t mean that Instacart as a company is profitable because it does not reveal administrative costs, sales and marketing and other expenses. Mehta would not say whether the entire company is profitable, but said it is actively focused on growth and continuing to scale.
Profitability may become an important metric for Instacart as it prepares for an eventual IPO, which Mehta says he expects eventually. Its largest peers in the “gig economy” space, Uber and Lyft, have both fallen significantly from their debut prices, in part because of worries over their large losses.
But Mehta says he’s not even watching their debuts.
“I am singularly focused on Instacart,” he says. “We are heads down, thinking about the problems we want to solve and not really looking anywhere else.” He added that being acquired “is not something we entertain.” Over the last year, Instacart has raised $1.2 billion in private markets, bringing its valuation to nearly $8 billion, according to Pitchbook. That makes it one of the most valuable privately funded start-ups in the world.
As Instacart has scaled, it has also faced backlash from its contractors, or in-store shoppers. A report from NBC News said tips given to drivers for on-demand delivery services including Instacart and Doordash were being used to substitute a portion of drivers’ wages rather than directly boosting their income.
Instacart responded to the report and said it would change the way it pays its drivers to make sure tips don’t subsidize their total pay.
Mehta says that the startups continues to launch more features to support shoppers, like instant cashout and more flexible hours.
“The shopper community is extremely important to us,” Mehta said. “We’re proud of the progress we have made but we know we have more work to do.”
FROM 2017: Instacart CEO says Amazon-Whole Foods deal was a turning point in the industry