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Delivery service Instacart announced yesterday what it called the "first phase of the company’s next-generation fulfillment initiative designed to bring automated technology solutions to retailers across the U.S. and Canada," saying that it will work with automation partner Fabric to build warehouses for its retail partners, using them to make the fulfillment process more efficient and effective.

According to the press release, Instacart and Fabric "will integrate leading software and robotics solutions … to create new e-commerce services for retail partners and an even faster, more effortless online grocery shopping experience for customers. 

"As part of Instacart’s new next-gen fulfillment initiative, the company will pair Fabric software and robotics with Instacart technology and shoppers to power a new fulfillment process within dedicated warehouses and existing retailer locations. The new process will marry the speed of robotics with the human touch and attention to detail of Instacart shoppers, enabling faster fulfillment of customers’ full grocery shop from packaged goods, household essentials and produce to deli items, frozen food and alcohol. Once orders are carefully packed, shoppers will deliver orders to customers’ doors or place them in staging areas for curbside pickup."

Pilots are slated to begin in various locations later this year, the company said.

Bloomberg writes that "Instacart announced the partnership as it looks to revamp its labor-intensive model, which currently depends on 500,000 gig workers. The pandemic catapulted Instacart from a startup to delivery giant as store-avoiding consumers stampeded online. After Walmart Inc., the company is now the second-largest grocery delivery and pickup company in the U.S., with 45% of the market as of June, according to Bloomberg Second Measure data. Instacart doubled its valuation to $39 billion in a March funding round where it raised $265 million from investors."

The Wall Street Journal chimes in:  "Instacart added more than 250 retailers in the U.S. and Canada last year and now delivers from more than 600 businesses. It raised nearly $700 million of new capital over the past year amid a boom in business and has a valuation of $39 billion. The company is planning to go public and has beefed up its leadership team."

However, as the Journal points out, "Many grocers remain worried that they are sharing customers and earnings with Instacart––which takes a commission cut for each order––and say they have more options as delivery companies pitch favorable deals to stand out."

KC's View:

They should be worried.  Instacart is like heroin - and I say that with grudging admiration - in that it is building a system that will relieve retailers of many of the responsibilities of fulfilling e-commerce demands, while simultaneously creating a mechanism that won't need retailers.  It has the customers, delivery systems, and now it is going to have warehouses - which, by the way, will be able to operate as dark stores, selling directly to those shoppers, should relationships go asunder.

Instacart doesn't need to pick its retail clients' pockets - those clients are simply emptying their pockets and handing everything over to it.