Once part of the team at Amazon, Instacart CEO Apoorva Mehta is now up against the e-commerce giant.
Instacart, the popular on-demand grocery delivery startup, is pushing forward despite the December announcement its partnership with Whole Foods Market is ending. The company is valued at nearly $8 billion after raising $271 million in new funding in November and is expected to file for an IPO sometime soon.
“An IPO is definitely on the horizon for us,” Mehta recently told CNN Business. “As we think about building a long-term company, we think being a public company allows us to do that in the best possible way.”
But less than two years ago, Whole Foods was acquired by Amazon for $13.7 billion. Considering the grocery retailer was one of Instacart’s major partners at the time, some critics anticipated a not-so-bright future for Instacart.
“When Amazon acquired Whole Foods, of course, there were a lot of naysayers who said that Instacart wasn’t going to exist,” said Mehta, who previously worked at Amazon as a software engineer on its fulfillment team. “I’m really proud of the way that the team has handled the competition that we’re facing with innovation.”
But the path toward getting a business off the ground hasn’t always been easy for Mehta. After he left Amazon, he started about 20 companies – all of which failed. But what differed about Instacart, he believed, is the relatable, universal problem it solves.
“American households spend over a hundred hours every single year shopping for groceries,” Mehta said. “That’s time they could spend with their families, with their friends, doing the things that they love.”
Instacart, which launched in 2012, assigns customers a personal shopper to scour grocery store aisles, purchase items and deliver items within several hours. It now services 15,000 stores across 4,000 cities in North America, according to the company.
When Instacart was able to secure an initial funding from venture capital firm Sequoia Capital – an investor in Dropbox, WhatsApp, Airbnb and another grocery delivery company WebVan, which later failed because it grew too big too fast – Mehta said he felt he was onto something.
“Grocery delivery has been tried before,” he said. “It’s never really worked out. So having an investor who had invested in a company which had failed [WebVan] before, and choosing to invest in Instacart was a big milestone for us.”
Instacart declined to share details about its former partnership with Whole Foods, but it insists business is going well. According to Instacart, Whole Foods only represented roughly 2% of the stores its services after the announcement that the partnership is winding down.
Instacart currently has partnerships with other major chains, including Kroger, Sam’s Club, Publix, Albertsons and Walmart Canada. The company does not publicly disclose its revenue or whether it is profitable.
Meaghan Werle, a senior analyst at Kantar Consulting who focuses on Amazon’s business, noted the impact of the Whole Foods partnership on Instacart’s business may be slim.
“Whole Foods is still a relatively small retailer in terms of the overall grocery landscape,” Werle said.
As more big name brands, such as Amazon, Walmart and Kroger, get into the online grocery delivery space, it’s becoming increasingly imperative other grocery stores chains offer online delivery and curbside pickup, whether they partner with a company like Instacart or develop the infrastructure on their own.
Instacart continues to grow: The company announced in September it would open a second research and development headquarters in Toronto.
It’s also focused on finding new ways to appeal to consumers and retail partners. Most recently, it expanded its Instacart Pickup business, which allows customers to do curbside pickup, nationwide.
“No one has been able to solve grocery delivery at the scale we’re doing today,” Mehta said. “We’re building a company which can bring this whole category online. And we think that this is going to take many, many years … many, many decades to make happen. We’re just at the very early stages of this journey.”
