Whole Foods Puts All Its Eggs In Instacart’s Basket

Retailers spend as much time making sure their products get in front of customers at the right times as they do coming up with worthwhile products in the first place. However, Whole Foods may have solved one of those problems for the next few years.

Speaking to Re/code under condition of anonymity, sources with knowledge of the situation explained that Whole Foods and Instacart are close to, if not already done with, a deal that would see the grocer not only invest a substantial amount in the delivery startup but one that would also lead to a five-year operating partnership between the two companies. The sources said that while they didn’t know the exact terms of the investment agreement, they could confirm that it is essentially a done deal.

Neither Whole Foods nor Instacart would comment on the story, but Re/code outlined the various ways in which both retailers can reasonably expect at least moderate returns from the deal. For the grocer, Whole Foods has already been seeing sales from Instacart well into the mid- and high-single digit percentage range; helping Instacart grow and making it an official partner can only boost the number of customers who turn to the service to buy from Whole Foods. For the delivery startup, it never hurts to have more allies in the traditional retail world.

However, the deal does put Instacart in something of an awkward position with another of its partners — Google. Forbes noted that the delivery firm and tech giant recently announced a plan to bring fresh grocery deliveries to the Bay Area, but eligible stores would include only one Whole Foods location in San Francisco. Now that Instacart is the direct and official sponsor of the grocery chain, it’s unlikely that it’ll cede that position to Google if the Silicon Valley conglomerate decides it wants more of the fresh, organic foods market under its control — a not entirely unlikely outcome given Google’s burgeoning delivery war with Amazon.