retail news in context, analysis with attitude

Re/code reports that Whole Foods is making an investment in the four-year-old delivery startup Instacart. "The size of the deal could not be learned, but sources say the deal is essentially done, barring an unforeseen last-minute change of heart," the story says, adding that "the two companies have also signed a five-year delivery partnership ... making Instacart the exclusive delivery partner for Whole Foods’ perishables business.

"Other terms of the deal could not be learned, but Instacart’s commercial agreements with its grocery store partners typically include a revenue sharing component."

The story notes that "Google Express launched same-day delivery for fresh groceries just last week, and as of now, one of Google's initial partners in San Francisco is Whole Foods. According to Re/code, Google's partnership only extends to a single Whole Foods location in San Francisco, which means the grocery chain's new relationship with Instacart could sideline Google's delivery business in the near future—at least in regards to Whole Foods."
KC's View:
A bit of idle speculation here, if I may. (Also uninformed speculation, but when have I ever let that stop me?)

I am a bit surprised that Whole Foods would seem to be doubling down on Instacart, even to the point of investing in the company, at the apparent expense of any expansion of its relationship with Google. It makes me wonder if, in fact, it is possible that Google might at some point be interested in acquiring Instacart, which, despite its shortcomings, would give it a bit of a jump start in a business it clearly would like to grow.

There probably are a bunch of reasons this might not make sense. But I have a sense that this could be where things are going.