Amazon Fresh is getting more competition on its home turf. Seattle-based natural foods store Central Co-op just teamed up with Instacart to deliver groceries within an hour, joining local retailers like Whole Foods and Safeway that have already partnered with the service.
Instacart could tempt consumers with cheaper prices: $99 per year against Amazon Fresh’s $299. But the difference between the two services goes deeper than the pocketbook. While Amazon Fresh and competitors like FreshDirect replace local grocery stores, Instacart works with them – creating an opportunity for brick-and-mortar retailers that have been losing out to e-commerce.
Two out of five U.S. grocery retailers have no e-commerce capabilities, according to L2’s Big Box Insight Report: Shipping and Fulfillment. Others, like Whole Foods, Kroger and H-E-B, only allow e-commerce for catering and large orders.
Burdened by their lack of capabilities, even major grocery chains have largely ceded the e-commerce space to delivery services like Amazon Fresh and FreshDirect. But by partnering with Instacart, they keep customers who prefer the convenience of online transactions. Furthermore, these services give local grocery stores like Seattle’s Central Co-op a chance to compete with e-commerce giants.
Instacart’s expansion comes at a time when the future of e-commerce seems to be moving away from an online-only model. Even Amazon is opening brick-and-mortar stores, pointing to the fact that customers still value physical stores over retail websites. Online grocery shopping is becoming cheaper and more convenient, but Instacart’s success suggests that consumers also value local stores.