Instacart Inc., which late last month expanded its relationship with Kroger Co., reached a deal with Aldi that will bring online ordering and delivery to Aldi stores nationwide by Thanksgiving.
Aldi’s expansion of delivery via Instacart covers 75 major markets, including San Diego; New York City; Miami; Raleigh, North Carolina; and Minneapolis, Aldi says. The expansion follows a pilot program Aldi initiated with Instacart just over a year ago. That pilot tested Instacart delivery in Los Angeles, Atlanta and Dallas and was later expanded to the greater Chicago and Northwest Indiana areas.
Aldi, a German discount grocery chain, operates more than 1,800 U.S. stores in 35 states. Unlike most grocery chains, Aldi primarily sells its own brands. The retailer has been expanding aggressively in the United States, pledging to spend more than $5.3 billion to increase its store count to 2,500 by the end of 2022 and remodel existing stores. Last month, Aldi said it was more than halfway through the planned store makeovers.
By the end of 2018, approximately 80% of Aldi stores will offer online delivery via Instacart, a spokeswoman for Aldi says, and that number will increase as the Instacart infrastructure grows.
Instacart, a fast-growing, app-based online grocery delivery service, operates in more than 210 U.S. markets. Since its founding in 2012, it has raised more than $1 billion from investors over nine funding rounds, according to Crunchbase. That includes $350 million raised earlier this year in rounds led by Coatue Management and Glade Brook Capital. Other investors include Sequoia Capital, Andreessen Horowitz, Khosla Ventures, SV Angel and Y Combinator.
The metropolitan areas covered by this new deal is the same number recently added by Kroger. Late last month, Kroger said it would expand home delivery of groceries ordered via Instacart to 75 additional markets by late October. That deal will make the Instacart delivery available from more than 1,600 of Kroger’s 2,800 stores. Kroger ranks No. 86 in the Internet Retailer 2018 Top 1000.
In a blog post published Tuesday, grocery consulting firm Brick Meets Click (BMC) called the Aldi,/Instacart deal “big news for Aldi and Instacart as well as online grocery.”
“The Aldi/Instacart rollout will grow the share of groceries bought online as more customers learn they can get healthy and affordable Aldi grocery products delivered to them in as little as one hour,” BMC says on its blog.
For Aldi, the firm says, the delivery expansion adds, “another way to serve more customers who otherwise might not visit their stores.” For Instacart, the deal with Aldi draws attention to Instacart’s role as a marketing vehicle,” BMC says. “In addition to covering the last mile, Instacart is a rapidly growing online coupon delivery network, which broadens its appeal with additional savings over and above the retailer’s offer.”
Only about 3% of grocery sales in the U.S. are made online, but web sales in the segment are growing quickly, while overall grocery sales are not. Grocery sellers seek to capture some of that growth and fend off competition from online retail giant Amazon.com Inc. (No. 1), which shook up the grocery business in 2017 when it bought the Whole Foods Market grocery chain. Since then, Amazon has moved to aggressively expand grocery delivery from Whole Foods.