Sept. 01--Instacart and H-E-B are announcing a new formal agreement Tuesday that will expand their joint offerings with thousands of new products and potentially ramp up competition for online grocery delivery in Central Texas.
The move apparently could also result in lower prices, according to a review of the new offerings.
San Francisco-based Instacart was already taking delivery orders for H-E-B products, but with no formal agreement, there was limited selection and significant price markups in some cases.
"H-E-B epitomizes the kind of customer focused retailer that Instacart loves to partner with, so that we can give our Texas customers access to a Texas favorite grocer," Nilam Ganenthiran, vice president of business development and strategy for Instacart, said in a statement. "We're looking forward to continuing our work with H-E-B."
The news marks the latest turn in the online grocery wars in Central Texas, which are heating up as more consumers turn to delivery services for their goods.
In April, Amazon.com has boosted its nonperishable grocery offerings and launched its Prime Now service in Central Texas. The online retail giant now offers one-hour and two-hour delivery service for nonperishable items, pet supplies and other products.
Instacart, which entered the Austin market in May 2014, now offers deliveries from nine retailers. For example, last year it launched a national grocery delivery and pickup program with Whole Foods with in-store prices.
In April, new details about Instacart's pricing program were revealed. For some retailers such as Whole Foods, Greenling Organic, Tomlinson's and Petco, same-store prices are offered because retailers pay a fee for that pricing level. For other retailers such as Costco, H-E-B, Central Market and Royal Blue Grocery, there has traditionally been a 15 percent or more price upcharge. In those cases, the retailers haven't paid for the partnership and Instacart sets prices.
However, in the new Instacart and H-E-B partnership, it appears while there may be upcharges, some items may now be sold at lower prices. For example, a 64-ounce carton of Silk Very Vanilla Soymilk, which Instacart sold from H-E-B at $4.89 is now $3.82, a 22 percent decline.
Instacart, founded in 2012, delivers in 17 U.S. cities from dozens of grocery retailers. Instacart has also reached a similar agreement for H-E-B stores in the Houston area, the company said.
Instacart in July said it was converting as many as 100 Austin personal shoppers into part-time employees, while continuing to rely on independent contractors to deliver the orders.
H-E-B operates more than 360 stores in Texas and Mexico posting revenues of more than $22 billion, the company said. This year, the San Antonio-based chain is celebrating its 110th anniversary.
"Instacart's ability to deliver on-demand clearly matches our focus of making our customers' lives better," said Jeff Thomas, vice president and general manager for Central Texas at H-E-B. "We are excited to offer a larger assortment of H-E-B items to customers in Austin and Houston."
Instacart said it's launching the new partnership with new promotions, including free delivery and $10 off for new customers, through the end of the month.
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