US grocery delivery service Instacart has secured $200 million in Series E financing led by Coatue Management, which values the company at $4.2 billion.
Glade Brook Capital Partners has also invested in the San Francisco-based start-up, which will now focus on building robust shopper support teams and software. It said it aims to innovate to offer customers more convenience and a better selection of products.
The announcement comes days after Amazon revealed it is introducing free two-hour delivery of groceries from Whole Foods shops to Amazon Prime members, rolling out in four US cities.
Figures released last year by IGD predict that the US online grocery market is forecasted to have a compound annual growth rate of 18.1% over the next five years, representing a $20 billion opportunity.
Instacart founder and CEO Apoorva Mehta believes that in 2017 the online grocery market reached a tipping point, as the service went from being a nice addition to “mission critical” for grocery retailers.
“As a result, seven of top eight North American grocers jumped on to the Instacart marketplace,” he said. “This brings us to nearly 200 grocery partners; simply put, North America’s favourite grocery stores are now delivering via Instacart.
“Of course, this tipping point would never have happened had it not been for customers demanding grocery delivery. In 2017, we noticed that more customers started to rely on Instacart to deliver their weekly groceries than ever before and our express subscriber base grew by 300%. Best of all, this was not only something that was a phenomenon in big cities — it was nationwide.”
The company said that its model is thriving in smaller and sparser regions and, as a result, it has launched in 160 new areas in the last year and is now available in 70 million households in the US and Canada.
Mehta added: “In the next few years, we will be working hard to innovate for our customers by offering them more convenience and better selection at competitive prices. Recognising that our shoppers need better tools and processes to be able to offer great customer service, we will be investing in building robust shopper support teams and software. And, of course, we will continue to grow sales for our retailers and CPG partners by strengthening our partnerships and innovating together.”
Instacart has further expanded its business with the acquisition of Toronto-based start-up Unata, which makes digital coupons and offers an all-in-one platform for grocery retailers.
Same-day delivery company Shipt, one of Instacart’s main rivals, was bought by Target for $550 million last year.
© FoodBev Media Ltd 2018