Instacart signs a deal with Kroger to expand to additional 75 markets, making it available to 70% of all US households after expansion is completed in October
Toward the end of 2017, Instacart penned a partnership with one of the country's biggest grocery retailers, Kroger.
Context & Ripple Effects
The Kroger alliance signed toward the end of 2017 was Instacart's anchor with one of the country's biggest grocers, and this deal converts it into national coverage: 75 additional markets, taking availability to 70% of US households once the October rollout finishes. The expansion rides on fresh capital — Instacart had raised $200M earlier in 2018 at a reported $4.2B valuation to fund exactly this kind of footprint build-out.
What makes the move durable rather than a one-off delivery deal is how it compounds: weeks later Instacart layered its own pickup service on top of the same retailer network, and years later Kroger deepened the relationship further with 30-minute deliveries after its own quick-delivery tests fell short.
First-order effects
- Kroger gains same-day online reach in 75 new markets without building its own delivery operation, while Instacart's addressable base jumps to roughly 70% of US households by October.
- Shoppers in those markets get Kroger inventory through Instacart's app immediately, making the marketplace the default digital front door for a top-three grocer.
Second-order effects
- Other regional and national grocers now face a choice between signing with Instacart or ceding their online channel to a rival's storefront, accelerating a wave of similar retailer partnerships.
- With coverage near saturation, Instacart's growth shifts from adding zip codes to adding services per store — pickup, then faster fulfillment — raising switching costs for partners like Kroger.
Third-order effects
- If the pattern holds, grocery e-commerce consolidates around a handful of fulfillment intermediaries that own the customer relationship while supermarkets supply inventory and absorb the margin squeeze — a structure Kroger itself later reinforced by outsourcing quick delivery and robot-equipped warehousing to Instacart and partners like Fabric.
- Retailers' dependence on these platforms sets up a long-term bargaining question over data, pricing, and fees that regulators and grocers alike will have to confront as the intermediaries become infrastructure.
The trend: US grocery retail is outsourcing its last mile to platform intermediaries, with each retailer signing deepening the intermediaries' hold on the customer relationship.