Some US supermarkets say they aren't making money through Instacart due to the service's 10% commission on each order
Jaewon Kang / Wall Street Journal : Tweets: @layon_overwhale , @eyevariety , @chancekelch , @anthony , @sub8u , @silvermanjacob , and @benpershing Tweets: Leon Overweel / @layon_overwhale : Albert Heijn, the biggest Dutch super market chain which was founded in 1887, has been doing web-based home delivery since 2001 and app-based delivery since 2012 (the year instacart was founded), all built and run in-house. https://twitter.com/... @eyevariety : Not hard to make a profit when the supplier, the contract labor, and the end customer are all paying you. https://twitter.com/... Chance Kelch / @chancekelch : Someone should really start a grocery store optimized for customer delivery. https://twitter.com/... Anthony DeRosa / @anthony : For many supermarkets, food delivery cuts into already-thin profits. “We don't think we make money from an Instacart order,” said Mark Skogen, CEO of Skogen's Foodliner Inc. https://www.wsj.com/... Subrahmanyam Kvj / @sub8u : When you want to be relevant to retail consumers who want ecommerce-style fulfillment, but don't necessarily want to commit yourself to investing to build delivery capabilities. But want to continue complaining! ¯\_(ツ)_/¯ https://www.wsj.com/... https://twitter.com/... Jacob Silverman / @silvermanjacob : No one's making money on Instacart, including Instacart. One profitable month in 8 years of business. https://www.wsj.com/... Ben Pershing / @benpershing : Some supermarkets plan to stick with the delivery service despite concerns about its fees. Instacart says it lets grocers expand e-commerce without building their own infrastructure. https://www.wsj.com/...
Context & Ripple Effects
The margin question around Instacart is a decade old: the company restructured its retailer deals back in 2015 when its expansion economics were first challenged, and Quartz argued in 2016 that grocery is one of the industries that resists the on-demand model. The pandemic briefly silenced critics — Instacart added 300K shoppers and claimed its first-ever monthly profit of $10M in April 2020.
What changed since then is where Instacart makes money: by 2022 its ads unit, launched in 2019, generated roughly $740M — nearly 30% of revenue — meaning the platform increasingly profits from selling grocers visibility, not just fulfilling their orders. Against that backdrop, supermarkets now saying the 10% commission leaves them underwater is less a surprise than an overdue accounting.
First-order effects
- Supermarkets like Skogen's Foodliner are discovering that Instacart orders carry negative margins after the 10% commission, yet most plan to keep the service because the alternative — building delivery infrastructure themselves — is costlier still.
Second-order effects
- Instacart's response is already visible in its own numbers: with commissions squeezed by partner complaints, the company leaned harder into its ads business, which grew 30% in 2022 and now supplies nearly a third of revenue — effectively charging grocers twice for the same shelf space.
- Grocers weighing exit have a reference point in chains like Albert Heijn, which has run web-based home delivery in-house since 2001, making 'build vs. rent' a live strategic question for every US supermarket renegotiating with Instacart.
Third-order effects
- If the pattern holds, grocery e-commerce splits structurally: big chains internalize delivery the way Albert Heijn did, while smaller regional players stay on platforms and absorb the fee — concentrating independent online grocery among those who can afford the toll.
- The deeper precedent is the multi-sided marketplace squeeze flagged in the rapid-delivery wars, where NYC startups lost $20+ per order: intermediaries survive not by making any single side profitable but by monetizing supplier, labor, and customer simultaneously — a structure regulators and retail partners are only beginning to scrutinize.
The trend: Marketplace middlemen in grocery are shifting from thin commissions toward advertising and multi-side monetization, pushing their retail partners to choose between paying the toll and rebuilding delivery in-house.