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Instacart to build warehouses in partnership with retailers

Grocery delivery company will build facilities in partnership with retailers

Instacart will begin building microfulfillment centers with Fabric robotics to speed order picking in partnership with retailers. (Photo: Instacart)

Instacart is moving beyond the store with plans to open robotic fulfillment centers for grocers to handle online orders. The grocery delivery company has announced that Fabric will provide the software and robotics for the facilities, which will start rolling out over the next 12 months, according to The Wall Street Journal.

“With the rapid adoption of online grocery shopping that’s taken place over the last year, the grocery industry has experienced an accelerated transformation that’s required retailers to reimagine their e-commerce footprint and explore new technologies to meet the needs of their customers,” Instacart wrote on the company blog Thursday morning.

Fabric, with offices in New York City, Atlanta and Tel Aviv, builds robotic microfulfillment technology and related software. It is running microfulfillment operations for grocery and general merchandise retailers in those cities with plans to expand into five major metro areas in the months ahead.

“With Instacart next-gen fulfillment, we will integrate leading software and robotics solutions with our own proprietary technology and growing shopper community to create new e-commerce services for retail partners and an even faster, more effortless online grocery shopping experience for customers,” the Instacart blog stated.

As COVID-19 took hold of the U.S., e-commerce grocery sales skyrocketed, although earlier this year they started to slide. In September 2020, research firm Mercatus released a survey that found 43% of shoppers shopped online in the previous six months and 40% were likely or very likely to continue to shop online. Mercatus predicted online grocery sales will reach $250 billion by 2025, representing 21.5% of all grocery sales in the U.S.

In May, however, Brick Meets Click and Mercatus said e-commerce grocery sales were down 16% over May 2020, and average order volume had fallen 7%. Grocers are still seeing big demand for online orders and are looking for solutions that can lower costs.

Instacart is betting that automation and microfulfillment centers that can house more items are a way to handle this.

“Everything about our microfulfillment solution has been built for speed, efficiency and elasticity to meet today’s on-demand requirements,” said Elram Goren, CEO and co-founder of Fabric. “This partnership with Instacart is another validation that Fabric’s tech and operations are best-fit to serve retailers’ next-gen fulfillment needs.”

Goren said by working with Instacart, Fabric is able to create tailored solutions that meet the needs of retailers and Instacart to ensure the entire e-commerce experience is seamless.

“Our next-gen fulfillment initiative combines our robust technology suite and dedicated community of shoppers with robotics solutions to give retailers even more innovative ways to compete and serve their customers online,” said Mark Schaaf, chief technology officer for Instacart. “Our next-gen fulfillment work will also help reduce some of the things that make in-store shopping cumbersome for Instacart shoppers, like crowded store aisles, out-of-stock items and long checkout lines.”

Schaaf said that partnering with retailers on the centers will create added value for consumers.

“Over the long-term, we believe partnering with retailers to bring next-gen fulfillment technologies together with the personal touch and care of Instacart’s shopper community will create an even more seamless online grocery experience that’s faster and more affordable for customers and delivers even more value and growth to retailers,” he said.

Fabric’s robotics will pair with humans to speed fulfillment on everything from packaged goods to deli items. Frozen foods and alcohol will also be options.

“We know there isn’t a one-size-fits all solution for retailers and we want to ensure Instacart has multiple solutions that meet the unique needs of our partners. This new solution will ultimately enable a faster experience for customers and help retailers continue to innovate and compete,” Instacart wrote on the blog.

The company added that the fulfillment centers should also eliminate pain points for Instacart shoppers, including navigating crowded store aisles, inability to find items that are out of stock and waiting in long checkout lines.

Click for more Modern Shipper articles by Brian Straight.

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Brian Straight

Brian Straight leads FreightWaves' Modern Shipper brand as Managing Editor. A journalism graduate of the University of Rhode Island, he has covered everything from a presidential election, to professional sports and Little League baseball, and for more than 10 years has covered trucking and logistics. Before joining FreightWaves, he was previously responsible for the editorial quality and production of Fleet Owner magazine and Brian lives in Connecticut with his wife and two kids and spends his time coaching his son’s baseball team, golfing with his daughter, and pursuing his never-ending quest to become a professional bowler. You can reach him at [email protected].