As COVID-19 reshapes the American shopper, money is pouring into a cluster of new and existing grocery delivery platforms.
The latest: Grocery service Instacart said in a blog post Thursday it raised $200 million in new financing. The deal values Instacart at $17.7 billion. That compares with a $13.5 billion valuation at which Instacart raised $225 million in June.
“COVID-19 has forever changed the way people shop for their groceries and goods,” the blog post stated, “and as a result, Instacart has gone from a convenience to a lifeline for millions of people.”
Simultaneously goPuff, the convenience store delivery business, announced it had raised $380 million in new funding to “further accelerate geographic expansion, product category offerings and investment in talent,” according to a company blog post.
The round was led by existing investor Accel and new investor D1 Capital Partners with participation from Luxor Capital and SoftBank Vision Fund. The deal values goPuff at $3.9 billion.
In the coming months, the blog post said, goPuff will expand product categories to include baby and pet products, over-the-counter medications and grocery items. The Philadelphia-based company also is expanding nationwide.
Grocery delivery circle widens
Whether goPuff will go head-to-head with Instacart is unclear. The latter is said to be considering an IPO, and during the pandemic Instacart shot to the head of the grocery delivery pack, ahead of Walmart. What is more, the company is now expanding beyond grocery delivery, having nabbed other retailers like Sephora for beauty products.
Valiant Peregrine Fund and D1 Capital Partners co-led Instacart’s latest funding round, which the company said it would use to grow e-commerce software, product development and advertising.
Other big names also are entering the food shopping delivery space, most notably Uber (NYSE: UBER), with its rideshare and UberEats platform expanding from restaurant to grocery delivery this summer.
Online grocery shopping goes local
Beyond the Instacarts, the goPuffs and the Ubers, alternative business models also are disrupting the industry sector.
A case in point is MilkRun, a Portland, Oregon-based outfit that pays small farmers and producers to deliver their own goods locally. The company has seen its business surge elevenfold since the coronavirus lockdowns started in March. It expanded into Seattle this summer, with plans to launch in Austin, Texas, later this year.
Another new platform, Dumpling, claims to offer a more ethical model by turning grocery shoppers from gig economy workers into small business owners.