Instacart looked like a savior. Now the shops are not so safe.

But many supermarkets say they don’t make money through Instacart, mainly because the delivery company usually charges them a commission of more than 10% of each order. Some of Instacart’s retail partners claim the service has excessive control over customer interactions and expect it to earn a growing share of the money food manufacturers spend on marketing. All of this has put supermarkets in jeopardy as delivery continues to boom and becomes a necessity.

“We don’t think we make money with an Instacart order,” said Mark Skogen, CEO of Skogen’s Foodliner Inc., which operates more than 30 stores under its Festival Foods brand and began offering Instacart about a year ago.

Delivery is still expensive because your company pays Instacart a percentage of its online sales, Skogen said. The supermarket continues to operate with Instacart because it allows for higher revenue even if there is no profit.

Nilam Ganenthiran, president of Instacart, said in an email that the company’s services help traders grow without devoting years of work and capital investment to building infrastructure.

“We don’t compete with retailers,” Ganenthiran said. “We don’t operate outside of warehouses and we haven’t launched our own stores or mini-marts like other services that compete directly with supermarkets.”

The Save A Lot chain joined Instacart this summer because the service was quick and easy to implement, said Chris Hooks, head of merchandise at the Midwest grocery store that operates more than 1,000 stores. He said Save A Lot sees Instacart as a way to attract existing and potential customers.

Instacart said this year it has added or expanded agreements with more than 150 retailers in the United States and Canada, putting it in collaboration with more than 500 companies, including Kroger. Co.

, Walmart Inc.,

Aldi Inc. and 7-Eleven Inc.

Like many of his colleagues, the delivery service struggled to meet growing demand at the start of the pandemic, but said it has since recovered. Instacart said its orders have increased 500% annually on occasions this year and its workforce has largely doubled to 500,000.

The business boom has helped give Instacart its first profitable month, in April, since its founding in 2012. The company has raised nearly $ 500 million since March, valued at $ 17.7 billion . Instacart has said it expects an initial public offering, but declined to comment on the schedule.

Over the years, Instacart has added services such as suggesting out-of-stock item replacements based on customer preferences and allowing consumers to communicate directly with Instacart buyers, Ganenthiran said.

Instacart has begun delivering non-food items such as recipes and alcohol. The company is expanding a business creation website and providing technology support to retailers.

Instacart also works with manufacturers to promote and discount products on their platform. Mark Griffin, President of B&R Stores Inc. in Nebraska, he said that means retailers and Instacart are looking for the same fund of money that brands spend on marketing.

“We’re competing with what we perceive as a partner,” he said. When it works with Instacart, B&R becomes part of a “whole laundry list” of retailers rather than the customers ’local store, he said.

Ganenthiran, of Instacart, said the advertising business gives consumers access to discounts, which would eventually encourage them to buy more in supermarkets. Instacart was created to protect retailers and help them gain market share online, he added.

When HEB LP partnered with Instacart in 2015, the Texas-based chain increased the prices of products it sold through Instacart to help cover delivery-related expenses, said people who were familiar with the conversations. .

To maintain some control, others choose not to outsource their entire e-commerce business. Kroger, the largest supermarket in the country, manages pick-up orders with its own staff. The company also encourages customers to order delivery through its website, rather than instacart, offering digital coupons and fuel savings at Kroger gas stations for members of its loyalty program. Kroger executives described Instacart in a recent earnings call as a big partner, but said the supermarket is always looking for delivery partners.

Retailers have more options available. DoorDash Inc.

and Uber Technologies Inc.

began delivering groceries this year while Target Corp.

Shipt Inc. continues to expand.

Associated Food Stores, a Salt Lake City-based cooperative of more than 400 stores, said it is exploring using Instacart early next year. So far, it has used DoorDash, in part because of the service’s low commission rate, about 9 percent per order charged in stores, said Thomas Horne, the company’s senior e-commerce manager. Instacart’s rate is higher, he said, though the rate varies by retailer.

Instacart said it wants to give advantage to all supermarkets.

“It’s much harder to choose the perfect bunch of bananas or the best substitute for your favorite cookies than delivering a burrito to someone,” said Ganenthiran, who added that the company continues to make investments to improve its operations.

Some supermarkets hold up. Northeast chain of Weis Markets Inc.

he prefers to encourage customers to place orders online and pick them up at stores, said CEO Jonathan Weis. The supermarket does not use Instacart, but relies on Shipt for delivery.

“In our opinion, they were a bit pricey,” he said of Instacart.

Instacart could be just one of the many ways to buy groceries online. Farhan Siddiqi, digital director of Koninklijke Ahold Delhaize NV, said customers prefer specific delivery services. The owner of the Giant and Stop & Shop chains uses Instacart, in addition to in-house delivery services Peapod and FreshDirect LLC, which joins a privately held company to buy.

He added: “It’s a very complicated world.”

Write to Jaewon Kang to [email protected]