Maplebear (Instacart; CART) - ★★ - Ranked #75 in our Q2 2024 SMID Equity Rankings
Shares of Instacart plummeted over 7% on Tuesday after Amazon unveiled a new grocery delivery membership that will intensify competition in the hot market for online grocery orders.
Amazon is now offering existing Prime members unlimited grocery deliveries from Whole Foods, Amazon Fresh and other participating local stores for $9.99 per month. The e-commerce giant's "RxPass" subscription undercuts the $9.99 monthly or $99 annual fees for Instacart's own "Instacart+" unlimited grocery delivery membership.
But in a key point of differentiation, Amazon is not tacking on any service fees for Prime grocery orders over $35, while Instacart still charges delivery fees even for Instacart+ members, albeit at a discounted rate.
The new Amazon program represents a direct competitive threat to gig economy leaders like Instacart and DoorDash that have emerged as the primary third-party facilitators of grocery pickup and delivery in recent years.
Investors acted swiftly to reprice the risk, sending Instacart shares tumbling 7.3% to $33.47 by market close as Amazon's move heightens concerns about potential customer defections and margin pressures in the grocery delivery space.
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