Faced with escalating labor costs and state and local legisltion concerning workers in the gig economy, Instacart is considering stand-alone fulfillment centers.  As yet, the company has not partnered with an equipment supplier nor published a business plan.  It is estimated that as a result of COVID demand, Instacart signed up 300,000 store pickers who are becoming progressively more expensive with the Company limited in the ability to pass on costs to consumers. A serious problem faced by Instacart and other delivery services, none of which are profitable, is that consumers will be inclined to return to brick-and-mortar stores as COVID recedes. 

According to Bloomberg, a fulfillment center would cost in excess of $20 million and require 700 robots and 160 workers to fill 3,500 orders each day. Specific chains have already installed fulfillment centers including the Kroger company in association with strategic partner Ocado of the U.K. Other chains have plans in place to attach fulfillment centers to some stores, establish ‘dark stores’ based on advances in technology and have developed software for online ordering.

Industry observers consider that the expense involved in picking and delivery is unsustainable, adding as much as 25 percent to a typical grocery order. Given that Instacart has been openly discussing fulfillment centers without firm plans or tangible progress, some observers consider that the proposal is nothing more than pre-IPO hype. Alternatively the Company is floating the concept of fulfillment  centers to intimidate the expanded workforce to limit demands for additional earnings and benefits.