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Instacart, a company that started out as a delivery company to which retailers could outsource their e-commerce functionality but now likes to describe itself as "the leading grocery technology company in North America," announced yesterday that it has acquired Rosie, which describes itself as "the premier e-commerce platform for local and independent retailers and wholesalers."

Terms of the deal were not disclosed.  The acquisition comes as Instacart has been circling a planned initial public offering (IPO) that has not yet been scheduled.

As a result, the two companies said, "the Rosie team will lead Instacart’s business strategy and technology development for local independent grocers, as Instacart continues to build best-in-class e-commerce and fulfillment solutions for this critical segment of the grocery industry."  This part of the business will keep the Rosie brand name, sources tell MNB, and in fact the entire Rosie team is said to be staying with the company post-acquisition.

Sources also tell MNB that before an acquisition was considered, Instacart and Rosie had an alliance that was presented to retailers and industry partners, and so the deal simply builds on a relationship that already existed.  The expectation, based on reactions to this point, is that there should be no loss of business post-acquisition, sources say.

With this acquisition, Instacart said, it is "deepening its commitment to serving local and independent grocers and expanding its Instacart Platform e-commerce offerings."

Bloomberg notes that "Rosie is Instacart’s second acquisition this month, following its purchase of pricing and promotions platform Eversight Inc."

Some context from the announcement:

"Founded in Ithaca, NY in 2013, the Rosie team has spent nearly a decade building relationships and supporting local and independent retailers like Rosauers Supermarkets, Lee’s Marketplace, Niemann Foods, Inc., and Geissler’s Supermarkets across more than 40 states. Rosie offers independent grocers affordable and easy-to-use branded e-commerce websites and mobile app capabilities that power order flow, fulfillment, and customer insights. Rosie’s product features include shoppable weekly ads, store loyalty and rewards programs integrations, third-party fulfillment logistics integrations, payment processing and more – all developed for local and independent grocers. Rosie’s turnkey e-commerce solutions get grocers online quickly and efficiently, helping customers easily find and discover local stores.

"With the acquisition of Rosie, Instacart is introducing new e-commerce solutions built specifically for local and independent retailers that complement the company’s existing Instacart Platform offerings. Through the Instacart Platform, Instacart is further enabling grocers to chart their own digital transformation through a suite of enterprise-grade technologies. With Instacart Platform, Instacart gives retailers access to the solutions behind Instacart’s consumer marketplace, helping retailers like Schnucks, Tops Friendly Markets, and The Fresh Market create new online and in-store solutions that enhance the customer experience and help their businesses grow … Adding Rosie’s offerings to the Instacart Platform gives more retailers access to tools and technologies that can lead to growth in their businesses and deeper engagement with their customers – all while retaining their unique store experience and brand identity."

KC's View:

My expectation would be that there will be at least some tensions among clients and alliances created by this deal, though they can be handled if Rosie's team is able to a) deliver on their value proposition, and b) expand the offerings available to independents without retailers losing any level of independence.

I've certainly had my issues with Instacart over the years, though, in all fairness, I've had a bigger issue with retailers who essentially were handing over their customer data to Instacart and not preserving their unique access to their most important asset.  Instacart was brilliant in creating a business model that could help retailers compete with Amazon;  I blamed the retailers for not being proprietary or brand-centric enough.

This seems to be shifting as Instacart makes different options available to its customers, and to be honest, independents and regionals may need its portfolio of products even more than larger chains.  This is a big deal, and I look forward to seeing how it plays out in coming months.