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Instacart Inks Deal with Startup to Use Robots in Warehouses

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(Bloomberg) -- Instacart Inc. is teaming up with e-commerce technology startup Fabric to equip fulfillment centers with robots in an effort to speed up delivery and cut costs as it prepares for an initial public offering.

The company is planning to build new standalone warehouses as well as fulfillment centers for supermarket partners, Instacart said in a statement Thursday. The multi-year deal is the first step in what the grocery delivery service calls a “next-gen” fulfillment process that will use Fabric’s robotic technology to pick items while gig workers deliver food to customers’ doorsteps. The company didn’t disclose financial terms of the partnership.

“Our next-gen fulfillment work will also help reduce some of the things that make in-store shopping cumbersome for Instacart shoppers, like crowded store aisles, out of stock items and long checkout lines,” said Chief Technology Officer Mark Schaaf.

Bloomberg reported in June that Instacart was planning to build automated fulfillment centers but had fallen behind schedule. The company has yet to disclose any grocery chains that have agreed to participate in the automation of its operations but said it plans to kick off pilots with supermarket partners in the coming year.

San Francisco-based Instacart announced the partnership as it looks to revamp its labor-intensive model, which currently depends on 500,000 gig workers. The pandemic catapulted Instacart from a startup to delivery giant as store-avoiding consumers stampeded online. After Walmart Inc., the company is now the second-largest grocery delivery and pickup company in the U.S., with 45% of the market as of June, according to Bloomberg Second Measure data. Instacart doubled its valuation to $39 billion in a March funding round where it raised $265 million from investors.

Instacart recently poached Fidji Simo from Facebook Inc. to replace co-founder Apoorva Mehta as chief executive officer. Fidji has talked up plans to build out the advertising business and expand internationally.

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