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Investing.com -- Instacart (NASDAQ:CART) stock fell 5% in after-hours trading Monday following reports that Amazon (NASDAQ:AMZN) is developing a new ultrafast grocery delivery service that could directly compete with Instacart’s core business.
According to The Information, Amazon is planning a service that would deliver groceries and daily essentials in 30 minutes or less across major U.S. urban markets. The e-commerce giant has reportedly approached major consumer packaged goods companies to identify products suitable for the new offering.
Amazon’s expansion into ultrafast grocery delivery represents a potential competitive threat to Instacart, which has built its business model around grocery delivery services. The move signals Amazon’s continued push to strengthen its position in the grocery sector.
Permit filings indicate Amazon is seeking approvals to build or renovate small delivery hubs in several cities including Seattle, Philadelphia, and Fort Worth, Texas. The company has also begun recruiting warehouse staff for what it describes in job postings as "Amazon’s fastest delivery operation" where customers can order groceries and everyday essentials for ultrafast delivery.
Amazon has additionally advertised driver shifts specifically for this new delivery service operating from its fulfillment centers. The initiative appears to be part of Amazon’s broader strategy to increase sales of daily staples and bolster its grocery business.
The after-hours stock decline suggests investors are concerned about increased competition in the grocery delivery space, which has become increasingly crowded with major retailers and technology companies vying for market share.