Sprouts Farmers Market Home Page
Sprouts Farmers Market Home Page (Source: Sprouts Farmers Market)

Sprouts Farmers Market reduces Instacart reliance

February 26th, 2021. Sprouts Farmers Market (NASDAQ: SFM) has announced its full year 2020 financial results, with annual sales up 15% to $6.5bn. Their ecommerce sales grew by 290% compared to 2019, to 11% of Q4 revenue, with 15% of those online sales now through sprouts.com, the remainder through Instacart. 

Selling, general and administrative expenses (“SG&A”) outgrew revenue during Q4, adding $76 million to reach $464 million. Sprouts explains this as "primarily driven by increased ecommerce fees". Given the significant costs of Instacart, it is unsurprising that Sprouts is investing in its own ecommerce channel, moving customers from Instacart to their own website and operations.

Sprouts launched their own ecommerce capability at the end of Q3 2020 and this new channel now represents 15% of their ecommerce sales, with the bulk still being through Instacart. In the earnings call on Feb 26th, Denise Paulonis, CFO, said "our efforts to drive customers to shop at sprouts.com continue to gain traction growing to nearly 15% of our total online sales". This implies sprouts.com sales are equivalent to an annualized $107m. Paulonis highlights the important differentiators of their own online store compared to Instacart - capturing of customer data and ensuring a seamless service where customers do not leave the Sprouts ecosystem, giving customers convenience, choice of pickup or delivery. Paulonis also said their decision to use Sprouts colleagues to pick, bag and deliver orders to the customer's car was more efficient than Instacart.

Sprouts first launched its online offer with Instacart in January 2018 and ended its two year relationship with Amazon Prime Now in May 2018. At that time, Brad Lukow, who was Sprouts CFO, claimed Instacart cart sizes were 20% higher than Amazon ones. In today's call Paulonis said online baskets are twice the size of in-store baskets (which "are in the low 40's"). Sprouts expanded the number of stores served by Instacart in March 2019 by 200 locations and went chainwide with curbside pickup during 2020.

Sprouts Farmers Market Home Page
Sprouts Farmers Market Home Page  (Source: Sprouts Farmers Market)

Instacart, a member of our ecommerce platform shortlist, is a grocery ecommerce business that works with retailers to build and operate their technology and online operations, using gig workers in favor of employees.

This article was updated on March 19, 2021

M Ryan

M Ryan is an ecommerce consultant with twenty years experience working with retailers, consumer brand manufacturers and other consumer-facing businesses helping them to develop their ecommerce strategy, implement ecommerce technology and improve their ecommerce operations. He works extensively throughout US and Europe, with clients including global brands, large retailers and household names in consumer goods.