The news: Kroger and Instacart have launched a combined grocery and prescription delivery service across nearly all of Kroger’s banners, including Fred Meyer, Ralphs and Harris Teeter. Customers can add eligible prescriptions from more than 2,200 Kroger pharmacies to a regular Instacart order and get both in one delivery, according to the announcement.
The launch pushes Kroger’s rented delivery network into its most regulated category, nine months after the company wrote off $2.6 billion of owned e-commerce infrastructure. Walmart and Amazon, its two biggest general-merchandise rivals, are making the opposite bet and building pharmacy delivery networks they own.
How it works: Kroger pharmacy teams fill and verify each prescription at the store and seal it in tamper-resistant packaging. An Instacart shopper then delivers it with the groceries.
“This new service combines the convenience of grocery delivery with the personalized care provided by our pharmacy teams,” said Colleen Lindholz, president of Kroger Health.
Eligibility varies by medication, delivery address and local rules; Kroger has not published a list of excluded drugs. The service began at Harris Teeter in early August, three weeks before the company-wide rollout.
The backdrop: In November, Kroger closed three of its automated Ocado fulfillment centers, taking about $2.6 billion in charges. The unwind included a roughly $350 million cash payment to Ocado, the company said in a December filing. Also in November, it named Instacart its primary delivery partner across roughly 2,700 stores.
The retreat paid off within two quarters, by Kroger’s own accounting. E-commerce turned profitable in the first quarter, CFO David Kennerley said on the earnings call, and not only because the unprofitable Ocado sheds closed. Cost to serve was the lowest the company has seen, he said.
Pharmacy has its own pressure. The Inflation Reduction Act was a 130-basis-point headwind to identical sales in the first quarter, Kennerley said on the same call. Bundling prescriptions into grocery orders is one way to generate pharmacy traffic while reimbursement squeezes the category.
The pattern: Kroger is not Instacart’s first pharmacy partner. Instacart has delivered Costco prescriptions since 2020.
The move also caps a broader retreat, because Kroger was one of three North American grocers to walk back owned ecommerce infrastructure within three months.
Ahold Delhaize said in December it would close six fulfillment centers and keep working with Instacart and DoorDash. Sobeys parent Empire then shut its Calgary-area Voilà facility in January and paused the service’s Vancouver expansion.
The counter: Walmart and Amazon are building what Kroger is renting.
Walmart runs prescription delivery on its own network, launched in late 2024, and has delivered more than 4 million pharmacy orders since. Last September, it added refrigerated medications, which make up more than 30% of its pharmacy sales. It also expects to open two more central-fill pharmacy facilities this year, in Phoenix, Arizona, and Republic, Missouri.
Amazon Pharmacy delivers same-day on Amazon’s own logistics network and plans to expand by about 2,000 cities this year, to roughly 4,500.
My view: Instacart is the biggest winner in this deal. It picks up delivery from more than 2,200 Kroger pharmacies without owning a single one, and every bundled order builds the customer’s habit on its app as much as Kroger’s.
Kroger’s side of the trade is still sound, because renting has one property that building lacks: it is reversible.
Instacart is a contract Kroger can renegotiate or exit, while Walmart’s central-fill plants and Amazon’s delivery map are capital commitments that have to be filled. After a $2.6 billion write-off proved Kroger cannot run this infrastructure profitably, the reversible option is the rational one.
The open question is custody at scale: whether a shopper-based delivery model holds up under pharmacy-board and payer scrutiny across 2,200 pharmacies. If it does not, Kroger heads back toward the infrastructure it just exited.
Bundled prescriptions also need to lift pharmacy traffic enough to offset the reimbursement squeeze. Kroger’s identical-sales numbers will show that before anything else does.
What’s next: Kroger reports second-quarter results in September, the first earnings since the launch and the first full read on its post-Ocado ecommerce economics. Walmart’s two central-fill facilities and Amazon’s expanded same-day map are both due by the end of the year.
