Dive Brief:

• Shipt announced last week it had expanded its partnership with Costco to six markets in Florida and had also added three markets with Publix in the state, according to CNBC.
• The company, which serves just over 40 markets, has a 20% market share in the e-commerce grocery space — just three points behind AmazonFresh, though well behind Instacart’s 50%. Shipt plans to reach 60 or more markets by the end of this year.
• A recent report from Wells Fargo, however, notes that 82% of consumers are “reluctant to shift food purchases online.”

Dive Insight:

In the quickly expanding grocery shopping and delivery market, Amazon and Instacart are the two names that typically dominate the conversation. But Shipt is proving it’s a serious contender, too — an expansion with Costco and Publix gives the company a solid foothold in a very competitive Florida grocery market.

Building market share, something all providers are scrambling to do in these early days of grocery e-commerce, will be a challenge for Shipt. Instacart, which has had its share of troubles, is the market leader by a large margin, while Amazon, which runs about even with Shipt with its AmazonFresh service, has formidable resources behind it.

On the plus side, Shipt seems to have a clear market strategy. Founder and CEO Bill Smith told CNBC that the company is targeting the “mainstream, hometown America type of consumer” with groceries in the South and the Midwest. Shipt is based in Birmingham, AL.

"What I tell people is our customers are a lot more likely to be buying Cheerios than they are kale," Smith told the network.

On the downside, Shipt faces a particularly cutthroat competitor in Instacart, which plans to be available to 80% of U.S. consumers by 2018. Last month, Instacart ran a promotion offering its Express service, which offers free delivery on orders over $35 and typically costs $149 annually, free of charge to new customers in Texas and the Midwest. That severely undercut Shipt, which offers the same deal to its members for $99 per year. In Florida’s Jacksonville and Sarasota markets, Instacart has matched Shipt’s $99 annual fee.

Publix could be a great opportunity for Shipt to grow its presence in Florida. The retailer operates close to 800 stores in the state, and enjoys tremendous consumers loyalty. But Shipt isn't the only service Publix is using. The grocer is also testing out Instacart in Miami.