Dive Brief:

• Instacart is expanding its partnership with Walmart Canada to provide same-day delivery of its full-store assortment at nearly 200 of the retailer's 400 stores in as little as an hour, according to a press release emailed to Grocery Dive.
• The announcement follows a 17-store pilot that kicked off last September in the Greater Toronto Area and Winnipeg, which Walmart shoppers "strongly embraced," according to Instacart.
• Walmart Canada also offers grocery pick-up at 175 stores, with plans to expand to 190 by the end of January, as well as next-day delivery in the greater Toronto area through online orders.

Dive Insight:

Instacart continues to make inroads with the world's largest brick-and-mortar retailer, again raising the possibility that it could handle at least some of Walmart's fast-growing — and highly coveted — U.S. e-commerce business.

In addition to its relationship with Walmart Canada, Instacart handles fulfillment for more than half of Sam's Club stores in the U.S., including a separate alcohol delivery service that launched this summer. Instacart has quickly become the largest grocery e-commerce service in the U.S., reaching 80% of households. Walmart, however, has chosen to partner with other last-mile delivery firms like Postmates and DoorDash while using its own employees to pick orders in stores.

According to a Recode report from last year, the two companies are at an impasse in the U.S. because Instacart wants to list Walmart products on its marketplace, while Walmart only wants Instacart to provide last-mile delivery service. Instacart makes money through various service fees and CPG advertising. 

Regardless of how or if a deal shapes up, the two companies have become front-runners in the race for online grocery shoppers. Walmart recently took the lead in online grocery customers, with 62% more shoppers than Instacart using the retailer's platform in June, according to data firm Second Measure. Walmart has been making a concerted omnichannel push, including restructuring its supply chain and making key leadership changes to integrate its digital and in-store offerings. The retailer offers grocery pickup from more than 2,700 stores and delivery from around 1,100.

With the expanded partnership, Instacart delivery is now available in more than 70% of Canadian households, up from 60% earlier this year. Walmart accounts for 10% of grocery sales in Canada, and nearly 25% of Canadians buy groceries online, up from 17% in 2017, according to the Canadian Internet Registration Authority.