Costco debuts new grocery delivery service and expands partnership with Instacart

Costco Kirkland Signature jug of laundry detergent Costco Kirkland Signature jug of laundry detergent Photo: Lynsi Burton/seattlepi.com Photo: Lynsi Burton/seattlepi.com Image 1 of / 14 Caption Close Costco debuts new grocery delivery service and expands partnership with Instacart 1 / 14 Back to Gallery

Costco is making it easier for customers to buy groceries online and have them delivered to a doorstep.

The Issaquah, Wash.-based grocery giant this week rolled out a new two-day delivery service called CostcoGrocery for customers across the U.S., with the exception of those in Alaska, Hawaii, or Puerto Rico.

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The service offers delivery of non-perishable food and sundries. A $3 delivery fee is waived for orders over $75.

Costco already sold products online, but now it labels items available as part of the new 2-day service with a "CostcoGrocery" logo.

Costco's partnership with Instacart is also expanding, The Puget Sound Business Journal reported, noting that Instacart will offer same-day delivery of both dry and fresh items to more markets and with greater selection.

Instacart, which raised a $400 million investment round earlier this year, charges a $5.99 delivery fee for orders under $35 along with a service fee. Some items are marked up higher than what you'll find in-store. Instacart allows customers to purchase items at Costco without a membership — in fact, I tested this yesterday:

On its grocery delivery FAQ page, Costco encourages shoppers to visit its physical warehouses, noting that prices online are "generally 15 percent to 17 percent higher than warehouse walk-in price."

Selection and delivery are the most expensive part of the online shopping process, as compared to buying in the warehouse. At Costco, we do our best to keep costs to a minimum, but added delivery and other fulfillment costs included in the purchase price and in separate service fees on orders means that items purchased from Costco Same-day will be more expensive than if the same products are purchased at a warehouse.

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Instacart CEO Apoorva Mehta will speak at the GeekWire Summit next week in Seattle.

Shares of Costco were down 3 percent in after-hours trading even though the company exceeded earnings expectations and saw online sales rise 13 percent — a key metric to watch, particularly with Amazon's recent $13.7 billion acquisition of Whole Foods.