Crowded delivery business sees Instacart raise prices and lay off staff

Instacart is raising its prices and laying off employees, as the grocery delivery company laid off 12 in-house recruiters in December according to Re-code. CEO Apoorva Mehta attributed the move to a less aggressive hiring strategy for 2016 compared to last year, when the company grew its workforce from 100 to 300 employees. VentureBeat also reported that Instacart increased its delivery fee from $3.99 to $5.99 in most of the company’s 18 US cities, and also raised its annual membership subscription, which gives customers unlimited two-hour and scheduled deliveries, from $99 to $149. In a blog post, the company said the price hikes were due to improvements to its service and “changing market conditions.” However, many reports suggest it’s the latest sign of the tough economics of the grocery delivery business. Last year Amazon started requiring Amazon Fresh customers to sign up for a $299/year “Prime Fresh” membership to use the grocery delivery service.

Being a couch potato just got more expensive.

Instacart, a grocery delivery startup that's become one of the key companies in the quickly expanding field of on-demand shopping, is raising its prices. The San Francisco-based firm made the announcement today in a blog post, citing the cost of improving services amid a changing market.

Effective January 4, Instacart's two-hour delivery service will start at $5.99, up from $3.99. If you'd rather spend a flat fee per year to enjoy free two-hour delivery on orders $35 and up through Instacart Express, you'll need to pay $149, up from $99.

Last January, Instacart raised $220 million in venture capital from big backers including Andreessen Horowitz, Khosla Ventures and Kleiner Perkins Caulfield & Byers. Instacart now offers its delivery services in 18 US cities.

The price jump comes several months after Instacart announced it would begin rolling out part-time employment benefits to its employees amid heightened regulatory scrutiny of the emerging on-demand economy. Instacart also recently partnered with Target to begin offering on-demand grocery delivery in the major retailer's hometown of Minneapolis.

Instacart representatives did not respond to a request for comment.

CNET's Ian Sherr contributed to this report.