Instacart looked like a Savior. Now stores are not so sure.

But many supermarkets say they don’t make money with Instacart, especially as the delivery company charges them a commission of more than 10% on each order. Some Instacart’s retailer partners say the service has too much control over customer interactions and expect it to cost an increasing chunk of money food manufacturers spend on marketing. All of this has gotten grocers into trouble as supplies continue to grow and become a necessity.

“We don’t think we’ll make money with an Instacart order,” said Mark Skogen, CEO of Skogen’s Foodliner Inc., which operates more than 30 stores under the Festival Foods brand and started offering Instacart about a year ago.

Delivery remains expensive because his company pays Instacart a percentage of its online sales, said Mr. Skogen. The grocer is still working with Instacart as it provides increased revenue even when there is no profit.

Nilam Ganenthiran, Instacart’s president, said in an email that the company’s services help grocers grow without spending years of work and capital investment building infrastructure.

“We do not compete with retailers,” said Mr Ganenthiran. “We do not operate from warehouses and have not launched our own stores or mini-marts like other services that compete directly with grocers.”

The Save A Lot chain joined Instacart this summer because the service was quick and easy to implement, said Chris Hooks, chief merchandising officer at the Midwestern grocery store that operates more than 1,000 stores. He said Save A Lot sees Instacart as a way to engage existing and potential customers.

Instacart said it has added or expanded agreements this year with more than 150 retailers in the US and Canada, partnering with more than 500 companies, including Kroger Co.

, Walmart Inc.,

Aldi Inc. and 7-Eleven Inc.

Like many of its peers, the delivery service struggled to meet rising demand at the start of the pandemic, but said it has since caught up. Instacart said its orders have increased at times by 500% a year this year, and the workforce of largely gig employees has more than doubled to 500,000.

The business boom has helped Instacart get its first profitable month, in April, since it was founded in 2012. The company has raised nearly $ 500 million since March for a valuation of $ 17.7 billion. Instacart has said it expects an IPO, but declined to comment on the timing.

Over the years, Instacart has added services such as proposing replacements for out-of-stock items based on customer preferences and allowing consumers to communicate directly with Instacart shoppers, said Mr. Ganenthiran.

Instacart has started supplying non-commodity items such as recipes and alcohol. The company expands a business by building websites and providing technology support to retailers.

Instacart also partners with manufacturers to promote and discount products on its platform. Mark Griffin, President of B&R Stores Inc. in Nebraska, said it means retailers and Instacart are pursuing the same amount of money brands spend on marketing.

“We compete with what we see as a partner,” he said. When B&R partners with Instacart, it becomes part of “a whole laundry list” of retailers rather than customers’ local store, he said.

Instacart’s Mr. Ganenthiran said the advertising business gives consumers access to discounts, which would ultimately encourage them to buy more from supermarkets. Instacart was built to protect retailers and help them gain market share, he added.

When HEB LP partnered with Instacart in 2015, the Texas-based chain increased prices for products sold through Instacart to cover delivery-related costs, people familiar with the talks said.

To maintain some control, others choose not to outsource their entire e-commerce. Kroger, the country’s largest grocer, handles takeout orders with its own staff. The company also encourages customers to order delivery through its website – rather than Instacart – by offering digital coupons and fuel savings at Kroger gas stations for members of its loyalty program. Kroger executives described Instacart as a great partner on a recent earnings call, but said the grocer is always looking for delivery partners.

Retailers have more options on hand. By Dash Inc.

and Uber Technologies Inc.

started delivering groceries this year while Target Corps

Shipt Inc. continues to expand.

Associated Food Stores, a Salt Lake City-based cooperative of more than 400 stores, said it will explore the use of Instacart early next year. To date, it uses DoorDash, in part because of the service’s low commission of about 9% per order charged at stores, said Thomas Horne, a senior e-commerce manager at the company. Instacart’s rate is higher, he said, although the rate varies by retailer.

Instacart said it wants to give all supermarkets an edge.

“It’s much more complicated to choose the perfect bunch of bananas or the best substitute for your favorite cookies than to get someone a burrito,” said Ganenthiran, adding that the company continues to invest to improve its operations.

Some supermarkets are holding out. Northeastern chain Weis Markets Inc.

rather encourages customers to order online and pick up in stores, said CEO Jonathan Weis. The grocer does not use Instacart but relies on Shipt for delivery.

“They were a bit expensive in our opinion,” he said of Instacart.

Instacart may remain one of the many ways to shop for groceries online. Farhan Siddiqi, chief digital officer at Koninklijke Ahold Delhaize NV, said customers prefer specific delivery services. The owner of the chains Giant and Stop & Shop uses Instacart in addition to his own delivery services Peapod and FreshDirect LLC, which he buys together with a private equity firm.

He added, “It’s a very complicated world.”

Write to Jaewon Kang at [email protected]