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Instacart, the $2 Billion Grocery Delivery Startup, Lays Off 12 In-House Recruiters

The company won't be hiring as quickly in 2016 as it did in 2015.

Jason Del Rey has been a business journalist for 15 years and has covered Amazon, Walmart, and the e-commerce industry for the last decade. He was a senior correspondent at Vox.

Instacart’s crazy-growth days may be coming to an end.

The grocery delivery startup, which investors valued at $2 billion last year, laid off 12 in-house recruiters earlier this month, according to multiple sources. A spokeswoman confirmed the layoffs but did not disclose how many recruiters the company still employs.

In a statement, CEO Apoorva Mehta attributed the job cuts to the company’s plans to be less aggressive in hiring in 2016 than it was in 2015, when its staff tripled, from just under 100 employees to a little more than 300.

"We’re continuing to hire for key roles in areas like engineering, data science and sales, but as we no longer need to maintain such an aggressive hiring pace, we’ve decided to reduce the size of our recruiting team to better align with our future goals," the statement said.

A person familiar with the move, who was not authorized to speak publicly, said the company likely should have employed fewer full-time recruiters and more contractors since it was unlikely that last year’s pace of hiring would continue indefinitely. Those affected by the cuts will be paid through the end of January, this person said.

Instacart delivers groceries in 18 American cities from big chains like Whole Foods, Costco and Target and smaller grocers like Fairway and Zabar’s in New York City. Customers place orders through Instacart’s website or app, and the goods are whisked from local stores to customer doors, usually within an hour.

A substantial portion of Instacart’s revenue originally came from marking up the in-store price of a given item, but the company now often charges the same price as the grocer, but takes a cut of the sales from the store. Earlier this year, Instacart finally began being transparent about when it was charging higher prices than its partner grocers.

Update: Instacart also used the holidays to bury the announcement that it was raising both its minimum delivery and annual subscription fees by 50 percent. Minimum delivery fees are increasing in most instances from $3.99 to $5.99. At the same time, the annual fee for Instacart Express, a membership that includes unlimited two-hour and scheduled deliveries, is jumping from $99 to $149.

"To account for … improvements to our service, as well as changing market conditions, we’ve updated our prices," the company said in a blog post, which was reported earlier by VentureBeat.

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