On June 5, Birmingham, AL-based online grocery delivery service Shipt announced a $40 million funding round to challenge Instacart for the suburban delivery market. Just two days later Instacart responded by announcing it has forged a deal with Publix to offer its service at all of the Southeast’s leading grocery chain’s locations by 2020.

Shipt’s funding comes from Greycroft Partners, with participation from and Harbert Venture Partners. But earlier this year San Francisco-based Instacart raised $400 million in a round led by Sequoia Capital.

Shipt customers pay $99 annually for a membership for free delivery on orders over $35 from various retail partners. Instacart has no membership fee but charges between$3.99 and $7.99 per delivery.

Shipt CEO Bill Smith remains convinced the start-up can counter Instacart away from urban centers, with a total of $65 million in funding since its launch in 2014. He told Entrepreneur Magazine that the company operates in 47 metro areas and is available to over 20 million homes. The company plans to expand into another dozen or so markets by the end of the year and plans to reach 100 markets by this time next year.

Prior to the Publix announcement, Instacart offered delivery in 31 states. Publix and Instacart test-drove the partnership in Miami last summer and are now delivering in Florida (Daytona Beach, Ft. Lauderdale, Ft. Myers, Jacksonville, Melbourne, Miami, Naples, Orlando, Sarasota, St. Petersburg, Tallahassee, Tampa and West Palm Beach), Georgia (Atlanta), South Carolina (Columbia), North Carolina (Charlotte, Durham and Raleigh) and Tennessee (Knoxville and Nashville).

Over the next five months service will expand to markets in Alabama (Birmingham, Dothan, Huntsville, Mobile and Montgomery), Florida (Cape Coral, Crestview, Ft. Pierce, Gainesville and Panama City), Georgia (Albany, Augusta, Macon and Savannah), North Carolina (Asheville, High Point, Wilmington and Winston-Salem), South Carolina (Charleston, Greenville, Hilton Head Island, Myrtle Beach and Spartanburg), Tennessee (Chattanooga) and Virginia (Richmond).

Other delivery services will be able to operate from Publix, but Instacart will be the only official partner of the retailer.

“We selected Instacart because we knew their approach and expertise would deliver a high-quality experience for our customers,” said Laurie Douglas, Publix Senior Vice President and Chief Information Officer. “The overwhelming response of our customers has proven that Instacart and Publix are a strong and dynamic team. We are excited to take the next steps in building our unique relationship to dramatically grow the service in our markets.”

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