Instacart Looked Like a Savior. Now Stores Aren’t So Sure.

But many supermarkets say they aren’t making money through Instacart, largely because the delivery company typically charges them a commission of more than 10% of each order. Some of Instacart’s retailer partners say the service holds too much control over customer interactions and expect it to take an increasing share of money that food makers spend on marketing.

All that has put grocers in a bind, as delivery continues to boom and becomes a necessity. Some grocers are focusing more on their own pickup operations or working with rival delivery companies.

For many supermarkets, food delivery cuts into already-thin profits. “We don’t think we make money from an Instacart order,” said Mark Skogen, CEO of Skogen’s Foodliner Inc., which operates more than 30 stores under its Festival Foods brand and began offering Instacart about a year ago.

Mr. Skogen said his company pays Instacart a percentage of its online sales. The grocer still works with Instacart because it allows for higher revenue even if 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 to build infrastructure.

“We don’t compete with retailers,” Mr. Ganenthiran said. “We don’t operate out of warehouses and haven’t launched our own stores or mini-marts like other services that directly compete with grocers.”

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

Instacart said it has added or expanded arrangements with more than 150 retailers in the U.S. and Canada this year, putting it in partnership 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 surging demand at the start of the pandemic but said it has since caught up. Instacart said its orders have been up 500% annually at times this year and that its workforce of largely gig workers has more than doubled to 500,000.

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

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

Instacart has started delivering nongrocery items, such as prescriptions and alcohol. The company is expanding a business building websites and providing technology support for retailers.

Instacart is also working with manufacturers to promote and discount products on its platform. Mark Griffin, president of B&R Stores Inc. in Nebraska, said that means retailers and Instacart are going after the same pool of money that brands spend on marketing.

“We’re competing with what we perceive to be a partner,” he said. When working with Instacart, B&R 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 has been built to protect retailers and help them gain share in the online market, he added.

When H-E-B LP partnered with Instacart in 2015, the Texas-based chain raised prices on products it sold through Instacart to help cover delivery-related fees, said people familiar with the talks.