FWIW WholeFoods recently invested significant sums (~$30M) into instacart and made them the official online distribution channel. So WFM sees some value in being a distribution center, if that means moving more of their goods.

Yes. WFM has an equity stake in Instacart and has benefited (income diversification + investment appreciation).

That said, from what I'd read (and it's been a while), WFM's strategy with Instacart sounded like a way to steal market share and convert customers to shop IN their stores. If I recall, Instacart pickers were getting bonuses for (choosing) WFM stores, and WFM was offering food to pickers with no markup.

I don't know if it'll work out. WFM's been under fire for it's pricing for a while. Maybe Instacart will drive incremental sales growth (as you're alluding to). I'm skeptical as it might cannibalize the value of their high-cost experience locations.