DoorDash to acquire Instacart in $17 billion deal

DoorDash will purchase Instacart for $17 billion, a move that consolidates two leading grocery delivery services into a single entity. The acquisition is designed to strengthen DoorDash's position in the grocery sector, a market where it has aggressively expanded its footprint in recent years.

Under the terms of the deal, the Instacart brand and application will remain operational. Shoppers currently working for Instacart will continue to fulfill orders through the existing app infrastructure. Retailers retain the option to operate through either the Instacart or DoorDash platforms, offering a dual-channel presence for grocery delivery.

Instacart, established in 2012, specializes in grocery and convenience store deliveries across the United States and Canada. The company employs 600,000 independent contractors, known as shoppers, who completed 338 million orders last year. Instacart holds a market valuation of $14 billion, according to company filings.

DoorDash, founded in San Francisco in 2013, started as a restaurant delivery service before expanding into pet food and electronics. The company now operates in 40 countries and completed more than 3 billion orders last year. Its network consists of 9 million independent delivery workers, and the company has a market value of $73 billion.

DoorDash entered the grocery market in 2020 during a surge in pandemic-era demand. Initial partnerships were limited; Kroger, one of the nation's largest grocery chains, allowed DoorDash to deliver only flowers, sushi, and prepared meals from a small number of stores in 2022. That partnership expanded last fall, and DoorDash now lists the full inventory of all 2,700 U.S. Kroger stores in its marketplace. The company also added delivery from Costco last month.

Tony Xu, co-founder and CEO of DoorDash, stated that the acquisition will merge Instacart's grocery expertise with DoorDash's logistics capabilities. "Grocery is one of the hardest things to get right online. Someone has to pick a ripe avocado, find a substitute you'd choose yourself, and get the ice cream to you before it melts," Xu said. He added that the combined entity aims to provide more tools to stores of every size.

Market share data from Consumer Edge shows Instacart's dominance declining. Five years ago, Instacart held 26% of spending on U.S. delivery platforms, a figure that has dropped to 18%. In the same period, DoorDash's share increased from 44% to 59%, while Uber Eats remained steady at just under 20%. It is not yet clear how the merger will affect existing partnerships, such as the delivery relationship between Instacart and Walmart, which DoorDash previously exited in 2022.