DoorDash to Acquire Instacart for $17 Billion in Major Consolidation

DoorDash has announced plans to acquire Instacart for $17 billion, a move that would represent a significant consolidation within the grocery delivery sector. The acquisition is expected to substantially enhance DoorDash's capabilities in delivering groceries.

Under the terms of the agreement, the Instacart brand and its app will continue to operate independently. Instacart shoppers will remain engaged in fulfilling orders for the Instacart platform, and grocers will have the flexibility to continue their partnerships with either Instacart or DoorDash. The acquisition will grant Instacart customers access to an additional 50,000 stores already serviced by DoorDash.

Instacart, founded in 2012, focuses on grocery and convenience store deliveries across the U.S. and Canada. The company utilizes a network of approximately 600,000 independent contractors who completed 338 million orders in the past year, according to company filings. Instacart currently holds a market value of $14 billion.

DoorDash, established in San Francisco in 2013, initially concentrated on restaurant deliveries but has since broadened its services to include items such as pet food and electronics. The company operates in 40 countries and processed over 3 billion orders last year through its network of 9 million independent delivery workers. DoorDash has a market valuation of $73 billion.

DoorDash entered the grocery delivery space in 2020, driven by increased demand during the pandemic. Early on, many grocers were hesitant to partner. Kroger, for instance, began a partnership with DoorDash in 2022, initially limiting deliveries to flowers, sushi, and prepared meals from a select number of stores. This collaboration expanded significantly in the fall, with DoorDash now listing the full inventory from all 2,700 U.S. Kroger locations. In a notable expansion last month, DoorDash also began offering delivery services from Costco.

DoorDash CEO Tony Xu stated that the acquisition would merge Instacart's specialized grocery expertise with DoorDash's strengths in logistics and delivery. "Grocery is one of the hardest things to get right online," Xu said in a statement. "Someone has to pick a ripe avocado, find a substitute you’d choose yourself, and get the ice cream to you before it melts. Together, we could give stores of every size more of those tools and unlock the potential of grocery delivery."

DoorDash's expansion has notably impacted Instacart's market share. Five years ago, Instacart accounted for 26% of spending on U.S. delivery platforms; this share has since decreased to 18%, according to market research firm Consumer Edge. During the same period, DoorDash's market share grew from 44% to 59%. Uber Eats maintained a share just under 20%.

The implications of the deal for certain existing partnerships remain uncertain. For example, Instacart currently provides delivery services for Walmart, a partnership that DoorDash ceased in 2022.