DoorDash Buys Instacart for $17 Billion to Expand Grocery Reach

DoorDash has agreed to acquire Instacart for $17 billion, a move that consolidates the two dominant players in the US grocery delivery market.

The transaction values Instacart at approximately $14 billion, based on its current market capitalization. DoorDash, which holds a market value of $73 billion, will continue to operate the Instacart brand and application. Existing Instacart shoppers, who are independent contractors, will retain their roles. The company stated that grocers may choose to work with either brand, and Instacart customers will gain access to 50,000 additional stores currently covered by the DoorDash network.

Instacart, founded in 2012, specializes in grocery and convenience store delivery across the United States and Canada. Its workforce of 600,000 independent contractors completed 338 million orders in the previous year. DoorDash, founded in San Francisco in 2013, originally focused on restaurant delivery but has expanded into pet food and electronics. The company operates in 40 countries and completed over 3 billion orders last year using a network of 9 million independent delivery workers.

DoorDash entered the grocery sector in 2020 during a surge in pandemic-era demand. Early partnerships were limited; Kroger began working with DoorDash in 2022 but initially restricted delivery to flowers, sushi, and prepared meals from a small number of locations. The partnership expanded last fall to include the full inventory of all 2,700 US Kroger stores. DoorDash also added delivery from Costco last month.

Tony Xu, co-founder and CEO of DoorDash, stated that the acquisition combines Instacart's grocery expertise with DoorDash's logistics capabilities. Xu noted in a statement that grocery delivery requires specific handling, such as selecting ripe produce and transporting perishables. He added that the merger will provide stores of all sizes with better tools to unlock the potential of grocery delivery.

DoorDash has gained market share at the expense of Instacart over the past five years. According to market research firm Consumer Edge, Instacart's share of spending on US delivery platforms fell from 26% to 18%. In that same period, DoorDash's share increased from 44% to 59%. Uber Eats maintained a share of just under 20%.

Uncertainty remains regarding existing retail partnerships. Instacart currently provides delivery for Walmart, while DoorDash ceased Walmart delivery services in 2022.