DoorDash to Acquire Instacart in $17 Billion Deal

DoorDash will purchase Instacart for $17 billion, a transaction that merges the two largest grocery delivery platforms in North America. The deal resolves a five-year rivalry in which DoorDash steadily eroded Instacart’s market share while expanding its logistics network.

Under the agreement, the Instacart name and application will remain in place. Independent contractors who currently shop for Instacart will continue to work under that brand. Supermarkets will have the option to partner with either Instacart or DoorDash. DoorDash stated that Instacart customers will gain access to an additional 50,000 stores covered by the DoorDash network.

Instacart, founded in 2012, specializes in grocery and convenience store deliveries across the United States and Canada. Its workforce of 600,000 independent contractors completed 338 million orders last year, according to company filings. The company holds a market value of $14 billion. DoorDash, founded in San Francisco in 2013, expanded from restaurant delivery to include pet food and electronics. It operates in 40 countries, utilizes a network of 9 million independent drivers, and processed more than 3 billion orders in the past year. DoorDash is valued at $73 billion.

DoorDash entered the grocery sector in 2020 during a surge in pandemic-era demand. Initial supermarket partnerships were limited. Kroger began working with DoorDash in 2022 but initially restricted deliveries to flowers, sushi, and prepared foods from a small number of locations. That partnership expanded last fall, allowing DoorDash to deliver from the full inventory of Kroger’s 2,700 U.S. stores. DoorDash added Costco deliveries last month.

Tony Xu, DoorDash’s co-founder and CEO, said the acquisition combines Instacart’s grocery experience with DoorDash’s logistics capabilities. In a statement, Xu noted that groceries are among the most difficult items to deliver online. He cited the need to select a ripe avocado, find a suitable substitute, and transport ice cream before it melts. Xu added that the combined company can provide more tools to stores of all sizes.

Market data from Consumer Edge shows Instacart’s share of U.S. delivery platform spending fell from 26% five years ago to 18%. During the same period, DoorDash’s share rose from 44% to 59%. Uber Eats maintained a share just under 20%.

The deal leaves some existing partnerships unclear. Instacart currently offers deliveries from Walmart, but DoorDash stopped providing Walmart deliveries in 2022.