DoorDash Buys Instacart for $17 Billion

DoorDash will purchase Instacart for 17 billion dollars in a deal that significantly expands its grocery delivery operations. The company announced the acquisition on Wednesday, stating that the Instacart brand and application will remain available to consumers. Supermarkets will have the option to work with either Instacart or DoorDash going forward.

The merger connects two vast delivery networks. DoorDash operates in 40 countries and completed more than 3 billion orders last year through a network of 9 million independent drivers. The company has a market value of 73 billion dollars. Instacart, founded in 2012, specializes in delivering supermarket and convenience store items in the United States and Canada. It employs 600,000 independent contractors who completed 338 million orders last year. Instacart carries a market value of 14 billion dollars.

DoorDash, which started in San Francisco in 2013 as a restaurant delivery service, began delivering groceries in 2020. The expansion coincided with increased demand during the pandemic. Initial partnerships with supermarkets were limited. Kroger, a major U.S. supermarket chain, partnered with DoorDash in 2022. That agreement initially allowed DoorDash to deliver only flowers, sushi, and prepared foods from a small number of stores. Last fall, the partnership expanded to include the full inventory of Kroger’s 2,700 U.S. stores. DoorDash also added Costco deliveries last month.

Tony Xu, DoorDash’s co-founder and chief executive, said the deal combines Instacart’s grocery expertise with DoorDash’s logistics capabilities. In a statement, Xu noted that grocery delivery is difficult to execute online. He explained that shoppers must select a ripe avocado, find acceptable substitutes, and transport ice cream before it melts. Xu said the combined companies will offer stores of all sizes more tools to unlock the potential of grocery delivery.

Market share data shows DoorDash has gained ground while Instacart has lost it. Five years ago, Instacart held 26% of U.S. delivery platform spending. That share has dropped to 18%, according to research firm Consumer Edge. DoorDash’s share grew from 44% to 59% over the same period. Uber Eats maintained a stable share just under 20%.

The agreement leaves some partnerships in flux. Instacart currently delivers for Walmart. DoorDash ended its Walmart delivery service in 2022. It is not yet clear how the merger will affect these specific arrangements.