DoorDash is acquiring Instacart for $17bn, marking a major consolidation in the US grocery delivery market. The company said the Instacart brand name and app will remain operational, with Instacart shoppers continuing to fulfill orders for the platform. Grocers will retain the choice to work with either Instacart or DoorDash, and Instacart customers will gain access to 50,000 additional stores covered by DoorDash's network.
Instacart, founded in 2012, operates a network of 600,000 independent contractor shoppers who completed 338m orders last year, according to company filings. The company has a market value of $14bn. DoorDash, founded in San Francisco in 2013, started as a restaurant delivery business but has since expanded into pet food and electronics. Operating across 40 countries, DoorDash completed more than 3bn orders last year using 9m independent delivery workers and has a market value of $73bn.
The acquisition reflects DoorDash's rapid expansion in grocery delivery since it entered the sector in 2020. The company initially struggled to convince major grocers but secured a partnership with Kroger in 2022, which expanded significantly and now covers all 2,700 US Kroger stores in DoorDash's marketplace. Last month, DoorDash added Costco to its offerings. Tony Xu, co-founder and CEO of DoorDash, said the combination would merge Instacart's grocery expertise with DoorDash's logistics capabilities. 'Grocery is one of the hardest things to get right online,' Xu said in a statement, highlighting challenges like selecting ripe produce and ensuring frozen items arrive in good condition.
Instacart's market position has weakened considerably over the past five years. According to Consumer Edge, a market research company, Instacart's share of US delivery platform spending fell from 26% to 18% during that period, while DoorDash's share surged from 44% to 59%. Uber Eats held steady at just under 20%. The deal raises questions about some existing partnerships, particularly given that Instacart offers delivery from Walmart while DoorDash stopped providing Walmart delivery in 2022.
For US consumers and small grocers, the merger could reshape how they access delivery services, though the retained Instacart brand and delivery network choices mean competition may persist in the sector.