DoorDash bids $17 billion to acquire Instacart, reshaping grocery delivery market

DoorDash has proposed a $17 billion acquisition of Instacart, a move designed to consolidate the grocery delivery sector by combining DoorDash's logistics network with Instacart's retail focus. The offer values Instacart, which currently has a market value of $14 billion, at a premium. DoorDash, with a market value of $73 billion, would absorb Instacart's operations while keeping the Instacart name and app live for consumers.

Under the deal terms, the 600,000 independent contractors known as Instacart shoppers would continue to fulfill orders as they do today. Grocers would retain the option to partner with either Instacart or DoorDash. DoorDash stated that the merger would expand its grocery reach by adding 50,000 stores to its platform, leveraging its existing network of 9 million delivery workers across 40 countries.

Instacart, founded in 2012, handles grocery and convenience store delivery in the United States and Canada. Company filings indicate its workforce completed 338 million orders in the previous year. DoorDash, founded in San Francisco in 2013, started in restaurant delivery and expanded into categories like pet food and electronics. It processed more than 3 billion orders last year.

DoorDash entered the grocery market in 2020 during a surge in pandemic-era demand. Initial partnerships were cautious; for example, Kroger began working with DoorDash in 2022 but restricted the service to flowers, sushi, and prepared meals from a limited number of locations. That relationship expanded last fall, and DoorDash now lists the full inventory of all 2,700 U.S. Kroger stores. DoorDash also added delivery from Costco last month.

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. Someone has to pick a ripe avocado, find a substitute you’d choose yourself, and get the ice cream to you before it melts," Xu said. "Together, we could give stores of every size more of those tools and unlock the potential of grocery delivery."

Market share data from Consumer Edge shows DoorDash has gained ground at the expense of Instacart. Five years ago, Instacart held 26% of spending on U.S. delivery platforms; that figure has dropped to 18%. DoorDash's share rose from 44% to 59% over the same period, while Uber Eats remained steady at just under 20%.

The deal leaves some existing partnerships in question. Instacart currently offers delivery from Walmart, but DoorDash stopped providing Walmart delivery in 2022. It is not yet clear how the two companies will handle this overlap under the new ownership structure.