DoorDash to Acquire Instacart in $17 Billion Deal

DoorDash announced it will buy Instacart for 17 billion dollars, a move that merges the two largest grocery delivery services in North America. The transaction values Instacart at a multiple of its current 14 billion dollar market capitalization. DoorDash, which holds a 73 billion dollar valuation, will absorb the grocery specialist into its broader logistics network.

Instacart will retain its brand name and application, allowing existing shoppers to continue their work. Supermarkets will have the option to partner with either Instacart or DoorDash. DoorDash stated that Instacart customers will gain access to 50,000 additional stores currently covered by the DoorDash platform.

Founded in 2012, Instacart specializes in grocery and convenience store deliveries in the United States and Canada. Its workforce of 600,000 independent contractors completed 338 million orders last year. DoorDash, founded in San Francisco in 2013, started as a restaurant delivery service and has since expanded into pet food and electronics. The company operates in 40 countries and uses a network of 9 million independent drivers to complete over 3 billion orders annually.

Tony Xu, DoorDash co-founder and chief executive, said the acquisition 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 a driver must select a ripe avocado, find a suitable substitute, and transport ice cream before it melts.

Xu added that the combined entity would provide tools to stores of all sizes to unlock the potential of grocery delivery. DoorDash began delivering groceries in 2020 as pandemic demand surged. Initially, supermarkets were cautious. Kroger partnered with DoorDash in 2022 but limited initial deliveries to flowers, sushi, and prepared meals from a small number of locations.

The Kroger partnership expanded last fall, and DoorDash now carries the full inventory of Kroger's 2,700 U.S. stores. DoorDash also added Costco deliveries last month. According to Consumer Edge, DoorDash's market share in U.S. delivery platforms grew from 44 percent to 59 percent over the past five years. Instacart's share declined from 26 percent to 18 percent during the same period. Uber Eats held steady just below 20 percent.

Uncertainty remains regarding existing retail partnerships. Instacart currently offers deliveries from Walmart, while DoorDash stopped offering Walmart deliveries in 2022.